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from the editor contentsfJANA MARAIS Opinion r years after the massacre by police at Lonmin’s Marikana mine, it is trageous that nobody has been jailed or fired. It is impossible to imagine 4 How fintech must disrupt to be effective w devastating this must be for everyone who lost a family member, friend or 6 Eskom should learn from Lonmin’s mistakes colleague, not only at the hands of police, but also in the violence in the run-up and aftermath of the police shootings. The week in brief Depressingly, you don’t need to do much more than drive through Marikana or Nkaneng to see that living conditions remain unchanged for most mineworkers in the 8 News in numbers richest platinum field in the world. Lonmin admitted to Amnesty International this 10 Should you take advantage of the app-ortunity? month that 13 500 of its 20 000 employees still require formal housing.This is simply 12 Echo Polska Properties adds Polish flavour to the JSE abominable, no matter how tough the economic climate or operating environment. 14 SA not off the road to junk just yet Yes, there certainly are easier ways to make money than to run a mine in South 16 AngloGold bets on Guinea for growth Africa. Our regulatory environment has not done us any favours in attracting mining 17 Will he Trump himself? investment and creating jobs over the past two decades. SA remains richly endowed 18 High hopes at Northam with mineral resources – and the country should be one of the top jurisdictions for mining investment in the world. Marketplace Admittedly, government has also been a weak enforcer of its own burdensome regulations. It has, for example, allowed Lonmin to continue operating with impunity 19 House View: US dollar, Mpact even though the lack of suitable accommodation for workers has been a complete 20 Killer Trade: Sasol on volatile terrain breach of its social and labour plan – a key part of its mining licence. Government has 21 Simon Says: Steinhoff, Property stocks, Old Mutual, also been a terrible administrator of hundreds of millions of rands of mining royalties, which should have been spent on improving living conditions in mining areas. Mpact, JSE There are good reasons why mines should provide housing to particularly low- 22 Invest DIY: Getting information out of companies paid workers. Firstly, shafts are often far away from established towns. Even though 23 Pro Pick: Electrifying Africa mineworkers may be earning a so-called living-out allowance, there are simply not 24 Investment: What a week in the markets! enough housing options available in a mining town like Marikana. 25 Directors & Dividends: Dealing and payouts Then, mines also continue to rely on migrant workers – at Lonmin, they account for about half of its workforce. One can understand why a migrant worker would be Cover reluctant to pay for their own brick-and-mortar house far away from home, especially to work at a mine where job cuts are a more regular occurrence than dividend payments. 26 Technology: Apps for Africa: Can SA tech up? Matter of fact In depth In the article SA gas suppliers can’t keep up (11 August issue), we stated that Sasol is 32 Steinhoff: Is Jooste SA’s top dealmaker? not supplying liquefied petroleum gas (LPG) to Afrox, and inferred that this may partly be due to the impact of strike action. However, the journalist did not approach Sasol On the money for comment. Sasol says it continues to supply Afrox with LPG uninterrupted and per contractual terms.The group also said while there has been a petroleum sector fuel 35 Spotlight: How Ashton Kutcher made millions in tech strike, its operations, including its refineries, continue as normal with no impact on investments – and how he spots the next big thing production. We regret the error. ■ 39 Personal Finance: Investing in the stock market – not EDITORIAL & SALES just for the pros 40 Entrepreneur: Helping entrepreneurs turn their dreams into reality 42 Management: What England’s new manager can teach business about leadership 44 Careers: When you’re smarter than your boss 45 Crossword and quiz 46 Piker ENQUIRIESEditorJana Marais Deputy EditorAnneli Groenewald Journalists andContributors Simon Brown, Johan SUBSCRIBERS Fax SHOPSFourie, Moxima Gama, Shaun Harris, Lynette Hundermark, Jana Jacobs, Marcia Klein, Schalk Louw, David McKay, 087-740-1019 0864-575-918 0861-888-989Ridwaan Moolla, Buhle Ndweni, Samantha Pauwels, Lesiba Seshoka, Glenda Williams Sub-Editors Stefanie Muller, [email protected] [email protected] Smit Office Manager Thato Marolen Layout Artists Beku Mbotoli, Tshebetso Ditabo, Zandri van ZylAdvertising manager Paul Goddard [email protected] Sales Executive Tanya Finch tanya@fivetwelve. 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opinionBy Johan FourieFINANCIAL SECTORHow fintech must disrupt to be effectiveMany hope that financial technology will provide high social returns, but to do that it needs to change the status quoa rather than just become part of the current financial sector, which is notoriously difficult for new players to enter.lthough few would dispute that a strong financial whom in an emergency. It reallocates wealth; it creates theindustry is necessary for a thriving economy, the potential for social mobility and social disruption.”growth in finance over the last three decades, as a A few weeks ago, Ronald Khan of investment management2015 paper by Thomas Philippon in The American firm BlackRock, gave the biennial Thys Visser MemorialEconomic Review shows, has not contributed to more efficient Lecture at Stellenbosch University. Over three nights he delvedcapital allocation.The cost of financial services – or more into the details of investment history, theory and its futuretechnically: the unit cost of financial intermediation – has outlook. He explained how his firm is already using textualremained roughly around 2% for the past 130 years in the analysis and machine learning techniques – Big Data analysisUS.This is not much different for other countries. Financial – to improve their returns on global stock markets, and theinnovation has not benefitted consumers in terms of lower impact this will have on the active management industry. Icosts as innovations in other industries have done. Thomas Philippon was surprised that he did not mention even once that these Why this happens is not a theoretical puzzle. Innovation in Economist and innovations will lead to lower costs for consumers, but that the main purpose was seemingly to maintain the high returnsfinance is often geared towards rent-seeking and business- professor of finance (and cost structure) of investment firms.stealing by incumbents rather than radical disruptions from at the Leonard N.new entrants.The problem is that such innovation does Stern School of This type of fintech will not disrupt the industry, and thusnot improve the overall efficiency of the system; it results in Business, New York won’t have the large social returns that creative destructionprivate returns to incumbents but with low or no social returns. University promises. It will most likely only reinforce the position of theAlthough this is true for most industries, the ease of entry and incumbent. What is necessary, then, is to encourage start-competition in most industries make this less of a concern. ups to enter and compete with technologies that can disrupt. Finance, though, is characterised by high barriers to entry. Here, according to Philippon, financial regulation can help. He emphasises three challenges that regulation can help address.The trend, at least since the 1990s, has been to consolidatefurther.The number of US banks and banking Finance,though,is 1. Regulation can help to level the playing field for fintechorganisations fell, for example, by almost 30% characterisedbyhigh firms.This is complex, however, as some parts of thebetween 1988 and 1997. barriersto entry.Thetrend, financial system, like custody and securities settlement, at least since the1990s,has are inherently concentrated. For example, blockchain The South African banking sector followed beento consolidatefurther. technology can improve the efficiency of the market, but itroughly the same trajectory, with one exception: Thenumberof USbanksand could also restrict entry, which will see the incumbent firmCapitec. Using improvements in information bankingorganisationsfell,for increase its rents.technology, Capitec has managed to reducefees, which has reshaped the South African 30%example,byalmost 2. Regulation must be forward looking. Regulators mustbanking landscape. But much of finance still identify the basic features or principles of what theremains expensive. Despite the new entrant, fintech industry must look like within a decade or two, andSouth African banks, like their US counterparts, implement the appropriate regulations when the industry isgenerate large spreads on deposits. As between 1988 and 1997. still small. It will be difficult to regulate once the industry is already established.Philippon argues in a recent National Bureau 3. Fintech will require additional regulations to protect www.pages.stern.nyu.edu/~tphilipp/ consumers. One example that Philippon uses is the useof Economic Research working paper, “finance could and of robot advisers for portfolio management.The legalshould be much cheaper. In that respect, the puzzle is not challenge here is that no robot will provide fail-safethat fintech is happening now. The puzzle is why it didnot happen earlier.”That is why fintech, or financial technology, is “advice”, but it is highly likely that these robots will beall the rage. The hope is that financial technology better than their human equivalents.– including cryptocurrencies and the blockchain, Just how fintech will disrupt the South Africannew digital advisory and trading systems, artificial finance industry is anyone’s guess. But as longintelligence and machine learning, peer-to-peer as the incumbents develop their own products Images: Gallo Images/Getty Imageslending, equity crowdfunding and mobile payment (or continue to buy young start-ups), don’t expectsystems, to name a few – will result in innovation consumers to benefit soon. If consumers are towhere the social returns surpass private returns. In benefit, regulators must find a way to make entryother words, fintech must disrupt to be effective. and competition a reality in an increasingly complex and This sentiment is echoed in a wonderful new book, Money technologically advanced industry. ■ [email protected] Everything: How Finance Made Civilization Possible byWilliam Goetzmann: “While finance can solve great problems, Johan Fourie is associate professor in economics at Stellenbosch University.it also can threaten the status quo. It changes who turns to4 finweek 25 August 2016 www.fin24.com/finweek

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opinionBy Lesiba SeshokaINDUSTRIAL RELATIONSEskom should learn from Lonmin’s mistakesBy insisting that nearly all its employees provide an essential service, thereby legally preventing them from going one strike, Eskom may be paving the way for more militant unions to recruit members at its operations.lectricity parastatal Eskom should strike a agreement did not constitute a minimum SLA as itbalance between its balance sheet on the one provided for maximum, not minimum, staff to be at workhand and its human resources on the other if it during a strike. Eskom, on the other hand, insisted thatis to avoid repeating the mistakes that led to the almost everyone is essential and should be at work.deadly (and financially crippling) strike at Lonmin in 2012. Eskom has a responsibility to ensure that a new SLA is The strike at Lonmin, where the National Union of in place. It is in its own interest to do so. But alas, EskomMineworkers (NUM) was then the dominant union, beganwhen a group of rock drill operators (RDOs) demanded seems to enjoy the fact that such an agreement Once the offeredwage increases at a time when Lonmin had already had a does not exist and that its employees cannottwo-year wage agreement with trade unions in place. In strike at all. 8%,increasereachesaboutterms of the agreement, no new wage demands were to bemade during those two years. Now, that is being short-sighted. With the increasing number of splinter unions being Lonmin was within its legal rights to refuse any further established and the fierce competition forengagement on wages, but that insistence was to be of nohelp to its industrial relations or its balance sheet. membership, it will not be long before we witness Eskom draws the the new Marikana at Eskom. line and tells the unions What followed was a shattering industrial action that they have thethat left South Africa’s platinum belt in intensive care, Back in 2012 at Lonmin, NUM carefully option to accept theleading to thousands of job cuts; the rise of the complied with the rules stating that one cannot wage offer or go for legally bring new wage demands when an existing binding arbitration. agreement is still in force. The interests ofAssociation of Mineworkers and Construction its members, the RDOs, were simply castUnion (Amcu), a more militant union than aside and bundled together with all otherNUM; and yet another shareholder mine employees’.bailout to keep Lonmin afloat. But that didn’t stop Amcu from Eskom is following this same path. ignoring the rules that NUM soAlmost every year it enters into wage carefully followed. By breaking thenegotiations with its trade unions rules, Amcu was hailed by the workers– NUM, the metalworkers union as a union that had their interests atNumsa and Solidarity. It then dances heart. The resultant violent battle forin the same spot, year in and year out. higher wages and fights over union membership not only led to a number The utility arrives at the first roundof wage negotiations empty-handed of deaths, but nearly destroyed Lonmin.and pleads poverty. Then it – like all other Unlike the workers at Lonmin,employers – tables a lower figure Eskom’s employees are not currentlywhich it gradually increases as the allowed to strike if they are unhappy with wagenegotiations progress. increases. And it is not the law that abhors strike Once the offered increase reaches about 8%, Eskom action in its entirety at Eskom but Eskom itself.draws the line and tells the unions that they have the option Indeed, Eskom’s engineers, technicians and manyto either accept the wage offer or go for binding arbitration. other categories of employees should not be allowed toAnd then, every year, Eskom reminds the unions that strike. But officials, clerks, some security guards and otherthey are not allowed to strike as their members provide an categories of workers should be allowed to exercise theiressential service in terms of the Essential Services Act. constitutional right to strike – if they downed tools, no True, workers employed by Eskom are not allowed to lives would be lost.strike in terms of the Act as they are categorised as providing Eskom owes its now somewhat healthy balance sheetan essential service, which is defined as any service that, and stable power supply to these workers. It cannotwhen interrupted, may lead to serious injury and/or death. continue to keep its workforce stable through repression. But the Act provides that there should be a minimum Very soon, a union like Amcu could appear at Eskom, break the rules and the parastatal could become Eishkom, aservice level agreement (SLA) in place that stipulates whichpart of the workforce at the parastatal can exercise their right broken company that could send our entire economy into Getty Images/iStock Imagesto strike and which part cannot. It provides for the need of intensive care. ■what is termed a skeleton staff that would keep the fires [email protected] at the parastatal at a time of industrial action. Lesiba Seshoka served as spokesperson of the National Union of Mineworkers This pact was nullified by both Eskom and the trade for seven years. He currently works as executive director: corporate relations at theunions some years ago. The unions argued that the University of KwaZulu-Natal. He writes in his personal capacity.6 finweek 25 August 2016 www.fin24.com/finweek

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the weekin brief >> TREND: Does your business really need an app? p.10 >> IN THE NEWS: A massive European property fund comes to the JSE p.12 >> Junk status: We’re not in the clear yet p.14 >> AngloGold’s primary focus on overseas operations p.16 >> Trending on Fin24 p.17 >> Northam Platinum’s Paul Dunne brims with optimism p.18“IT’SONE OF “VEHICLE AUTONOMY lawdragon.com COULD HAVE AS BIG ANTHE WEIRDEST IMPACT ON SOCIETY AS THE FORD MASSCASES I’VE SEEN ASSEMBLY LINE HAD OVER 100 YEARS AGO.”IN 35YEARS. – Mark Fields, chief executive of Ford, comments onIT IS LIKETHE an investor call on the automotive manufacturer’s plans to build a totally self-driving car by 2021. The car, whichCROOK SUING will have no steering wheel or pedals, will be designed for commercial use such as driverless taxi and ride-THE POLICE sharing services that Ford said it expects to dominate the market in the coming decade, ft.com reported.FOR MISSING The group said it doesn’t expect fully autonomous cars for individual use for “several years” after they areTHE CRIME.” first introduced. These vehicles are expected to cut the number of road deaths globally, it reported.- Mike Young, a defence lawyer at Willkie Farr & Gallagher in NewYork, comments in an interview with the Financial Times on the “What kind of people are we that we$5.5bn lawsuit faced by PwC, the biggest ever trial of an audit firm. seem to be more outraged by the NkandlaThe lawsuit was brought by the trustee of Taylor, Bean & Whitaker scandal than by Marikana? Do we really(TBW), once the largest non-bank mortgage lender in the US, whose care more about e-tolls than 44 people’sexecutives colluded with Colonial Bank employees to perpetrate fraud lives? I have wondered whether it isof $2.9bn over two years, ft.com reported. Lawyers for the trustee because we cannot, as a society, faceargue that PwC, the auditor of Colonial Bank, was in a position to the trauma. My friend said the answerdetect and stop the fraud but missed multiple red flags, while PwC is simpler than that: it is because it wasargues that the firm had been duped by a gang of fraudsters who poor, black, rural people who died.”knew how to cover their tracks, ft.com said. – Business Day journalist Franny Rabkin in a column8 finweek 25 August 2016 marking the four-year commemoration of the Marikana massacre, when police killed 34 protestors. Another 10 people were killed in the week before the massacre. To date, not a single person involved has been prosecuted or even fired. www.fin24.com/finweek

DOUBLE TAKE the week BY RICO THE RENEWABLE ENERGY BOOMS 1THREAD_8459_DUM_FIN Be a part of the GOOD 70% biggerIt may (and should) take a while for the hype over pictureWayde van Niekerk’s gold at the Olympics to blow over. The share of electricity that the world’s 20 majorWe all know by now he smashed Michael Johnson’s economies are generating from renewable Dumisani Dlamini, Professional1999 world record of 43.18 with a time of 43.03 energy sources has increased by more than 70% #EEQWPVCPV5#%JKGH(KPCPEKCN1HƂEGTseconds. This means he would’ve beaten Johnson by in the past five years, according to data compiled of the National Arts Council, 2016 Younga metre, according to Business Day, and that from the for the FinancialTimes by research group CFO of the Year, Public Sector CFO ofdreaded lane eight. In fact, the previous fastest anyone Bloomberg New Energy Finance. In total, G20 the Year and SAIPA member.had run at the Olympics from lane eight was in Athens countries produced 8% of their electricity fromin 2004, when Grenada’s Alleyne Francique clocked solar farms, wind parks and green power stations I have always had a passion44.6. Van Niekerk would’ve beaten him by 13 metres. in 2015, up from 4.6% in 2010, ft.com reported. for accounting. I wanted Seven G20 members now generate more than to tell a story through THE 10% of their electricity from renewable sources numbers and I knew SAIPA BAD (excluding hydropower), compared with three in was the right platform for 2010, it said. Last year, the UK generated 24% me to achieve that. I knowSouth Africa’s university campuses are set for a new of its energy from renewable sources, compared that having the designationwave of protests and unrest over planned fee increases with just 6% in 2010, ft.com reported. of Professional Accountantfor 2017. Two campuses – the Mangosuthu University (SA) next to my name hasof Technology and UKZN’s Pietermaritzburg campus ESKOM INCREASE SET ASIDE enabled me to get ahead in– were closed on 15 August due to protests, while my career and prepared methe South African Union of Students warned of more R11.2bn for my role in leadership.shutdowns across the country, Business Day reported.The Council for Higher Education has recommended a The North Gauteng High Court set aside an With over 30 years of accounting behind us,fee increase of 6.3% for next year. interim tariff increase of 9.4% on Eskom’s direct the South African Institute of Professional customers, which was applicable from 1 April Accountants isn’t just about the title, it’s THE and also passed on to municipal customers on about meaningful contributions to the UGLY 1 July.The increase, which was approved by accountancy profession. regulator Nersa, was aimed at giving Eskom anFour years after the deadly strike and police massacre additional R11.2bn in revenue to compensate for 6ˆÃˆÌÕØœÜ̜Ãii…œÜޜÕV>˜Li˜iwÌat Lonmin’s Marikana mine, 13 500 of the company’s higher-than-expected energy costs and lower www.saipa.co.zaroughly 20 000 workers remain in need of formal sales in the 2013/14 financial year, Moneyweb Tel: 08611 SAIPA (72472)housing, according to a new report by Amnesty reported.The High Court judge, however, called -Ƃ*ƂˆÃ-\"™ää£iÀ̈wi`>˜`œvviÀÓi“LiÀÃ>International. While Lonmin admitted at the Farlam the decision irrational, unfair and unlawful, iÛin +`iÈ}˜>̈œ˜Commission’s hearings that the living conditions of agreeing with the applicants that Nersa hadmany of its employees were “truly appalling”, Amnesty not followed the prescribed methodology.Thefound very little has changed since 2012. Deprose application was brought by the Nelson MandelaMuchena, Amnesty’s director for Southern Africa, said: Bay Business Chamber along with several“So far Lonmin’s post-2012 plans have not delivered one local intensive energy users, which called theadditional housing unit for mineworkers at Marikana. […] ruling a “massive win for electricity users in SA”,The company’s failure to improve employees’ housing is Moneyweb reported.baffling and irresponsible in the extreme.”@finweek finweek finweekmagazine

the week trendBy Lynette Hundermark Should you take advantage of the app-ortunity?It seems that virtually every retailer, business, mall and website is now asking users and customers to download its“t app. But does your venture actually need one? And what should you keep in mind before commissioning an app?here’s an app for that,” is one of the It is important to identify the targetmost common phrases exchanged audience as this influences the design andamongst smartphone owners. From user experience, which are important for thehailing a taxi to checking your bank app creation process as different groups ofbalance, there is almost an app for everything. people are likely to use your app differently.However, as a brand or small business that Establishing who the target audience is alsohas not yet jumped onto the app bandwagon, assists with the platform identification (iOS,should you rush in headfirst and join in? With Android, Windows Phone, BlackBerry) so thatalready over 1.5m apps in each app store the platform with the majority of the targetbelonging to just Apple and Google, should you audience can be considered first.To this day,really add another app to that list? the most-requested platform I get asked toFor the last seven years, I’ve worked with develop apps for is still the iPhone. However,brands in their apps execution strategies (back with only 5% to 7% of the South Africanwhen the word “app” was literally a buzzword), audience on this platform (and this statisticacross a variety of sectors. I’ve learnt that there has been consistent over the last five years),are two very basic, but essential points that I often ask my clients if they are sure thatneed to be addressed before embarking on any this is the best platform to ensure maximumapp strategy. engagement with their target audience.1. Who is my target 2. Would my target maintenance is required.This is also the case Gallo Getty Images/iStockphotoaudience for this app? audience need an app? with apps.While this may seem like an obvious point This question addresses the “Apps for Apps’ As a brand, you may have delivered the mostto address, in my experience potential app Sake” bling versus “Solving a business or beautiful and functional app to your users today,clients often neglect this basic question. consumer problem” need.Truth be told, there is but the new version of Android or iOS will beWhen asking this question, the common very little that an app can do that one cannot do released tomorrow, which will inevitably impactanswer is, “Everyone”. on a mobi site. However, apps can offer richer the performance of that app and your users and faster experiences if implemented properly. will have the expectation that the app will just But have you ever come across a product work. Also, should that platform release somethat appeals to everyone? By everyone I am I’ve also found that there are usually two new funky features, there will be yet anotherincluding children, teenagers, millennials, types of mobile users, those who are hardcore expectation from your app users that you willparents, grandparents, business executives, app users and those who don’t really mind cater for those new features sooner than later.working mothers, sports fanatics (and the what they use as long as they have a mobile-list can go on). Unless you are developing an optimised platform presented in a useable Last but not least, apps must be treated likeentertainment app (and there are still specific format that is appropriate for the mobile user. any product that offers value to your users. In atypes of users that need to be identified for world where we are inundated with informationthat), chances are you will be appealing to a very However, a mobile app user will have the and volume of choice, people may not alwaysspecific target audience and not everyone. expectation that the app – which has taken remember the information they are presented effort and time to source and download from with, but they will certainly remember how theyIt is important to identify the app store using very precious and expensive felt when using your app. While a high-endthe target audience as this data if WiFi is not available – will have more smartphone may be able to hold over 250 apps,influences the design and features than a traditional mobi site will offer. it is usually the apps on the home screen thatuser experience, which If this isn’t the case, it will just be deleted and get used frequently, so give your users a need toare important for the app never looked at again. download your apps and ideally have them oncreation process as different their home screen. ■groups of people are likely to Once these two issues are addressed, and [email protected] your app differently. there is a genuine business case for going down the app route, then a minimal viable Lynette Hundermark is the managing director and chief solution (that contains core functionality) can product officer of Useful & Beautiful, a mobile solutions be mapped out and the user experience can consultancy. be designed. It is also important to realise that investing in an app strategy is very similar to buying a new car and it is not just a one-off purchase. When you first buy it, a car is shiny and new, but over time there is wear and tear, so ongoing10 finweek 25 August 2016 www.fin24.com/finweek

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the week in the newsBy Glenda WilliamsEcho Polska Properties adds Polishflavour to the JSEThe largest property fund in Poland is listing on the JSE on 1 September and its double-digit growth and 7.5% euro yieldd forecast could be an attractive lure for investors. uncertainty around Brexit. ual primary listings on the JSE and “It is going to take us 20 to 25 years to get the same Luxembourg bourse will help expand Echo Polska Properties’ (EPP’s) portfolio to €1.4bn, cost levels as Western Europe, so when Europe wobbles, if the entity’s plans come to fruition.The Poland gains,” says Dean. “Post Brexit, two banks upped€1.2bn valued property fund, the largest in Poland and in their Warsaw office requirements, one doubling its initialwhich South Africa’s Redefine Properties holds a strategic 10 000m2 requirement and the other taking an additional49.9% stake, expects to list on the JSE in September, hot on 3 000m2,” he adds.the heels of a Luxembourg listing this month. Poland is already the largest Business Processing The company aims to raise €100m through the private Offshore (BPO) provider in Europe.The sector, says Dean, Hadley Deanplacement of around 10% of shares at a list price of €1.45/ is Poland’s biggest employer, employing 212 000 people. It CEO of Echo Polskashare.There will be no exiting of shareholders, the share is growing 15% each year on average, adding 35 000 jobs Propertiesissuance diluting current shareholders equally, according to annually. It also drives demand for office space, withCEO Hadley Dean. 350 000m2 of additional space required yearly. TheBPOsectoremploys The capital raise from the dual listings will be Given the 7% average annual increase in retail 212000peopleand is sales, unsurprisingly last year Poland welcomedused to fund acquisitions and development, 25 new international retail tenants. 15%growingbyprimarily four office acquisitions as well as EPP’s expanded €1.4bn portfolio each year on average,the development of a 6ha retail site in will reflect a 69% retail mix by value. adding 35 000 jobscentral Warsaw in which the company The group already boasts high-profile annually. It also driveshas a 70% stake.The shopping centre’s retail tenants including IBM, Nokia, demand for officelocation puts it in a catchment area of H&M as well as South African retail space, with 350 000m2100 000 office workers and 85 000 chain Pepkor.local residents. The group’s average lease length is of additional space just over five years; its retail vacancies a required yearly. EPP’s portfolio currently comprises mere 1.9%. Come 1 September, the entiresix office and 10 retail properties with a portfolio’s debt will be hedged over five years.gross leasable area totalling 446 400m2,spread across Poland’s major cities.Dean, whose mission is to deliver sustainable Also significant in terms of risk, EPP’s loan-to-double-digit annual growth in distribution per Pasaz Grunwaldski, EPP’s value ratio – currently 56.7% – is expected toshare through organic growth and acquisitions,forecasts €64m distributable income in 2017 €239.7m shopping centre in decrease to around 50%, according to Dean.equating to a forward euro yield of 7.5%. Wrocław, Poland’s second- EPP’s market cap post-listing is expected to most affluent city. be around €850m.EPP is also well-placed to leverage growth “We know we are going to be able to deliveroff the development activities of its former parent and double-digit growth in the short to medium term throughdeveloper Echo Investments, having a 25% development [reduced] vacancies, extensions and ROFO assets. Byprofit participation in and right of first offer (ROFO) on 10 having a retail focus and entering into further development Marek Belkaof Echo Investment’s projects. partnerships with Echo Investment and others, we will be Former prime minister of able to do that long term,” concludes Dean. Poland and non-executive Delivering stable double-digit growth is a tall order giventhe prevailing global economic uncertainty. But Poland, “Other than a focus on Poland and pure euro-based director of EPPdriven by rising consumption, employment and wages, dividend, EPP expands the investable universe for directstable prices and increased exports, provides a strong investment into CEE for SA investors,” says Keillen Ndlovu,platform for this, according to Marek Belka, former prime Head: Listed Property Funds at Stanlib.minister of Poland and non-executive director of EPP. “EPP is promising double-digit DPS growth in euros, The biggest strength perhaps of this large, stable and which is expected to mainly come through a good acquisitionliquid market is its banking system, adds Belka. “Banks are and development pipeline in a strong Polish economy. Shouldstable, with high-quality capital. Slightly more than half of EPP deliver on this promise consistently in the future, thethe banking sector is in the hands of (mostly European) counter could obtain a good rating over time.” And, he says,international financial groups.” given the stronger rand of late, it could be a better entry point. Keillen Ndlovu Images supplied From an investment perspective, Poland is around Investors seeking diversification into multiple Head of listed property50% cheaper than Central Europe, attracting most of the geographies could find accessing EPP via Redefine funds at Stanlibmajor American and European pension funds, Dean says. suitable, concludes Ndlovu. ■Its inexpensive space is likely to be a net beneficiary of the [email protected] finweek 25 August 2016 www.fin24.com/finweek

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the week in the newsBy Marcia KleinSA not off the road to junk just yetThe strengthening of the rand is very good news for South Africans in terms of interest and inflation rates. But politicalc and economic risks remain and the good news may not be enough to stave off a ratings downgrade.oming when it was least expected, R/$ EXCHANGE RATEthe rand’s strength, should it last, Randis surprisingly good news for SouthAfricans. 17 At current levels – which reflect a marked 16appreciation of the rand since Nenegate inDecember – it is likely that interest rate and 15inflation increases will be muted, putting more 14money into people’s pockets in the months leadingup to Christmas. 13 The rand was at R13.20 to the dollar on 10August, its best level this year and far off the 11 12 Nov ‘15 Jan ‘16 Mar ‘16 May ‘16 Jul ‘16January exchange rate trough of over R18. The Sep ‘15 SOURCE: INET BFArand, which slumped to R15.44 directly afterPresident Jacob Zuma fired finance ministerNhlanhla Nene on 9 December, continued tolanguish thereafter. But since mid-June, when it rand acts inversely to the dollar. Nonetheless, in TherandwasatR13.20 tothedollaronwas at R15, it has strengthened and for the past the face of dollar strength, the rand appreciation 10 August, its best levelmonth has shown consecutive weekly increases signals the extent to which it was initially oversold thisyearandfarofftheto its current level of R13.30 (at the and detached from fundamentals, 11Januaryexchange precarious as they may be.”“...in the face of dollartime of writing on 15 August). R18.ratetroughofover Its relative strength to the British strength, the rand Ballim says the Fed’s approachpound, which had itself weakened to monetary policy, combined withagainst the dollar, has been even appreciation signals some stability in China’s growth ratemore impressive. The rand is at R17 the extent to which it (which is underpinning commodityto the pound against R24.50 on was initially oversold prices) “provided favourable external11 January. headwinds for the rand, which is categorised as both an emerging- Although driven largely byexternal factors including better and detached from markets and commodities currency.risk appetite for emerging-market Locally, the elections have added acurrencies, uncertainty over whether fundamentals, favourable glow to financial markets,the US Federal Reserve will push precarious as they including the rand,” he says, asup interest rates and central bank markets have judged the processconservatism globally, markets have may be.” free and fair and absent of taint,acted as though there is cause for and the outcome positive forsome optimism in the South African improved governance.economy despite the looming downgrade by ratings But, “having said this, it is likely there will be Goolam Ballimagencies to junk status. reduced additional good news to carry the rand Standard Bank even further over the near term and we would look chief economist The local election results were largely consideredpositive in the eyes of traders, mining and for some element of consolidation following its briskmanufacturing production figures were better than appreciation in just one month”.expected and the petrol price has been comingdown. All in all, some good news for the currency. Rand boosts GDPRatings downgrade?There is, however, still political and economic risk, South Africa reclaimed its position as Christie Viljoenas ratings agencies are well aware, and the good Africa’s largest economy, largely due to Senior economistnews may not be enough to stave off a ratings the strengthening rand and weakeningdowngrade, which may or may not be already built Nigerian naira. In 2014, SA lost its top at KPMGinto the exchange rate. ranking to Nigeria after the latter rebased its calculation of GDP, and SA was also Standard Bank chief economist Goolam subsequently eclipsed by Egypt.Ballim says the recent appreciation of the randhas taken place alongside dollar strength. “This is SA’s return to the number one spotseemingly odd in that it is usually the case that the14 finweek 25 August 2016 www.fin24.com/finweek

The risk of a sovereign downgrade by Standard & Poor’sstill looms heavily, Ballim says, and economic dataand political events will still unfold prior to the firstweek in December, when South Africa will know if it isdowngraded below investment grade. The risk of a sovereign downgrade by Standard President Jacob Zuma South African national flags hang above an advertisement for Images: Supplied Gallo Images/Getty Images www.community.standardbank.co.za& Poor’s still looms heavily, he says, and economic the new Mandela rand banknotes at the headquarters of thedata and political events will still unfold prior to Peter Attard Montalto South African Reserve Bank in Pretoria.the first week in December, when South Africa will Analyst at Nomuraknow if it is downgraded below investment grade. International an expectation of a downgrade at the end of this year. In the short term it expects the rand at Ballim says that “to the extent that the political Busisiwe Radebe between R14 and R15.climate continues to show incremental reformist Nedbank Groupgains and, critically, that finance minister Pravin Some issues which would cause Montalto toGordhan remains at the helm of Treasury” and that economist revise his forecast are a major cabinet reshuffleit is insulated from bad intent, SA should again “which could raise the risks of immediateavert a downgrade. downgrades by the ratings agencies”, a loosening of fiscal policy, a China crisis, a Donald TrumpOutlook for the rand presidency and extra Fed hikes.In a report on the rand, Nomura analyst Peter Nedbank Group economist Busisiwe RadebeAttard Montalto says it “looks set to remain a lot says the rand is going with the emerging-marketstronger than forecast for longer until domestic currencies flow, as well as responding to US jobidiosyncrasies come to the surface – either on their numbers. These, together with some positive signsown or from a change in the global backdrop”. locally, have given the exchange rate a boost, she says. “The major drivers have been what is going on Nomura has lowered its forecast from R19 to internationally rather than what is going on here.”R17 to the dollar at year-end and R18 at end-2017. The stronger currency, if it is sustained, is However, Nomura still believes asset prices positive for inflation and interest rates, which are(including the currency and local rates) “currently rand-dependent.markedly underestimate the political riskpremia required into year-end”, and that ratings Radebe mentions that a ratings downgradedowngrades still look likely. at the end of the year will not necessarily mean a weakening rand. “If you look at the Brazilian real, Montalto says investors are becoming more after the downgrade, it actually strengthened as thebearish after Zuma’s position is seen as secure. downgrade was expected.”Nomura’s view on rates, inflation and the highcurrent account deficit have not changed but Nedbank’s average for the rand/dollar exchangedomestic shocks will be muted as international rate is R15.06 for the 2016 year. Its forecastsinvestors increase their appetite for risk and look for suggest R15.41 in 2017 and R15.97 in 2018.yield in emerging markets. Although the rand is showing strength at the Nomura expects the rand to be R17 at year-end, moment and although Nedbank is not expectingR18 at end-2017 and R16 at end-2018, including any sharp deterioration, Radebe does point out that the 2015 average was R12.93. ■reflects no change in its GDP, just its the two data points makes these [email protected] value in dollar terms, which saw calculations spurious at best and notits GDP reach $301bn against Nigeria’s really a reliable indicator of recent finweek 25 August 2016 15$296bn and Egypt’s $270bn. developments. But Christie Viljoen, senior “In order to reflect the impact ofeconomist at KPMG, says the the naira devaluation and the rand’scalculations are incorrect as the US recovery on comparable GDP estimates,dollar estimates are based on GDP a calculation would need to be madedata from the end of 2015 while the based on GDP data for the secondexchange rate readings are from August quarter of 2016.” These statistics have2016. “The time difference between not been released yet. ■@finweek finweek finweekmagazine

the week in the newsBy David McKayAngloGold bets on Guinea for growthThe mining company bets on projects outside South Africa as safety stoppages at its deep-level underground minest hamper local output. ANGLOGOLD ASHANTI he strategy behind the proposed demerger of AngloGold Ashanti’s South Cents African gold mines was to give special 35 000 focus to the ageing mines as well as help improve the overall investment appeal of 52-week range: R81.52 - R317.75the demerged company by diversifying into 30 000 Price/earnings ratio: -other minerals – a strategy quite similar to the 25 000 1-year total return: 208.38%one taken by Sibanye Gold. 20 000 Market capitalisation: R107.2bn As it turned out, in 2014, the plan was Earnings per share: -$0.10scuppered by shareholders who thought that 15 000 Dividend yield: -raising over R2bn worth of cash ahead of the 10 000demerger was too high a price to pay for the Average volume over 30 days: 2 269 579larger group to be rid of the SA mines. 5 000 SOURCE: INET BFA “Rid” is not a word AngloGold has ever Sep ‘15 Nov ‘15 Jan ‘16 Mar ‘16 May ‘16 Jul ‘16used in respect of its involvement in SA, butthe coming months and years may underlinewhy the local mines don’t appear to have a AngloGold’s SA mines are assets in declinefuture, especially as AngloGold progressesunder the sure and steady hand of its CEO, in the absence of technology good enough toSrinivasan Venkatakrishnan. mine the very deep recesses of its orebodies, All of the company’s growth projects below 4km underground.outlined by Venkatakrishnan on 15 Augustare outside of SA, including some $115m(R1.5bn) that would be spent expanding itsSiguiri mine in Guinea, expanding the life ofmine four years to 2023 from 2016.There are also greenfield project studies This has had the desired effect. documented Section 54 work stoppages,in Colombia at AngloGold’s La Colosa, In addition to cost-control improvements, which cost AngloGold’s SA mines someGramalote and Quebradona prospects, which and a large degree of restructuring, 44 000 ounces in gold production, are onlywere described by Ron Largent, head of AngloGold’s SA mines have achieved working to hasten the inevitable decline of theAngloGold’s international division, an all-in sustaining cash margin mines, and speedier loss of jobs. Section 54as “moving the needle” in of about 20% when it was notices, issued in terms of the Mine Healthterms of reserves. only just about breaking & Safety Act, enable government to shut anThe approach to the even in the first half of entire operating shaft while it investigates anSA mines appears to be 2014. As a whole, the accident and recommends a suitable round ofa process of harvesting. SA mines provided 28% mediation before re-opening.This is sometimes a dirty of AngloGold’s gold The department of mineral resourcesword in the mining world production in the six (DMR) rightly points to the need for safetybecause “high grading” months to June and a related interruptions in order to managea mineral resource is respectable 24% of and decrease the number of fatalities ona bit like a slash and pre-tax earnings. SA’s mines, which have increased 18% thisburn retreat. However, the But there may be more of year compared to last year at the half-yearoperating statistics do tend to the restructuring to come. stage. But AngloGold argues that the DMR’sshow AngloGold is driving markedly AngloGold’s Kopanang The group’s Kopanang mine heavy-handed manner is unnecessary andhigher grades on lower tonnages indiscriminate.over the last 18 months. mine near Orkney in produced a negative all-in sustaining There’s no arguing with the facts. the North West. costs (AISC) margin in the half-yearSince the half-year point in its ended June even though the dollar AngloGold’s SA mines are assets in decline in2014 financial year, when the company was gold price and the rand weakness against the absence of technology good enough to Image: www.anglogoldashanti.comrecording an average grade from its SA mines the dollar (for most of the period) were in its mine the very deep recesses of its orebodies,of about six grams per ton (g/t), the average favour. Now that currencies, including the below 4km underground. Gold productiongrade has increased to between 7g/t and rand, have strengthened against the dollar, has fallen to about 500 000 ounces this year8g/t while tons mined have fallen to about the mine can no longer expect the same from some 1.3m ounces at the same stage in1.5m tons per quarter from about 2m degree of exogenous assistance. the group’s 2006 financial year. ■tons previously. The upshot of this is that the widely [email protected] finweek 25 August 2016 www.fin24.com/finweek

Will he Trump himself? the week in the news Reuters/Eric Thayer #trendingRepublican presidential candidate Donald Trump has had a tough few days in the office during on fin24.comAugust. Among other things, he was reported to have overhauled his campaign team afteropinion polls showed that he was falling behind Democratic candidate Hillary Clinton, indicating Top 10 estates in SA revealedthat now some of his backers were starting to doubt his ability to “Make America Great Again”.Whereas voters seem to have forgiven him just about anything in the past, Reuters reported that Steyn City, still under developmentRepublicans were particularly irked by his refusal to stay true to a policy message. Critics single out near Fourways in Johannesburg,his foreign policy as the biggest concern, with one of his latest controversial statements a calling for has been named one of the top 10a “Cold War-style effort to confront radical Islam”, as reported by The New Yorker.The publicationsaid he was “the gift to Hillary Clinton that keeps on giving”. Above he is pictured during a visit to the residential estates in South Africa byMilwaukee County War Memorial Center in Milwaukee, looking out at Lake Michigan in mid-August. New World Wealth. Characteristics of the top estates include good security, APPLE EXPANDS IN CHINA GREEN LIGHT FOR WORLD’S BIGGEST OFFSHORE WIND FARM activities like golf and horse riding,9 000 facilities like shops and children’s 1.6m playgrounds, well-designed housesApple plans to open its first research and of high quality, views includingdevelopment (R&D) centre in China later this The UK’s minister of business, energy and scenery and wildlife, as well asyear as part of its strategy to boost its presence industrial strategy, Greg Clark, has given resale and price growth potential.in the country, where its revenues declined by a approval for the world’s largest offshore wind The top 10 estates, according tothird in the latest quarter, ft.com reported.The farm, which will be built off the Yorkshire New World Wealth, are Val de Vie,technology group, which is facing increasing coast in an area nearly a third of the size Zimbali, Fancourt, Steyn City, Pezula,competition from Chinese smartphone makers of Greater London, ft.com reported. The Whalerock Ridge, De Zalze, Atlanticsuch as Huawei and Oppo, currently employs new farm will consist of up to 300 turbines Beach, Highland Gate and Arabella.9 000 staff in the country, about half of whom with a generating capacity of 1.8 gigawatts,work in its 42 retail stores, it reported. It has sufficient to power 1.6m homes, it said. The 15/08/2016 15:07doubled its number of corporate offices over project is being developed by Denmark’sthe past four years to 45. Apple spends about Dong Energy and is expected to create up to 100% mortgage loans fairly$10bn a year on R&D, according to ft.com. 1 960 construction jobs and 580 operational common – economist and maintenance positions, ft.com Apple spends about reported. Dong Energy is yet to make a final Mortgage loans of 100% − in other investment decision on the project. words for the full value of the home $10bn being purchased − are fairly common these days, according to John Loos, a year on R&D, according to ft.com. household and property sector@finweek finweek finweekmagazine strategist at FNB. Based on FNB’s deeds data, he estimates this to be the case in 41.5% of total bonds taken by individuals in the second quarter of 2016. Most 100% home loans were made in the average house price range of R358 934 (49.5% of total mortgage loans). The lowest dependence on 100% loans is in the most affluent sector with average house prices of R2.442m (22.1% of mortgage loans). 17/08/2016 11:53 Curro profit surges 59% Private education group Curro said it’s on track to almost double the number of schools it runs to 200 by 2020. It plans to spend about R950m building the schools, and is investing a further R500m to expand existing campuses, it said. More parents are seeking alternatives to government schools for their children in South Africa, with the quality of education ranked 120th out of 140 countries in a survey by the World Economic Forum last year. Curro said that profit had climbed to R81m in the six months ended 30 June from R51m a year earlier. Revenue increased 24% to R705m, while earnings per share rose 51% to R0.22. 16/08/2016 10:04 finweek 25 August 2016 17

the week in the news By David McKay High hopes at Northam Northam Platinum is investing to double its production as it believes there will be a large gap between global supply of and demand for the precious metal in future. long-term platinum price of $2 000/oz. Given the current price is $1 117/oz (at the oubling production at a cost time of writing on 16 August), it will be of R7bn in the platinum sector hard to fund brand new platinum projects, d  may seem a demonstration Dunne believes. of extreme optimism, but Northam Platinum CEO, Paul Dunne, believes there are plenty of reasons to be “We see a very large gap developing in cheerful about the future. world demand for platinum in particular,” In an interview with finweek during July he said. “This is why Northam continues to he told how the country’s platinum sector invest through this cycle,” said Dunne. nearly hit the wall at the end of 2015. Prices Dunne has been in the hot seat at for the basket of platinum group metals – Northam since February 2004 after platinum, palladium, rhodium and nickel – fell replacing Glyn Lewis who helped so low that only mine gate fixed costs were transform the company from a single, covered. In layman’s terms, miners were lease-bound mine into a company with faced with the decision of whether to stay more options by dint of its development of open, or close. Booysendal. Paul Dunne “We very, very nearly got there towards It is this project that Dunne has Northam the end of the last calendar year, but we’ve accelerated and, through the group’s just managed to avoid it by some balance somewhat controversial R6.6bn black Platinum CEO sheet management,” he said. Prices have economic empowerment scheme, in also helped with a 15% recovery in the rand which it issued shares worth R4bn that basket at the time of writing. “We were on the currently leaves it with cash of north of“We very, very nearly got there verge of severe structural change,” he added. R3bn. Included in the BEE scheme is a towards the end of the last Dunne’s contention, however, is that requirement that Northam’s share price calendar year, but we’ve just managed to avoid it by some Northam is building new production because exceed that of preference shares issued to balance sheet management.” it’s low cost and because even By 2025, SA platinum Northam’s BEE shareholders. at a compound average growth If that isn’t the case, rate of 1.5%, which is less than production where the resources world economic GDP growth, the Northam has to stump up the platinum market will demand 9m are currently paid for or difference in payment to the ounces of platinum by 2025. BEE partners. It’s a bit of a developed will be about gambit that Dunne hopes can Compare this to the current be managed by developing 4.5m available production where reserve ounces. low-cost additional ounces into development has already been a platinum-hungry market. He NORTHAM PLATINUM paid for; in Dunne’s terms – the has about 10 years to do it.Cents capitalised resource base of SA platinum. So far, production has been lifted6 000 Dunne believes there’s been a natural to about 460 000 oz/year through the4 000 depletion to below 4m ounces today from successful two-and-half-years ramping- 5.5m ounces in 2005. And it’s going lower up of the 160 000 oz/year Booysendal3 000 because the price of platinum is not currently North UG2 project, which is situated on2 000 demanding more investment. the relatively unmined eastern Bushveld. By 2025, SA platinum production The balance of production is from the1 000 where the resources are currently paid for 300 000 oz/year Zondereinde mine, or developed will be about 4.5m ounces. situated on the heavily mined western Sep ’15 Jan ’16 May ’16 Jul ’16 That’s a huge gap to the 9m ounces in future Bushveld, which has been Northam’s demand, although recycling and the fact flagship mine since the 1990s.52-week range: R16.10 - R56 that 20% of platinum is now sourced fromPrice/earnings ratio: - suppliers outside of Southern Africa will help Between now and 2021, Northam1-year total return: plug the deficit. hopes to commission 340 000 oz/year ofMarket capitalisation: 29.50% additional production through a series ofEarnings per share: R25.5bn And there needs to be higher prices to developments at Booysendal. It’s a bet ofDividend yield: encourage new projects. For brownfields note but Dunne thinks the firm has got itsAverage volume over 30 days: -R3.59 development, a platinum price of $1 500/ sums right. “We believe the world wants - oz is required on a sustainable basis while platinum,” said Dunne. ■ greenfield project growth would require a [email protected] 1 612 355 SOURCE: INET BFA 18 finweek 25 August 2016 www.fin24.com/finweek

market Don’t place miss: The finweek: Money Matters show every Friday at 1PM on CNBC Africa, channel 410. In the show, we talk to experts about this issue’s top stories. HOUSE VIEW: US DOLLAR BUY SELL HOLD By Simon Brown Consider moving cash offshore Last trade ideas Every time the rand crashes, two things R10 to the dollar in the next few years, but SELL MiX Telematics happen: People rush to move money offshore, predicting currency moves is tough in the catching the worst price possible, while others short term. Longer term we know the rand DIG DIVTRX regret not having moved money when it was will weaken – if only because of the lower US MORE cheaper. But here’s the thing: the rand never inflation rate; the rand should weaken by the goes anywhere in a straight line and right now inflation difference every year – although never WAIT... Ethos Capital we’re seeing rand strength. in a straight line. SELL Ellies We should be using this move to take some You can buy US dollars by opening an money offshore. Don’t shift everything at offshore bank account and simply transferring once, but rather transfer it in a gentle trickle money overseas. Alternatively, you could buy every month or three. I still think we’ll get even NEWUSD, an Absa ETF that tracks the rand/ more rand strength, and it is not inconceivable US dollar exchange rate, or just top up on the that the local currency will move back below DB x-trackers. ■ MPACT BUY SELL HOLD By Moxima Gama Massive upgrade to add capacity Last trade ideas Paper and packaging group Mpact, which was serviced by Mpact this year. It also warned BUY BHP Billiton unbundled from Mondi in 2011, saw its share that the profitability of its paper business will price drop by nearly 20% in May after warning remain under pressure due to excess recycled BUY Woolworths Holdings that its earnings for the six months to end containerboard capacity in SA. June will decline by at least 20%.The plunge SELL Sasol in profitability was attributable to lower sales of However, it expects to remain competitive containerboard, higher finance costs, a slower- in this segment, partly thanks to the upgrades BUY Exxaro Resources than-expected ramp-up of its Mpact Polymers of its Felixton mill near Richards Bay, wherempact.co.za plastic drink bottles business, and a higher the second phase is expected to be completed effective tax rate. in the second half of 2017. Once completed, the R765m upgrade, which will see capacity After that huge fall, the share price is now increase from 60 000 tons a year to 215 000 levelling out.The group’s interim results, tons a year on completion, is expected to released on 11 August, show a 6.2% increase in significantly enhance Mpact’s product offering revenue to R4.7bn, while the interim dividend and cost position in the recycled containerboard was maintained at 30c a share.The group said and corrugated markets. its plastics business, excluding Mpact Polymers, How to trade it: Mpact has been consolidating which is still in development, showed “pleasing since the big drop in May and June. A move revenue and operating profit growth”. above 3 600c/share would end this short-term sideways momentum and commence a new While Mpact’s paper business reported upward trend towards 4 400c/share. Long a 5.6% increase in revenue, this was largely positions should be initiated above 3 600c/ thanks to average selling prices increasing share with a fair trailing stop-loss. Alternatively, by 5.8%, and the acquisition of Remade, SA’s Mpact will remain in bearish territory on a largest trader of recyclable material. Excluding reversal below 3 080c/share. In which case, Remade, paper sales volumes would have been don’t go long. (Also see Simon Brown’s view on down 6.6%, Mpact said. the stock on page 21.) ■ [email protected] The group said it expects trading conditions to remain “subdued” across most sectors @finweek finweek finweekmagazine finweek 25 August 2016 19

marketplace killer tradeBy Moxima GamaTECHNICAL ANALYSISSasol on volatile terrainWeaker than expected global growth, subdued oil prices and delays and cost overruns at its major new project in the USAa have weighed on the petrochemical giant.earnings per share (HEPS) for in Canada, which contributed Amid weak oil and weaker global the year to end June will be to a 39% decrease in EPS. The commodities prices, Sasol’s economic outlook between 10% and 30% lower company will release its final board abandoned its policy of means demand results on 12 September. paying an ever-rising dividend last year. Though it will continue for oil in 2017 is than in the previous year, while While the share price is trading to issue dividends, the payout near the same levels it was a year ratio will be less progressiveexpected to grow at a slower earnings per share (EPS) will ago, it is trading 28% lower than than in the past. The group has its year-high, reached in June. decided to raise its net debt-rate than this year, according to decrease by between 53% to-equity target to 44% until This decline has partly been 2018 to endure the currentforecasts by the International and 73%. The group said the attributed to its weak earnings downturn and to continue with update, but also to news of major its growth investments – itEnergy Agency (IEA). The “volatile macroeconomic cost overruns and a delay at its believes increasing gearing and Lake Charles Chemicals Project containing costs will allow it toAgency expects global oil to grow environment, in particular (LCCP) in Louisiana. The cost continue paying dividends. estimates on the project wereby 1.2m barrels per day (bpd) in low crude oil prices, has had a increased from $8.9bn to as What next? much as $11bn.2017, compared with expected significant impact on earnings”. Possible scenario: Sasol has been These numbers have consolidating betweengrowth of 1.4m bpd this year. In Its results for the year will undoubtedly caused jitters in the 50 000c/share and 35 400c/ market because the increase in share for the past 15 months.addition to muted growth, high also be impacted by a whopping the estimated capital cost and After retesting major resistance at extended schedule will reduce 50 000c/share, it lost ground andstock levels are also expected to R11.5bn writedown of its share the expected project returns by breached the 40 810c/share level approximately the same amount – thereby confirming a double-continue putting pressure on oil in the Montney shale gas assets as the company’s lower long- top pattern and plummeting term price assumptions. to key support (dated back toprices, according to the IEA. January 2015) at 35 400c/share. Sasol is now recovering its losses, This is bad news for Sasol, 52-week range: R354 - R497.47 but would have to trade abovethe world’s largest producer of Price/earnings ratio: 8.82 40 810c/share to redeem itself.motor fuel from coal. Its fortunes Failing which, downside back to 35 400c/share could ensue.are closely tied to global oil 1-year total return: -4.59% Breaching that level would signal a lack of investor confidence andprices as well as the rand/dollar Market capitalisation: R241.6bn support at 30 500c/share could be tested in the short toexchange rate, as the bulk of Earnings per share: R42.04 near term. Alternative scenario: Aboveits production facilities are still Dividend yield: 4.64% 40 810c/share Sasol could pushbased in South Africa. to 43 450c/share. Breaching the Average volume over 30 days: 2 224 705 45 000c/share level would pave Sasol warned in a trading the way to major resistance atstatement that its headline SOURCE: INET BFA 50 000c/share. ■ [email protected] SASOLDon’t SOURCE: MetaStock Pro (Reuters) Moxima Gama has been rated as one of themiss! top 5 technical analysts in South Africa. She has Moxima Gama on finweek: Money Matters been a technical analyst for 10 years, working on CNBC Africa every Friday at 1pm. for BJM, Noah Financial Innovation and for Standard Bank as part of the Research Team in theTreasury Division of CIB.20 finweek 25 August 2016 www.fin24.com/finweek

marketplace Simon says By Simon Brown STEINHOFF Simon’s MPACT stock tips Founder and director of investment website JustOneLap.com, Simon Brown, is finweek’s resident expert on Silence is worrying Everyone needs the stock markets. In this column, he provides insight into the week’s main The Mpact results showed shrinking organic a mattress paper sales with plastics improving but still market news. struggling. A weak second half is expected from the group. What struck me was the lack Steinhoff* announced a $2.4bn deal to buy of comment on the Competition Commission investigation that Mpact issued a Sens about Mattress Firm in the US at a 115% premium on 26 May. Now sure, maybe nothing further has happened, but then even a comment to its previous closing price, although the stating this would surely be expected? With this in mind and considering the tough offer price is where the stock was trading a operating environment, I will be staying away from Mpact for now, waiting to see if the year ago.This is Steinhoff’s first foray into the OLD MUTUAL situation improves for the business. US and on the surface one wonders what all the excitement is about mattresses, but two Old Mutual’s JSE things are important. Firstly, pretty much headquarters in every person with disposable income has a Still a great Cape Town stock mattress and we’ll buy a number during our JSE* results were again really good as trade volumes grew 18% on the back of market lifetime. Mattress Firm sells some 65% of volatility. Being a largely fixed-cost business, increased revenue mostly drops straight to their mattresses at over $1 000 (R13 400 the profit line. In these results reduced fees meant profit growth was reduced slightly. at the time of writing).The other issue is Risks remain new exchanges that may in time take some decent market share (but that a mattress has a massive mark-up and that’s some way off for now) and a decrease in volatility, but the latter is also unlikely any Mattress Firm reported a gross profit margin time soon. So all in all, the JSE remains a great stock to hold on a forward price-to- of almost 40% in its last set of results.This is earnings ratio of around 14.5 times and well worth a buy on any weakness. ■ Don’t rusha monster deal and premium for Steinhoff but [email protected] if the company does pull it off, as it did with *The writer owns shares in Steinhoff and the JSE. Conforama, the deal represents yet another just yet strong source of profit for Steinhoff. The Old Mutual results were without doubt the PROPERTY STOCKS toughest I have ever had to try and understand with more moving parts and one-off costs Easy pickings? than I can recall seeing before. However, the issue is not so much about its profitability as the company is being broken up and sold off. The trend of smaller property stocks listing So we need to try and work out if the final on the JSE continues with two more coming, values received will exceed the current share Globe Trade Centre (GTC) listing as finweek price and if the answer is yes, then we canGallo Images/iStock | Gallo Images/Getty Images | mpact.co.za went to press on 18 August, and Echo Polska consider buying the share. Personally, I do think to follow in September. The latter is 49.9% the ultimate value for the company is higher owned by locally listed Redefine and both than the current share price, but a lot still has focus on the Polish property market. I have to happen. It is going to take a number of years no real knowledge of the Polish market but so I am in no rush to get into the trade. I have to ask: why the JSE listing? Surely London or Frankfurt would make more sense, or are those investors perhaps less likely to Personally, I do think the be thrilled by the listings? Hence I wonder if ultimate value for the company local JSE investors aren’t being seen as easy is higher than the current share pickings for a new property listing? I will be buying neither company and will watch and see how profits and dividends perform over price, but a lot still has to happen. the next few reporting periods. @finweek finweek finweekmagazine finweek 25 August 2016 21

marketplace invest DIY By Simon Brown SHARES Getting information out of companies Yes, there are ways that private investors can obtain information about the companies they are invested in. i Contributor Simon Brown shares a few tips. So that doesn’t help. often grumble about the gap between private investors If you can’t attend the presentation, the next step is and the professionals. As a private investor, one is often treated as a second-class citizen with less access the company website’s investor relations section. You’ll to information. Sure, in some ways I understand why; not only find results presentations but even copies of a handful of professional investors may hold a hefty other presentations they have done, for example from the chunk of the listed company’s These days you’ll also Mining Indaba and the like. Attending in stock while a private investor may person is always best, but if we have to hold fractions of a percentage at hack it then we will. best. So for management, a small find many companies These days you’ll also find group of professionals goes a lot will webcast their many companies will webcast their further than even a large group of presentations live so we can actually private investors. presentations live so watch and listen from the comfort of we can actually watch our homes. Failing which, companies But there are many ways we always publish the presentations on as private investors can hack their websites and some will even the system and get a lot more information. and listen from the include an audio file of the presentation. As I am part of the media, I comfort of our homes. Another is conference calls, which are becoming more popular, especially with often get invitations to results announcements outside of results (like presentations that the average investor simply does not get Consolidated Infrastructure did earlier invited to. Yes, we all get the this month). results on Sens, but results presentations are often well I also found that making contact is often a winning worth attending as often a lot more detail is presented. strategy, especially when it comes to smaller companies. In addition, the attendees can ask questions, and the I still clearly remember phoning a listed company (a small answers to these can also be very enlightening. cap, admittedly) and asking to speak to the So how does a private investor go CEO, and boom – in no time there he was about attending these results on the line. I did not mention that presentations? I was a tiny private investor but asked my questions and got Simple: we ask. Contact the answers galore. company’s investor relations So try sending an email department and ask if you or simply call if you have could be added to the invite questions. You’ll likely hit list for results presentations. a wall of silence at times, Before I worked in media, but other times you will I often did this, and the hit the jackpot. vast majority of companies We can, of course, were more than happy to attend the annual general extend an invitation. Hence I meeting (AGM) – every got the invites as an ordinary investor has full access Joe and attended a number of to the AGM. And as I have presentations. written recently, I am going to start doing that. And here we need to pause.Gallo Getty Images/iStockphoto Some of these presentations were A last point is that some so boring I wished I’d never heard of the companies just make getting company nor requested an invite. But you information almost impossible. If that is the quickly learn which to avoid and which are worth the time case, it makes the decision easy – then I just avoid that and effort. stock. If a listed company is not making information freely Another route is the Investments Analysts Society available to an investor, then we get the message loud and clear. They have no interest in small investors and I’ll take of South Africa. Members get invited to all results presentations, but in order to become a member, you my cash elsewhere. ■ seemingly need to be working in the investment industry. [email protected] 22 finweek 25 August 2016 www.fin24.com/finweek

marketplace pro pick By Samantha PauwelsINFRASTRUCTUREElectrifying AfricaConsolidated Infrastructure Group has its sights firmly set on power generation in Africa, and with a great managementc team the company is making astute deals that is paying off handsomely. This has, in turn, allowed the group to triple its order book toonsolidated Infrastructure Group (CIG) is a R5bn over the last three years. While CIG has had a key focusperfect play on the electrification theme in Africa. on diversifying across a number of geographies, the marketOne does not need to travel too far across theborders to realise that Africa has a dire electricity has recently been spooked by its Angolan presence, throughproblem, with 620m people on the continent lacking access Angola Environmental Services (AES), the group’s second-to power. The electrification level in sub-Saharan Africa largest division. Contributing 30% of after-tax profit, AESis estimated to be below 30%, stressing the unsatisfied collects, recycles and disposes of waste generated indemand for this vital utility. Greater access to electricity is the oil production and drilling process at oil and gas rigscritical in order to reduce poverty and stimulate An attractive feature of located off the coast of Angola. However, in spite ofeconomic growth. this group, however, is the lower oil price, AES delivered robust growth of 24% in the previous results (for the six months to McKinsey & Company estimates capital end February).expenditure for the installation of new generationcapacity by 2040 to be $490bn. While there its dynamism and ability There is no doubt that doing business in Africais considerable demand, with few reliable comes with challenges, specifically slow constructionand financially accredited companies able to to adapt to the changing and building times, currency risk and regulatorysuccessfully provide power generation solutions environment. hurdles.This puts pressure on working capital andto various nations in Africa, investors have been the balance sheet, a notable element to watch outnervous to commit capital. for. An attractive feature of this group, however, isCIG has successfully entered this market, its dynamism and ability to adapt to the changingunderpinned by a great management team and strong environment. Management believes that renewableorder book. The group’s largest division, power energy is inevitable and, with its rapid growth rate, CIGprojects (Conco), contributed roughly half its has increased its investment and resources in theafter-tax profit and remains a growth engine. Consolidated Power Maintenance business, whichSince 1994, the company has expanded into focuses on renewable energy.the rest of Africa and has managed to build a Management has proven to make very astutestrong presence and respected reputation on deals over the past eight years, successfullythe continent. increasing shareholders’ wealth through great acquisitions and capital allocation decisions.CONSOLIDATED INFRASTRUCTURE GROUP Recently, the group announced its latest target, Conlog – a prepaid and smart electricity meter Cents provider. CIG CEO, Raoul Gamsu, stated: “Conlog is an3 750 ideal extension to our primary electricity infrastructure3 500 Conco is SA’s operation, Conco, and further diversifies our earnings into a3 250 largest high- fast-growing sector.” This acquisition is debt free and earnings3 000 voltage engineering accretive, with strong demand offering further upside potential.2 750 company and the leading provider of With a market cap of just over R4bn, this small-cap counter2 500 turnkey solutions continues to demonstrate impressive earnings growth.The Sep ‘15 for electricity supply group last reported 24% growth in HEPS, with an improvement in over 20 African in its debt-to-equity ratio from 39% to 24%. While investors may be familiar with the group, perhaps what has gone countries. unnoticed is the recent devaluation of the share. Nov ‘15 Jan ‘16 Mar ‘16 May ‘16 Jul ‘16 Currently, the share trades on a 10.6 times price-to-earnings52-week range: R25 - R35.80 ratio (P/E), well below its average rating of 15 times overPrice/earnings ratio: 10.62 the past few years.The last time investors were able to buy CIG on this multiple was in 2012, after which the share price1-year total return: -17.25% doubled within two years. Offering generous upside in earnings,Market capitalisation: R4.1bn long-term consistent growth potential with compoundingEarnings per share: R2.47 attributes as well as an attractive valuation, we believe CIG is anDividend yield: - investment worth making. ■Average volume over 30 days: [email protected] 29 934 SOURCE: INET BFA Samantha Pauwels is a portfolio manager at Cannon Asset Managers.@finweek finweek finweekmagazine finweek 25 August 2016 23

marketplace investmentBy Schalk LouwMARKETSWhat a week in the market!The rand has strengthened considerably against the dollar in the past weeks and this is great news for investors.I But there are also some other factors that make caution critical at this time.WINTER MAY BE EVEN COLDERhave spent most of my life in Cape IN THE NORTHERN HEMISPHERETown and if there’s one thing that THIS YEARI have become familiar with overthe years, it is the concept of four Before readers become excited aboutseasons in one day. One minute you’ll be possible drops in fuel prices due to the rand’ssweating in the heat, only to reach for strengthening, think again. In recent reports,your jacket or raincoat the next. The it was indicated that Opec is consideringweek up to 10 August’s activity on a freeze in oil production. This causedthe markets definitely reminded a 5% hike in the price of Brent oil,me of such a day. bringing it to its current level of $45COLD WEATHER HITS per barrel. This means that the rand’sTHE JSE strengthening has pretty much been cancelled out by the rise in oil prices,This may seem somewhat which makes the prospect of a possibledramatic when we consider that decrease in fuel prices unlikely.our local stock market has been A COLD DEMAND FOR COPPERperforming negatively when comparedto the S&P500, for example, which Contrary to other metals, copper seemsseems to be reaching record highs every to be the metal that simply cannot getday. But the picture changes slightly when a big enough boost in 2016. There justwe view our local market returns in US doesn’t seem to be any significant demand,dollar terms. By looking at things from that especially when we take a look at China’sperspective, we have in fact This means that the rand’s appetite for copper. Copper is nowshown three times more growth very close to its extremely low levels ofthan the S&P500 Index over the strengthening has pretty much earlier this year, with the metal hit withseven days to 10 August. a further 1.35% decline (or 6% declineHEAT WAVE STRIKES been cancelled out by the rise in rand terms).THE RAND in oil prices, which makes the prospect of a possible decrease in BUFFETT CHANGES HISIn my article, No one can pin TUNE AGAINdown the rand, which appeared In 2003, Warren Buffett made quitein the 28 April edition, I urged fuel prices unlikely. a splash when he called derivativereaders to be careful in acting instruments “weapons of massagainst the rand. I also pointed destruction”. The seasons turned rapidlyout that although the exchange for Berkshire Hathaway, however, as herate of R14.30/$ at that stage may have bought a number of contracts in derivativelooked better than its earlier R17/$ levels, instruments shortly after (2004). ButI thought that the rand was fairly priced Buffett announced earlier in August that hebetween R11 and R11.50/$ and I was in firmly stands by his view that regulators areno hurry to swap my rands for dollars. At making derivatives too complex and difficultthe time of writing (10 August), the rand to understand, and that he decided to paywas trading at R13.25 per dollar (nearly $195m in June this year to terminate their5% stronger for the week) and I haven’t contracts in protection against bond losses.changed my tune just yet. On a final note, I still urge investors toYes, our very successful municipal ensure that they remain well-balanced andelections may have contributed to its within their risk profiles. Experience hasstrength, but not as much as investors Warren Buffett taught me that once the markets become as Gallo Images/iStockthink. When we look at Brazil’s 4% and Business magnate, volatile as the Cape Town seasons, cautionRussia’s 3% strengthening in currency becomes critical. ■over the same period, it appears as though investor and [email protected] philanthropistemerging countries’ currencies are startingto normalise. Schalk Louw is a portfolio manager at PSG Wealth.24 finweek 25 August 2016 www.fin24.com/finweek

marketplace directors & dividendsDIRECTORS’ DEALINGS BEST AND WORSTCOMPANY DIRECTOR DATE TRANSACTION TYPE VOLUME PRICE (C) VALUE (R) DATE MODIFIED PERFORMING 11 August SHARES 11 AugustAFRIMAT AJ van Heerden 11 August Purchase 203,831 2223 4,531,163 12 August SHARE WEEK CHANGEAFRIMAT AJ van Heerden 11 August Sell 83,571 2223 1,857,783 12 August BEST PRICE (%)ARGENT TR Hendry 10 August 1,141 399 17 AugustARGENT TR Hendry 11 August Purchase 1,190 399 4,552 10 August (c)ARGENT TR Hendry 16 August Purchase 8,000 394 4,748 10 AugustARGENT TR Hendry 5 August Purchase 6,264 400 31,520 10 August Beige Holdings 3 50.00ASCENDIS J Bester 5 August Purchase 2,025 2200 25,056 10 AugustASCENDIS CD Dillon 5 August Purchase 157,253 2200 44,550 10 August Aveng 575 34.98ASCENDIS CD Dillon 5 August Purchase 1,363,636 2200 3,459,566 10 AugustASCENDIS K Futter 5 August Purchase 41,715 2200 29,999,992 10 August Dipula A 1199 19.90ASCENDIS B Harie 5 August Purchase 2200 917,730 10 AugustASCENDIS B Harie 5 August Purchase 730 2200 16,060 10 August Tharisa 1500 19.43ASCENDIS B Harie 5 August Purchase 14,600 2200 321,200 10 AugustASCENDIS C Sampson 5 August Purchase 1,935 2200 42,570 10 August Buildmax 19 18.75ASCENDIS GJ Shayne 5 August Purchase 71,175 2200 1,565,850 10 AugustASCENDIS GJ Shayne 5 August Purchase 39,147 2200 861,234 10 August WORST 36 -25.00ASCENDIS A Sims 5 August Purchase 7,727,273 2200 170,000,006 17 August South Ocean Holdings 116 -20.00ASCENDIS KUHH Wellner 5 August Purchase 39,421 2200 867,262 15 August Atlatsa 51 -17.74ASTRAL GD Arnold 16 August Purchase 431,527 13409 9,493,594 16 August Wesizwe 211 -17.25BARLOWORLD S Moodley 12 August 2,500 8528 335,225 10 August Alaris Holdings 10 -16.67BRAIT CH Wiese 10 August Sell 11611 34,367 10 August ChrometcoDIPULA A NS Gumede 4 August Purchase 403 1000 162,554,000 10 AugustDIPULA A NS Gumede 5 August Purchase 1,400,000 1000 345,000 10 August INDICESDIPULA A NS Gumede 8 August 1000 1,892,720 10 AugustELLIES RH Berkman 5 August Sell 34,500 500,000 11 August INDEX WEEK CHANGE*ELLIES RH Berkman 5 August Sell 189,272 21 1,680 10 August VALUE (%)ELLIES RH Berkman 8 August Sell 50,000 22 17,976 10 AugustEQUITES A Gouws 5 August Purchase 8,000 24 24,189 17 August JSE ALL SHARE 52 396.40 0.34EQUITES G Lanfranchi 5 August Purchase 81,712 1360 27,200 11 AugustFORTRESS A MW Stevens 16 August Purchase 100,788 1400 3,248,000 12 August JSE FINANCIAL 15 15 400.86 -0.29GAIA INFRAST C Ferreira 25 July Purchase 2,000 3361 1,008,300 11 AugustMTN GROUP SSB Ntsele 10 August Sell 232,000 890 8,900 15 August JSE INDUSTRIAL 25 68 621.05 0.89NEWPARK SP Fifield 10 August Purchase 30,000 12101 242,020 15 August 0.25PRESCIENT M Buckham 11 August Purchase 1,000 576 720,000 10 August JSE SA LISTED 662.07PRESCIENT AM Louw 11 August Purchase 2,000 96 8,177,779 10 August PROPERTYRAUBEX LA Maxwell 5 August Purchase 125,000 96 1,237,667 17 AugustRAUBEX TG Wiese 8 August Sell 8,518,520 2034 325,440 17 August JSE SA RESOURCES 18 026.89 -0.67ROCK N Matulovich 12 August Sell 1,289,237 2000 4,000,000 15 AugustROCK A van der Veer 15 August Sell 16,000 3401 238,070 15 August JSE TOP 40 45 392.84 0.58TFG D Friedland 10 August Sell 200,000 3475 417,000 16 AugustTFG D Friedland 11 August Purchase 7,000 15554 1,244,320 16 August CAC 40 446 044 0.19UNIVERSAL A Dunn 11 August Purchase 12,000 15794 575,059 16 August 1 067 665 0.24UNIVERSAL A Dunn 11 August Sell 8,000 1810 9,050 DAXX 0.40UNIVERSAL A Dunn 11 August Sell 1810 9,050 689 392 1.86 Purchase 3,641 1810 9,050 FTSE 100 2 291 084 0.43 Purchase 500 -0.83 Purchase 500 HANG SENG 522 711 500 NASDAQ 1 659 651 COMPOSITE NIKKEI 225 *Percentage reflects the week-on-week change. DIVIDEND RANKING SHARE F’CAST F’CAST DPS (C) DY (%)All data as at 16:00 on 17 August 2016. Supplied by INET BFA. REBOSIS 119 11.1 EMIRA 146 9.7 ACCPROP 58 9.4 FORTRESS A 136 8.2 LEWIS 347 7.9 SA CORPORATE 43 7.7 DRDGOLD 80 7.3 Recently refurbished Hyde Park Lane Geoffrey Jennett REDEFINE 86 7.3 office park, Hyde Park CEO Of Emira Property Fund MMI HOLDINGS 162 6.8 Image: www.studio88.co.za GROWTHPOINT 184 6.7MATTER OF FACTWe published two directors’ dealings in the 18 August 2016 issue, indicating purchases of KAP Industrial Holdings, based on data provided byINET BFA. However, the directors involved were in fact from PSG, not KAP. We regret the error.@finweek finweek finweekmagazine finweek 25 August 2016 25

cover story technologyThe tech start-up scene is heating up globally, with innovationbeing the order of the day. In the wake of the recent MTN BusinessApp of the Year Awards, we take a look at how SA measures up.Are we lagging or leaping, and what does our tech future look like?26 finweek 25 August 2016 www.fin24.com/finweek

cover story technologyBy Jana Jacobs in Moxyland – a novel by Lauren Beukes – people live in a dystopian future set in Cape Town where a cellphone is everything. It is a means to confirm your identity and provides you access not only to money, work and travel, but also to your home. If you commit a crime, you are not sent to prison. You are “disconnected” – making you an outsider unable to function in society. In 2008, when the novel was released, this future was fictional – distant at best. Only eight years later, and we can’t deny that smartphones (and our increased dependence on them) are changing the way we live our lives. While “disconnection” is not going to be a proxy for prison, it’s not such a stretch to associate a lack of connectivity with a hindrance in growth and functionality. Technology, and the apps it’s given rise to, is changing the way we engage with our world and function on a daily basis. Whether you are catching an Uber, banking, shopping, or playing a game phenomenon (read: Pokémon Go), you can do it all through an app. The innovative tech start-ups developing and building these apps are reshaping industry globally to cater to the increased need for (often cashless) convenience, and to provide consumers with solutions that provide instant access and gratification. finweek 25 August 2016 27

cover story technologyBut how does SA measure up on the tech scale? the device through which most South Africans accessAccording to Arthur Goldstuck, MD of World Wide the internet, and the growing take-up, we believe,Worx, six years ago less than 10% of the population drives a virtuous circle whereby, as more people gethad smartphones, where currently nearly half online, opportunities are created for advertising, localthe population does. “This drives app development, content distribution andeverything,” he says. 10%Six years ago less than e-commerce, which in turn drives further Vicki Myburgh However, when it comes to demand for smartphones and mobile Entertainment and broadband.” media leader at PwCusing our smartphones optimally,we aren’t really because a gap Connection, then, is key. MOBILE INTERNETremains between smartphone users of the population had Country comparisonsand internet users. According to smartphones, where PENETRATIONWorld Wide Worx estimates, 25% currently nearly half the So then, the problem is not so much with BY COUNTRY:of smartphone users in SA are not population does. owning a smartphone but with connectivity 25%internet users. This disconnect and thus usage. 30%is due to the high cost of mobile In terms of fixed-line broadband 36%data, users’ fears that mobile data access, we are the leaders in Africa.will “eat up their airtime” and the Goldstuck explains that mobile internet isreality that a smartphone that is technically all broadband, but practicallyalready connected to the internet it’s not. “When your signal is weak, thenautomatically uses airtime when it’s not a broadband experience, but it is acompleting background updates, broadband service.”according to Goldstuck. Myburgh explains that South Africa isUltimately, most consumers are lagging behind more developed countries,terrified of using their data, and 18m Arthur Goldstuck but in comparison to African countries suchsmartphone users primarily access MD of World Wide Worx as Nigeria (with mobile internet penetrationtheir email, WhatsApp and Facebook of more than 25%) and Kenya (mobileon their devices. Few other apps internet penetration of more than 30%),are used, with a possible half a million using Uber. South Africa is slightly ahead at around 36%.Although this is a great stat for Uber, Goldstuck “Mobile internet is popular in developing countriespoints out that this represents a fraction of SA’s due to the affordability and the fact that it is availablepopulation – just under 1%. on pre-paid models in small packages,” she says.In terms of smartphones, the optimistic forecast According to Dobek Pater, managing directoris that there will be about 29m in use in SA by the of Africa Analysis, “we will always be behind moreend of this year, with Goldstuck adding that we are developed markets in terms of new technologyreaching saturation of smartphones within the adult adoption on a large scale due to lower spendingmarket in SA. “Eventually most cellphone users power of our average consumer”.will be smartphone users…at around 2021 we will Can SA tech up?see saturation in the cellphone market at a total ofaround 45m.” What is important is for countries to realise theVicki Myburgh, entertainment and media leader concept of the digital nation, according to Goldstuck.at PwC, believes that “smartphones have and will And at present, Kenya and Rwanda seem to be thecontinue to prove that they are both market-making only African countries catching on to this, as canand market-changing…The smartphone is already be seen with Kenya’s investment into its “SiliconTECH HURDLESDOBEK PATER, MD OF AFRICA ANALYSIS, BELIEVES THE CHALLENGES SA FACES IN TERMS OF TECH ADVANCEMENT INCLUDE:■ Slow progress in creating an enabling environment ■ Poor state of the economy, resulting in lower among our population.for faster technology advancement. Currently, the disposable income levels, which translate into ■ Weakness of the rand versus major globalgovernment is responsible for this in the main. slower adoption and usage rates, and slower currencies (linked to an extent to the poor state■ Dearth of relevant skills in the country to drive adoption of new technologies by business. of our economy) – this makes acquisition ofinnovation, deployment and maintenance of ■ Poor state of public education, which technology more expensive, limiting deploymenttechnologies. translates into lower technology literacy rates and adoption rates.28 finweek 25 August 2016 www.fin24.com/finweek

cover story technologySavannah” and Goldstuck’s belief that Rwanda is APPS scale, according to Goldstuck.exhibiting the most exciting tech advancement Myburgh reiterates that connectivity (or lackon the continent. Of course, Rwanda brings with OF THEit concerns around its human rights and is not a FUTURE thereof) remains an issue: “Connectivity, especiallymedia-friendly country – things that may negate this for the man on the street, is a barrier to the local techadvancement somewhat. As free WiFi becomes start-up scene as electronic products and services more prevalent, the are not able to generate economies of scale as they So is SA’s government being short-sighted when 25% of smartphone would be if the entire population was connected.”it comes to the concept of a digital nation? users that are not utilising the internet Where SA certainly has teched up is in the banking Pater doesn’t think so. on their devices at sector. With regard to innovation, Goldstuck believes “I think [government] realises the importance of that “banks have finally all gone beyond lip service”.Thismoving to digital platforms and the need for inclusion the moment will can be seen in FNB’s establishment of an innovatorof all sectors of the society, business and government start using it, mostly division, Standard Bank’s innovation environment inin the digital future. However, the way in which the Rosebank, Nedbank’s use of big data, Absa’s integrationgovernment appears to be approaching it results in for apps such as of interesting payment methods in its credit card space,unnecessary delays in achieving these targets, which WhatsApp as opposed Capitec’s low-cost banking and Investec’s biometrics.is ultimately counterproductive to the achievement ofthe self-defined goals.” (See sidebar below.) to other apps, says This innovation, however, is not seen in other Goldstuck, however, believes that the mentality Goldstuck. sectors because they lack the same incentives.towards digital advancement is virtually non-existent He also believes “They are not as obviously threatened as the banksin SA. Couple this with what he deems a troubled are by start-ups. But this means that you could findtelecommunications sector and it would seem that apps around massive disruption finally happening because theythat SA’s path to tech advancement is not looking healthcare and are not ready.”particularly bright. education will become As can be seen in the tech environment, there is more important, Towards a connected continentnot a lack of innovative minds and potential for tech especially in thestart-ups in the country, “but you have to be lucky or market that cannot So what is the outlook for tech advancementvery determined and have strong backers to make afford data at present. across Africa?innovation count in this country if you are a start-up,” There are somesays Goldstuck. apps in this field, but Goldstuck believes that with more undersea For an SA app to go global is not impossible, but nothing pervasive at cables landing in the future and the cost of wholesaleit is unlikely. According to Goldstuck the bottom the moment. However, internet costs falling, the cost of mobile data will dropline is that the app would need a big audience as a the drawback here will dramatically and we will see a lot more terrestrialstarting point and needs to show traction. “It’s the be language, as most fibre spreading from the undersea landing points,old network effect: the bigger your network gets, the apps are in English. especially in urban and metropolitan areas.bigger it gets. The more momentum you have, the “We are going to havemore you can build on that momentum.” to see a far greater There will be a proliferation in urban fibre grids SA’s market is simply too small to facilitate this. effort and funding for and “urban Africa will be highly connected”, saysPayment app SnapScan (see sidebar on pg. 30) is apps in indigenous Goldstuck. However, rural Africa will still be facing aan example of an SA app that had the possibility of languages,” he says. digital divide – not in terms of devices because mostexpanding globally. However, the app gained traction Myburgh explains: users will have the device necessary for accessing thein SA through “an aggressive physical roll-out” “Mobile IM (instant internet, but in terms of affordability and quality.whereby it spread via its presence at flea markets messaging) such asand in stores, which is a difficult base from which to WhatsApp and mobile “Everyone will have access, but it won’t be the versions of social same. And everyone won’t be able to afford the same Dobek Pater networking services access,” according to him. MD of Africa such as Facebook are enjoying huge So although Moxyland has not quite materialised, Analysis popularity on mobile there is still a lot to be done if SA and other African phones. The more countries are to avoid “disconnection”. ■ recent popularity of the app-based game Pokémon Go has been an excellent example of illustrating that there are ways in which consumers can use and interact with their smartphones, which have not even begun to be understood.”@finweek finweek finweekmagazine finweek 25 August 2016 29

cover story technology SA’s top apps Q&A WITH SNAPSCAN BEST CONSUMER BEST ENTERPRISE CEO, KOBUS EHLERS APP AND OVERALL DEVELOPER APP APP OF THE YEAR HearZA SnapScan is a payment app that is Domestly now accepted at more than 20 000 merchants across South Africa. Founders: Founder: What are the biggest Thatoyaona Marumo and Nic Klopper challenges when it comes to Berno Potgieter establishing a tech start-up How it works: in SA, particularly in terms of How it works: funding and scaling? hearZA – the National Hearing Domestly is an online cleaning Test App – is a world first offering There are several key challenges ranging from a scarce supply service that serves as a marketplace clinically valid hearing tests on a of good quality skills to a lack of infrastructure and accessible for both cleaners and clients. The smartphone in under 3 minutes. funding. Another key aspect to bear in mind is that the entire founders invested extensively in the hearZA was launched on World addressable smartphone user base in South Africa is smaller app to ensure superior functionality Hearing Day on 3 March 2016 as than that of California. In short – building a Silicon Valley- that would make life easier for both part of a WHO initiative highlighting style start-up in SA may be a very bad move. That does not, parties. hearing loss as the most common however, mean that we cannot find local solutions to very real chronic disability. hearZA’s vision is problems being faced by people in SA today. Apps are simply Clients can browse, book and early detection and linkage to care another tool we have to deliver quality products and services to pay a cleaner when and where they as the key to eliminate avoidable users in an efficient way. need them, while cleaners can easily hearing impairment. manage bookings and their money, Where did you find the funding? as well as find maps and directions to BEST BREAKTHROUGH each booking. DEVELOPER APP We decided not to raise funding, but rather to bootstrap the Tuta-Me company with sales from the start. This is a real challenge, but Domestly launched in Cape it does provide more flexibility if you can avoid raising funds Town in 2014 and also launched in Founders: on day one – obviously this is not possible for some kinds of Johannesburg in 2016, with plans to start-ups. In terms of scaling we decided to rather follow a extend to KwaZulu-Natal by the end Abed Tau and Dylan Hyslop partnership approach than a traditional fundraising one. of the year. The business created 600 sustainable jobs within the first six How it works: How do South African apps compare to those in months of going live. developed countries? Tapping into the on-demand In our 29 October issue last year, service space (like the Ubers of the There are some excellent South African apps and developers. co-founder Thatoyaona Marumo world) is Tuta-Me. This platform When developing apps it is important to remember that you described Domestly as a “next-level is aimed at connecting tutors and are competing with everyone else in the world. I think the cleaning app” – and given that it learners, and is South Africa’s first really successful South African apps are trying to do something swept up a total of three awards at specifically locally relevant – competing head-on with the event, including being the overall massively resourced international players can be very hard. winner, it seems that his description was on point. What is required to take a local app global? smartphones is quickly opening up access to most customers. I think it is incredibly important to realise that the real question is what problem you are solving, rather than thinking about it Where do you see African countries at in five years’ time in simply as an app. Mobile applications are simply tools allowing terms of tech advancement? us to do business in new and innovative ways. In many cases African countries can leapfrog the initial stages How do you keep up with changes in the tech of mobile technology roll-out and progress straight to more landscape and adapt to remain competitive? advanced technologies. Mobile access (especially for data) is also a very promising solution in many countries without access The key is to really listen to your customers. Of course you to sophisticated fixed-line communications infrastructure. At the need to implement the latest technologies and certainly learn current rate of development it is not impossible to imagine the from larger industry trends, but the true lodestar of any good majority of African users bridging the digital divide and getting app is the feedback you get from your own users. affordable access to the internet. This is crucial to stimulate trade, education and economic development in the modern economy. ■ It seems that a future where we will be able to do almost anything with just a smartphone is not so far off. www.fin24.com/finweek What is your view on this and what challenges do we face with tech advancement in SA? Smartphones are fast becoming ubiquitous and SA is no exception. Although we still have a significant number of feature phone users, the rapid decrease in the price of entry-level30 finweek 25 August 2016

cover story technologyMTN BUSINESS HOSTED ITS FIFTH ANNUAL APP OF THE YEAR AWARDS ON 4 AUGUST AT THESANDTON CONVENTION CENTRE IN JOHANNESBURG. HERE IS THE FULL LIST OF THE WINNERS:on-demand tutoring service. under, to learn and play”. which to pay, or can top up with a customers – lists a wide range of Tau and Hyslop created the app The app launched last year and prepaid voucher. Once drivers reach categories that can be searched. the boom to exit, the parking fee isbecause, “We believe that education is aimed at kindergarteners and first automatically deducted, opening Ultimately, the MiBRANDand learning is the one single driver graders. The game is set in a vivid the boom. mission is “to forever change thethat will move the world forward. And monster room setting and while way you connect with the storesbecause we could and we wanted to.” interacting with the fun, colourful No more scratching in bags for that you love”. monster characters, kids practise coins, drawing money for an R8 ticket Users can download the app critical early maths skills. or feeling like you are at a casino slot BEST ENTERPRISE APPand sign up as a learner, tutor or machine when you get R92 change iKhokhaboth. Once users have set up their MOST INNOVATIVE from the parking machine.profiles, they can start to search for KaChing Founders:a suitable tutor. Users can then book PEOPLE’S CHOICE AWARDand schedule appointments using Founders: MiBRAND Ramsay Daly and Matt Putmanthe app. Tutors have all been vettedand rated and come to students’ Jaco Marais, William Cosby and Founders: How it works:preferred locations for the sessions. Rudolph de WetPayment is automatic, cashless and Salvatore Barras and This mobile credit card machinesimple via the app. How it works: Kyriakos Ioulianou entered the mobile payments space last year and has allowed smallBEST MOBILE In our 24 March issue we spoke to How it works: businesses to accept cash, card andGAMING APP Jaco Marais about this ticketless mobile/QR payments.Friendly Math Monsters for parking app that uses licence plate Times are tough for consumers at theKindergarten recognition technology and your moment and retailers have felt the This year, the app added smartphone to open the boom when sting of reduced foot traffic to their the optional cash-in-advanceFounder: users arrive at, and exit, a parking stores. functionality, based on trading lot. Now, plans for expansion in history. This feature providesFanie Deysel Johannesburg and Durban have Launched this year, MiBRAND merchants with cash advances, come to fruition and this convenient is an app aimed at both consumers calculated using card transactionHow it works: app has scooped up an MTN and retailers in an effort to drive history, and is closely linked to Business award. the shoppers to stores by helping average monthly card spend.With more kids becoming tech consumers find specials and followsavvy and spending their days KaChing launched in 2015 listed stores in specific areas or in The app is a major breakthroughperfecting screen navigation, a and its seamless entry and exit nearby locations. for small businesses as it allowsrange of apps have been launched to to malls is currently available in them to take card payments fromstimulate learning on tech devices. Johannesburg at Melrose Arch, The app is free to download anywhere. Merchants no longer Campus Square, Morningside and allows consumers to claim free have to chase EFT payments or However, Friendly Math Shopping Centre, Thrupps and at vouchers from stores nearby. Should deal with the admin of bad debt.Monsters for Kindergarten describes The Pavilion in Durban. retailers want to post tailored or Additional functionality includes theitself as “more than just a drag- specific content, they can pay to do so. ability to track business sales, selland-drop math game with cute, After downloading the app, users airtime for a rebate and refer friendsinteractive characters – it’s a fun and enter their licence plate number This two-way app – aimed at for R100 cash. ■challenging way for kids, ages 6 and details and load a credit card with connecting consumers to their favourite stores and retailers toINNOVATE OR DIE? Myburgh adds that although the uptake of on-demand services such as Showmax and Netflix has been positive, “we do not believe this will come close In the digital age, consumers are driven by instant gratification or the appeal of to replacing traditional revenues in the near future due to the fact that a very fast undergoing a true experience. With the advent of on-demand services such as internet connection is required for these services, something which is still very Netflix and Showmax, creating a cinematic experience as opposed to simply expensive in South Africa”. focusing on the consumption of entertainment, is going to become extremely important in adapting the traditional movie theatre model. Further, she says, “in South Africa and Africa there is a big focus on local content and sports events, something which OTT [over-the-top] players do not Goldstuck believes this is what Ster Kinekor is doing particularly well in the necessarily cater for”. For this reason, the expected uptake of these services SA space with its Imax theatres and Dolby sound system technology that is in SA is “expected to have a much less disruptive effect than what we have focused on creating a cinematic experience. Its other initiatives such as its Cine experienced in other territories”. ■ Prestige that provides “luxury, business-class movies” and it’s broadcasting [email protected] of live theatre from London via satellite in its theatres are examples of how important it is to “up your game” to stay relevant.@finweek finweek finweekmagazine finweek 25 August 2016 31

in depth steinhoffITSOJPODOESATLEMSAAK' SE R?Wtoofitiathsctqshtueaisbailcteiqo.uWnisse.ittioankeoafMloaotktraetstshiFsirgmro,wStineignmhouflftiandadtieodnayle’stiamnportehsesricveomhipstaonryy By Shaun Harrisa  fewweeks who heads Aspen. The big deal ago, Steinhoff International sealed for Steinhoff, and in SA corporate a large deal in theUS market that will make it the history, occurred at the endbiggest distributor of mattressproducts in the world. The price tag of March 2015 and involvedfor US company Mattress Firm? Acool $2.4bn. That’s a big transaction, Christo Wiese’s Pepkor Group.but market watchers who know theintegrated discount retailer will not be At R62.8bn it remains one of thesurprised. It’s just another big deal for themultinational group that specialises in larger deals done in SA.large takeovers, illustrating how Steinhoffhas grown so quickly over the past decade In an interview with Jooste byand what fuels its profitability. this writer in December 2014 for Last month it was UK and Europeandiscount retailer Poundland, which after Financial Mail, he said the big deal (atsomething of a protracted battle to finda suitable partner/acquisition target, the time) for Steinhoff was probablyit is buying for £610.4m. “By offeringPoundland shareholders an improved Markus Jooste Conforama, the furniture chain basedcash offer we aim to bring certainty CEO of Steinhoffto the transaction, recognising the in France. “It was a game-changer forstrength and value of the business and Brian Joffeits management team,” Steinhoff CEO Former CEO of Bidvest Steinhoff in that it effectively doubledMarkus Jooste said in a statement atthe time. Stephen Saad the group’s purchasing power, added Founder and Jooste is the man who often CEO of Aspen six new countries to our repertoire andspots, oversees and settles the manyacquisitions that Steinhoff makes. That is transformed Steinhoff into the secondwhat has driven the spectacular growthof the group. With the many acquisitions largest retailer of household 15But one failure inhe has overseen, he must qualify as one goods in Europe.” Unfortunately,of the best dealmakers from South Africa, Jooste could not be interviewedcertainly in the same league as Brian at the time of going to print asJoffe from Bidvest and Stephen Saad Steinhoff is in a closed period. The art of dealmaking years can hardly be considered a bad track record. Not all Steinhoff’s acquisitions In fact, it is a compliment. prove to be successful. But for a serial dealmaker like Jooste, how could they all be successful? There has probably only been one significant failure over the years, and that’s the JD Group. Your uncle in Gallo Images/Getty Images the furniture business has become a cantankerous, and at times expensive, old man. But one failure in 15 years can hardly be considered a bad track record. In fact, it is a compliment. Other listed investment companies32 finweek 25 August 2016 www.fin24.com/finweek



in depth steinhoff VERTICAL INTEGRATIONowned by Steinhoff do better. KAPIndustrial Holdings, in which Steinhoffholds 45%, is rated a buy by analystspolled by INET BFA. Its share price is up Steinhoff’s vertically15.1% over the past year. integrated businessWhen investigating possible deals, model sounds simple,Jooste shows remarkable patience. And but it’s not. It controlsif the potential deal does not seem right, and often owns bothhe walks away from it. This happened in the manufacturing andMarch when Steinhoff decided against retailing sides of itsbuying general merchandise chain Home business – but the trickRetail Group. It happened again in May is to get the right goods A Conforama store in Paris, France.when Steinhoff pulled out of a bidding to the customers orprice war with rival French retailer Groupe shops in the shortest benefits off its existing infrastructure.”Fnac for French electronics retailer possible time. In Europe, where Steinhoff has theDarty. Its ambitions were met with the The group sources majority of its sales, it has boxed clever.acquisition of Poundland. Aiding that and makes products When Steinhoff first moved into Europe,deal was the 20% drop in value of the in low-cost locations it set up manufacturing operationspound against the rand this year amid around the world, and in in cheaper Eastern Europe to retail inuncertainty about Britain leaving the EU. SA in lower-cost regions developed Europe, where it targets cost-One critique against Steinhoff has like the Eastern Cape, conscious discount shoppers. That hasbeen the massive 115% premium it has and then retails them in always been Steinhoff’s target market.been prepared to pay for Mattress Firm in developed markets. A bright futurethe US. Independent investment analyst Steinhoff InternationalIan Cruickshanks told Bloomberg he Sourcing & Logistics acts The group’s trading update, due onlamented the big premium Steinhoff is as a service provider to 29 August, and results for the 12 monthswilling to pay. “It is a very big premium. the group. Its job is to to end June (due on 6 September),Shareholders deserve to know why the create a competitive promise to be good. In the nine monthscompany is prepared to pay that much advantage by getting ending 31 March, Steinhoff said revenueto enter the US market.” He added: “I am exclusive, quality- increased by 45% to €9.9bn, whilevery nervous about this deal and it has approved products operating profit was up 46% to €1.1bn.caught the market by surprise.” to market quickly at The operating margin firmed The share price is buoyant, Said Jooste in a statement: “This competitive prices. It to 11% notwithstanding “the advancing by is where products are lower margins inherent in thetransaction will allow Steinhoff to not sourced that makes general merchandise category 15.1%only enter the US market with an industry the difference – from (acquired on March 31, 2015)leading partner and a national supply 41 countries, mainly in and kika-Leiner (acquired onchain, but it will also expand Steinhoff’sglobal market reach in the core product Asia, Eastern Europe and December 7, 2015)”, Jooste so far this year.category of mattresses. The Mattress Western Europe. ■ commented in the results.Firm brand and speciality retail concept Steinhoff’s price-to-are a strong compliment to the earnings ratio (P/E) is on a stillSteinhoff Group retail brand “We expect Steinhoff to follow reasonable 15.6 times while theportfolio.” forward P/E is 18.6, showing Jason Forssman, fund their traditional template in terms the market expects goodmanager at Ashburton upcoming results. The shareInvestments, agreed that the of acquisitions, refinancing the price is buoyant, advancing by Antoine Antoniol/Bloomberg via Getty Imagesdeal offers a rare opportunity existing debt within Mattress Firm 15.1% so far this year.to acquire assets with similar The analyst consensusdistribution channels in the and leveraging scale benefits off its view on INET BFA is thatUS. “We expect Steinhoff to the Steinhoff share is a buy.follow their traditional template existing infrastructure.” Now could be a good time forin terms of acquisitions, investors to profit from Jooste’srefinancing the existing debt within extraordinary dealmaking talent. ■Mattress Firm and leveraging scale [email protected] finweek 25 August 2016 www.fin24.com/finweek

on THIS WEEK: mthoeney >> Personal Finance: Investing for beginners p.39 >> Entrepreneur: Meet the man who created an entrepreneur network spanning six countries p.40 >> Management: Leadership lessons from the English soccer team’s new manager p.44 >> Careers: How to deal with an incompetent boss p.44 CEO INTERVIEW By Anneli Groenewald How Ashton Kutcher made millions in tech investments – and how he spots the next big thing Seven years ago actor Ashton Kutcher became the first person to have 1m followers on Twitter. But follower numbers are no longer a priority for him. For the past few years, he has been chasing tech start-ups that will earn him millions. And his track record proves that he’s got a knack for it. o  ne became famous playing Guy start-up companies. Michael Kelso in the TV Oseary That was a few years ago. (His first series That 70s Show, and the other is manager investment, according to Forbes magazine, was in 2009 when he put $1m into Skype. to Madonna. Within 18 months Microsoft bought But together Ashton Kutcher Skype, and Kutcher got four times his and Guy Oseary built an money back.) investment portfolio of $250m Speaking at the event, he said he (from $30m) in just over six Ashton Kutcher now has about 150 private companies years. Initially independently, then in his investment portfolio. together, and later with support While many might shrug off from billionaire Ron Burkle, the Kutcher’s success on account of him duo seems to have mastered the being just another rich Hollywood art of spotting good investments. star throwing money about, Forbes “I just started investing in various magazine’s decision to put him on companies and learnt by failing a lot,” the cover of its Midas List issue in April said Kutcher in front of a 15 000-strong (identifying the 100 top tech investors), audience during a discussion on tech start- was just another endorsement for him.The ups at the Sage Summit for entrepreneurs real nod in Kutcher and Oseary’s direction in Chicago recently. came earlier this year, when they were “I was learning by sitting in rooms where appointed by Liberty Media Corp to run itsGallo Images/Getty Images I was the dumbest person and keeping The real nod in Kutcher and Oseary’s direction $100m investment vehicle. my mouth shut and listening. And by came earlier this year, when they were Speaking at the summit, Kutcher said asking as many questions as I could and finding interesting people and interesting $100mappointed by Liberty Media Corp to run its the tech environment first caught his companies. I just found it exhilarating.” interest while he was running his own production company (which he started After a while he realised that he had when he was about 20; he is now 38). He something to offer that could be of value to investment vehicle. noticed that buffering speeds on social @finweek finweek finweekmagazine finweek 25 August 2016 35

on the money spotlightmedia platforms were getting faster and THE solver? Are they going to overcomefaster. “So I started to look at that as a IMPACT OF obstacles that come their way? Do theynew platform for distribution of content.” KICKSTARTER have domain expertise in whatever it isHe then started looking into analytics that they’re building? Are they the kind ofcompanies to track and measure the Helped fund Oculus Rift, a person I want to work for? Can they sellefficiency of the distribution of their virtual reality company that their product?”content. “The more I looked at those was bought by Facebook forcompanies, the more I realised how…just Secondly, you need to look atbase technology …was going to have to be $2bn in 2014 the product, he said. “Is there a clearin basically every business, and how basic understanding of what the product is? Is itit was going to ultimately end up being in Helped fund 500 a disruptive product or is there a disruptiveour lives.” restaurants that are business model? Is it something that’s currently open in the US different? Is there competition in thatHow to pick a tech investment space? And what does [the competition] 25 000 full-time look like? It’s probably not any differentThe man who got it right on Uber, Spotify, jobs created to any other investment. What does theAirbnb and Skype, to name but a few, said market look like? You know – you sort ofthe minute that you think you know exactly 275 000 temporary look at all those things.”how to pick a company, “you start seeing jobs createdthings and patterns that change the way Spotting a disrupterthat you approach it”. $5.4bn in economic impact for the relevant Kutcher believes that “really successful There are, however, “two basic tenets businesses challenge some intuition thatthat are undeniable” when deciding on communities we all have”.investing in a tech start-up. 8 800 new companies He used the analogy of a multiple choice “First, it’s the founder,” Kutcher said. “Are and non-profits formed ■ question paper – where people who do notthey a gritty person? Are they a problem know the answer choose a specific box to‘YOU DON’T HAVE TO BE ASHTON OR BUST’− YANCEY STRICKLER, CO-FOUNDER, ALONG WITH PERRY CHEN AND CHARLES ADLER, AND CEO OF KICKSTARTER.Kickstarter operates as Chicago in July. financial backers any money. Kickstarter, he says, area community that uses sometimes just “super weird”.crowdsourcing to help kick-start “Generally all the advice that “The fact that it isn’t annew businesses. According “But oftentimes, theyto the Kickstarter website, people gave us was correct… We investment is a feature, not a are incredibly innovative andsince its inception in 2009 challenging. And these are theover 11m people have backed decided to learn for ourselves,” bug,” he adds. sorts of things that investorsprojects, over $2.5bn has been have said no to over and over. Sopledged and 110 386 projects he says. “The reality of how now they go direct to the publicsuccessfully funded. The and say: ‘So what do you alldifference to Kickstarter is “It’s an idea that capital works is that it think?’”that the investor does not getany share in the business, and became an organisation is all operated from He believes that maybetherefore the creator retains “decades and decades fromownership. that’s become a ‘investmentality’. It’s just now” the Kickstarter concept will no longer be the “alternative “For four years we tried to company that became money trying to create way to get investors, but this canmake that idea a reality and just be the mainstream way”.failed repeatedly,” according a community. But we money. And that just locksto Strickler, who, along with Already 300 000 part- andKutcher, took part in a discussion still feel like…just people out ideas that are creative,” full-time jobs have been createdon tech start-ups at the Sage through Kickstarter projects.Summit for entrepreneurs held in trying to figure out what the Yancey Strickler says Strickler, adding that they “God willing, we’ll get to 1m jobs hell we’re doing. Each day.” at some point, and all through the Co-founder and CEO see this as a perversity. generosity of people,” he says. ■ Strickler has personally of Kickstarter He says the beauty of backed around 2 000 the platform is that it allows Kickstarter projects through creative people to be creative the platform: “I spend at least and get paid for it. “You can be half an hour a day looking at a part-time creator, and that’s projects on the site and checking totally valid. It’s not like, ‘It’s out people’s ideas.” Ashton or bust’. There’s a lot in wired.co.uk He says 99.9% of the between there.” projects will not make their Some ideas posted in36 finweek 25 August 2016 www.fin24.com/finweek

on the money spotlightTHE MARKETING ON SOCIAL tick – to explain how disrupters operate. MEDIA “If you don’t know [the answer] you fill inPSOOWCEIARLOFMEDIA Yancey Strickler: “It’s ‘C’ all the way down…Trust me, there were aSeven years ago, Ashton come up with these elaborate an addiction. It’s not hard lot of Cs on my paper,” he joked.Kutcher challenged CNN, and social media plans. And theythen beat CNN at becoming the generally fail at some point for me to imagine that The problem is, however, that “all the Cs”first person or account to get along the way, because 20 years from now we create “false data nodes”.1m followers on Twitter. While marketers have a tendency will find that what socialhe used to be “aggressively to forget that social media is media does to our brains Since “we create these false datainterested” in social media, actually a conversation where is equivalent to what nodes that we assume are reality”, instincthe said his position on this, there’s a feedback loop.” smoking does to our lungs. and intuition often fails us becausein his personal capacity, has It is sugar. It is mental people end up “connecting dots that don’tchanged. He says when a business actually exist”. does not account for feedback sugar.” From a business “it tends to fall apart”. Kickstarter employs “Great businesses usually challengeperspective, however, he around 120 people, who one of those data nodes. Somewherebelieves that social “When used effectively all work in one building. He where someone used their intuition and wemedia is “hugely it becomes a prefers to keep interaction assume that that intuition was right...it justvaluable” on two with all employees to so happens that that intuition was wronglevels. conversational face-to-face instead of and somebody usually builds a business in marketing engine using social media. “These that void. And those are probably the most “One: it is that can be extremely other tools are just too exciting [companies]”. powerful.” easy to abuse.”hugely valuable He said Kickstarter (see sidebar on p. He warns against Ashton Kutcher: “It’s 36) is a perfect example: “Why in the hellfrom a customer aggressively chasing each short-term dopamine would people be willing to give other people new social media platform (as money to build their businesses withoutservice and a customer you “waste a lot of time and dumps over time.” getting any equity in the company?! As anrelations perspective.” He energy doing that”) by saying Kutcher switches off all investor?! This is unfathomable!”explained that the social media that “the fans usually go where social media notificationsenvironment allows customers the celebrities are, and the and sets his phone on “Do The same is true for Airbnb. “Whyto bring their feedback in a celebrities don’t usually go to not disturb” mode all the would people open up their homes and let“very direct public way”. “It where the fans are. And I think time. “It’s the only way strangers stay with them? Why?!”creates transparency in your that’s usually true on social you’ll get things done,”company.” It also creates the media. he says, quickly adding But when companies are built withinability to develop a high-quality “The mainstay social that his wife, actress Mila those challenged intuitions, they usuallyproduct or service much media platforms remain Kunis, is the only one who play in a grey space where there arequicker. the most effective because is allowed to ignore that no competitors. they’ve got the most Secondly, it needs to be people,” he says, referencing setting. ■ “Then they get so big that it is really hard Facebook, Twitter, Instagram to compete with them,” he adds.used in the right manner. and Pinterest. ■ “A lot of people, from a So what will the next Uber look like?marketing perspective, look “The next Uber will look nothing like Uber,”at social media and they said Kutcher. “The space I am looking at the most now is cyber security. It’s somethingIt also creates the ability to develop that everyone know…that we need to focus a high-quality product or service on cyber security…and then we go and hire much quicker. some IT person to do that for us. “I think [cyber security] will become more valuable for people over time as they realise the value of their privacy.” While there are a couple of companies operating in this space, he mentions Sentinel One, which “sort of replaces your anti-virus software”. He said anti-virus software is a bit like putting up a picture of someone who has already robbed a bank, in a bank.This means the virus will only be identified once inside – when it is too late. Rather, Sentinel One creates criminal@finweek finweek finweekmagazine finweek 25 August 2016 37

on the money spotlightprofiles of viruses and aims to prevent APPLE: MANAGINGsecurity breaches altogether. “So it looks EMPLOYEESat what a virus generally looks like, some of HOT OR NOT?the behaviours of it, and then it stops it at THROUGH THEthe gate.” Kutcher on Apple: “I am UPSCALING long-term optimistic and PHASE He also mentions “some really interesting short-term pessimistic on juststuff in the biotech space”.They recently about everything right now. Ashton Kutcher says “wear-all-hats-people areinvested in a company called Emerald Cloud So I believe that cash is a very it is very important to the wrong people” for theLab that operates a lab in the cloud. “So if good position to be in right realise that the needs of next phase.an experiment has already been done, it now. Apple included.” ■ a company, in terms ofdoesn’t have to be done again.” He said the employees, change as it In the next phase, acompany is growing exponentially, and in THE enters a new lifecycle. business actually needsfuture it can be expected that more similar DEALS people who have expertiseprojects will be seen. THAT “Early stage you need in the variant verticals that a lot of people that wear a are relevant to the business.Mentorship and being able to say that PAID lot of hats. You need peopleyou do not know OFF who are not afraid to take “And that’s really hard risks. Not afraid to run shit. because sometimes yourOne of the most important mentors in Kutcher and Oseary, Not afraid to overcome workhorse employees thatKutcher’s career as investor has been either independently or in obstacles as they come up have legitimately been“legendary angel investor” Ron Conway. collaboration with Burke, against them. Not afraid to the most valuable peopleOther mentors were often founders of made the following deals: seek feedback,” he explains. to you are no longer thecompanies. “And mentors that are older most valuable people tothan me and mentors that are younger than 2010: $500 000 invested “When you’re a small you. That’s probably one ofme,” he added. in Uber (their investment is group communication is key. the toughest, most tricky You have to be on the same transitions during the Another mentor has been Joshua now worth $60m) road map together early course of business: EitherKushner (son of property magnate Charles when you’re bootstrapping encouraging those peopleKushner) who is almost 10 years his junior 2010: $3m in Spotify (now or building something.” to stay in their lane in theand runs a fund called Thrive. “I think being worth around $9m) appropriate way or replacingwilling to be mentored by anyone that you Later on in the business them with someone who’srespect – it doesn’t matter what their age 2011: $2.5m into Airbnb “someone has to emerge as great at that thing. Andor experience is – just creates ultimate (now worth $90m) coordinator of this mess”. that’s very hard to do.” ■vehicles for success.” Total investments made: Often, he said, the His feeling is that the people who are Period: 6 years“generally the most successful […] have the “When you’re a small groupcapacity to contain their emotions. And a Total investments: $30m communication is key. Yougeneral open generosity that is so large that Now worth: $250m ■ have to be on the same roadit almost takes you aback when you deal map together early whenwith it”. SOURCE: Forbes you’re bootstrapping or He pointed out that those entrepreneurs building something.”and founders who have “the humility to askfor help, and are willing to not know” willbenefit hugely, as really great mentors arewilling to share “virtually everything”. Kutcher has been investing for about10 years. And in this time, one of hisinvestment friends, had, for example, sharedhis open investment platform with him andsaid “maybe you want to take it and use it,and use it for yourself”. “People are just willing to give you stuffas long as you are willing to say, ‘I don’tknow’,” he said. ■[email protected] Groenewald travelled to the Sage Summit as a guestof Sage.38 finweek 25 August 2016 www.fin24.com/finweek

on the money personal finance By Ridwaan MoollaInvesting in the stock market –not just for the prosWhile the idea of investing in the bourse can be intimidating, putting your money into stocks is a great way to save. If you haven’t done so yet, here are some tips to get you started. finite growth, and where costs erode that growth over the period of the investment, is going to leave yout here are three common myths about investing in perpetually on the back foot. the stock market: You need a lot of money to do it, it’s a quick way to make a lot of money and you Our thinking, therefore, needs to focus on two things: need significant technical knowledge.These are all wrong. You don’t need a lot of money to potential growth, and costs. So the next question to ask is:get into the stock market, it’s not a route to overnight 3. What are the costs as a percentage of themillions and, while there are technical aspects to investment?investing in stocks, it’s possible to outsource enoughof that to make investing in the stock market Let’s say your monthly costs on your R5 000achievable for the layman. You’ll find jargon, investment total an average R100, or 2%.but with the help of Google, it does not need The first 2% your investment grows isto pose a problem. swallowed by costs; and you thereforeBut before we think about investing, have to make more than R100 a monththere are three questions each of us to see any growth. To make your moneyshould ask ourselves: work, you need to see as wide a gap as1. Why should I invest? possible between costs and the time the investment stays in the market – andInvestments are a form of saving. Most of that means looking for low costs, andus are motivated to save because we have being patient.a specific goal. If that goal is close by – for It’s for this reason that investing ininstance, paying for an upgraded end-of-year stocks looks attractive; but there’s a goldenholiday – we’ll save up for it; but if we’re looking rule to observe before you go there: understandto a further horizon, investments become the the stock market. Most of us don’t. Most of usorder of the day. have no idea, for instance, what the underlying For some, that further horizon might be the Exchange-traded investments are for our retirement funds.education of our children, or the long-term target Getting to understand the stock market takesof knowing we’ll be able to sustain our standards of funds (ETFs), for a little effort. But there are plenty of tools aimedliving post-retirement. For others, the goal might be example, are a at helping the layman understand the basics, and develop confidence.something tangible – a luxury car, for instance. The most important thing is to forget the Wolf of What is your reason for saving? Give yourself some cost-effective, Wall Street hype. Don’t come thinking you’re goingtime to contemplate this; and when you have your to make a quick million. Establish a foundation withanswer, the next question to ask is this: highly accessible2. How am I going to achieve that target? way of getting a long-term portfolio. into the blue- Exchange-traded funds (ETFs), for example, areLet’s say your goal is a car that currently costs chip market.R500 000; and you’ve given yourself 10 years to get a cost-effective, highly accessible way of getting intointo that driving seat. By process of elimination, you’ll be the blue-chip market. A number of ETFs for example track the FTSE/JSE Top40 index, giving investorsable to work out the best route to achieving that goal. broad market access to top-performing shares.For instance, let’s say you are able to save R5 000 a And reinvest your earnings. In the fund above,month. If you put your money into a bank, these would dividends are automatically reinvested each quarter tobe the sums: provide a total return.There’s an encouraging exampleR5 000 × 120 months = R600 000 + 6% to 7% from the JSE to make an argument for thinking long Getty Images/iStock Imagesinterest compounded, minus costs term and reinvesting: if you’d bought R100 000 worth ofLooks good, right? Naspers* shares in 1996, they’d be worth R26m today. ■Yes, but where do you think the R500 000 price [email protected] is going to be pitched 10 years from now? It’s Rowaan Moolla is head of digital and education at Absa Stockbrokers.fairly certain that a savings mechanism that offers *finweek is a publication of Media24, a subsidiary of Naspers.@finweek finweek finweekmagazine finweek 25 August 2016 39

on the money entrepreneurBy Buhle NdweniHelping entrepreneurs turntheir dreams into realityAs a young entrepreneur first starting out on his journey, Selebogo Molefe, CEO and founder of Lifesgud GlobalInvestments, realised there was a gap in the market for a company that connected up-and-coming business people.w  henentrepreneur Selebogo Molefe, WHERE DID THE IDEA FOR THE HOOKUP CEO and founder DINNER (THUD) COME FROM? I struggled accessing networks because of Lifesgud Global I was not “connected” to any influentialInvestments, realised he was not people, so I decided to create a club that“connected” enough to tap into existing would connect unconnected guys like mebusiness networks, he started The with like-minded individuals who couldHookup Dinner to give other unconnected contribute meaningfully to one another’sentrepreneurs the opportunity to build entrepreneurship journey. The idea wascontacts and support networks. also based on the notion of filling a void“We began networking as two people, by helping entrepreneurs starting outthen it was eight, now it’s over 89 000 not to feel lonely and give up when theyacross six countries in Africa. We could access a community of dreamershave one goal: to create a connected like them.ecosystem for intra-SMME trade WHAT MOTIVATED YOU TO TURN IT Selebogo Molefeacross Africa. We enjoy the process of INTO A BUSINESS? CEO and founder ofdiscovering start-up phase entrepreneurs Lifesgud Global Investmentsand growing with them into formidable That part was accidental really. I justindustry players,” says Molefe. wanted a cool club of misfits to collaborateWE ASKED HIM SOME QUESTIONS and do business together. We knew we were for funding. My philosophy is thatABOUT HIS VENTURE: onto something when SAB Kickstart came entrepreneurs don’t need funding as it isWHAT DID YOU DO PRIOR TO STARTINGYOUR OWN BUSINESS? knocking for a partnership conversation. expensive; we need clients.I started out in the informal sector as a HOW DID YOU MAKE YOUR FIRST HOW HAS THUD GROWN OVER BUSINESS TRANSACTION OR GET YOUR THE YEARS?hair stylist for two years, where I learnt FIRST CONTRACT? We are currently in six countries – SA,a lot – eventually I came to love it. I I connected with Octavius Phukubye Zimbabwe, Botswana, Lesotho, Kenyathen moved into construction as a daka (@mohloboloko) on Twitter who happened and Tanzania. We are in all the provincesboy (construction site labourer) in my to be an Enterprise Development Specialist in SA and are currently implementinguncle’s company and worked my way up for the SAB Kickstart programme. He SAB Kickstart’s #StartupTruckthe chain. Now, when I see some of the got curious about what THUD was, and recruitment drive into their enterpriserestaurants like News Cafe in Dainfern eventually he came and networked with a development programme with theirand Sandton, I’m reminded that my small group of passionate young individuals. partners, including the National Youthhands played a small role in the building Octavius subsequently joined us as a guest Development Agency (NYDA), the Smallof those spaces. rainmaker (speaker) the following month. Enterprise Development Agency (Seda),The corporate world then gave me a We went on to form a two-year partnership Durban Hub and others nationwide.chance with a learnership, and I spent five with SAB Kickstart. On average, we attract about 200years honing my skills and learning how to entrepreneurs to each networking event.lead under the guidance of current ShellSouth Africa chairman Bonang Mohale WHEN DID YOU OFFICIALLY We have beenat Drake & Scull International, a facilities START OPERATING?management company. All of this The Hookup Dinner started operating in running monthly On average, we attractprepared me for my journey in business August 2012. As for the holding company, since August 2012full-time from 2009. I founded my Lifesgud, it was founded in April 2004. and expanding 200aboutbusiness, Lifesgud Global Investments, into other citiesin 2004 selling beanbags, which brought HOW DID YOU GET FUNDING TO GET as we go along.comfort and a different feel to events. STARTED? I have never received or applied We have also entrepreneurs to each developed sub- networking event. brands that speak40 finweek 25 August 2016 www.fin24.com/finweek

on the money entrepreneurWe have one goal: to create a connected ecosystem for intra-SMME trade across Africa.to target audiences and needs, including products that enable communities to continually apply in my business and life.THUDcampustours, THUDhackathons, thrive through conversation. That alone My two daughters and wife are also aTHUDacademy, THUDbootcamps and has kept us in business. huge factor motivating me to succeedTHUDfest where we host annual festivals and help secure an economically brightertargeted at entrepreneurs across Africa. With THUD, we are competing for future for us. enterprise development funds withWHAT HAVE BEEN THE THREE more established players. Again our WHAT ARE YOUR NON-WORKBIGGEST DIFFICULTIES YOU’VE HAD key differentiator is that our obsession HABITS THAT HELP YOU WITH YOURTO OVERCOME? of the connected economy drives us. WORK-LIFE BALANCE?1. Fighting procrastination and getting Therefore clients come to us because I consume knowledge voraciously – I buythings done quickly in order to stay in we have started with the core, creating and read books on a variety of subjects,business. a connected ecosystem of like-minded including spirituality, the history of Africa,2. Overcoming my fear of selling in entrepreneurs. They want that pipeline. leadership, biographies of pioneers,order to avoid rejection and avoid being technology and lately parenting. I alsoanother statistic of a failed business. HOW MANY PEOPLE DO YOU socialise and travel a lot with my small3. Fighting to have a constantly CURRENTLY EMPLOY? circle of friends and family. Lately, Icompelling vision that my team can Eight including myself and my business started volunteering at church, whichbelieve in during good and bad times – partner, Phakiso Tsotetsi, who is chief helps me to forget about myself andand we’ve had more bad than good. operating officer and co-founder of Lifesgud focus on helping others. Global Investments.BIGGEST LESSON LEARNT? WHAT IS THE BEST BUSINESS ADVICE WHAT IS YOUR THREE-YEAR GOALThe best way to stay in business is YOU’VE EVER RECEIVED? FOR YOUR COMPANY?by focusing on building real, tangible My former boss, Bonang Mohale, always OUR GOALS INCLUDE THErelationships over the long term with impressed two key things that made a FOLLOWING:people by showing that I care. Specialising lifelong impression on me: to strive to ■ Scaling our community reach throughin a field by honing in on one or two core always produce embarrassingly good technology to build a network of 1m Africanareas of service instead of diversifying results and to always have your heart start-ups;has kept us in good stead when clients focused on people and your head focused ■ Dominating the media space throughhave to make tough calls on which on numbers. content creation and shared ownershipsupplier to work with. I’ve learnt to focus. of platforms that will act as a catalyst toAnd business is built on trust – we focus WHAT WAS UNEXPECTED? launch and grow African start-ups, as wellon building that trust with our clients, The fact that 12 years later I’m still in as expose them to wider audiences;partners and stakeholders. business (with Lifesgud), especially with the ■ Building ourTHUD academies into 96% failure rate in business within the first formidable players;HOW TOUGH IS COMPETITION IN YOUR five years. I consider it a miracle that we are ■ Investing, by buying equity in five of theSECTOR, AND WHAT DIFFERENTIATES still going strong with my team. start-ups we’ve already developed, forYOUR PRODUCT/SERVICE FROM OTHERS? the purposes of helping them to grow byIn our product division with Lifesgud, we HOW DO YOU STAY MOTIVATED? leveraging our resources fully; andmanufacture beanbags, which we sell or I grew up in a Christian home. My folks ■ We want to be a R100m-turnoverrent out for events as well as decorating made me fall in love with church. I get company by 2025 and that means“pause/chill” areas. We compete with my dose of motivation through my local making smart investments with greatnormal chairs and all sorts of other visionary church, Grace Bible Church in returns as well as getting strategicseating products. Our key differentiator Pimville, Soweto. I get many business partners on board. ■is that we are obsessed with building lessons through the pulpit, which I [email protected]@finweek finweek finweekmagazine finweek 25 August 2016 41

on the money managementBy Sarah GilmoreWhat England’s new manager canteach business about leadershipSam Allardyce, the new manager of England’s football team, has an unconventional management style that could helpbusiness managers secure a competitive advantage. several players secured a regular place in his first team. Although he never achieved his dream of having a firstn  ew England manager Sam Allardyce will take team composed completely of players nurtured by this his players to Slovakia next month as they system, he invested time and resources in the foundations. start qualification for the 2018 World Cup in Russia and seek to wipe away the memoriesof a woeful performance at Euro 2016. It will be a huge 2. Love your budgetchallenge that calls upon all the weapons Allardyce hasamassed in his career. Managers outside of football would If you have no money and you have had to sell your bestdo well to consider how his approach could work for them. players in order for the club to stay afloat, how will youWhen the business world seeks inspiration from secure and sustain high performance? Smart managersfootball, Allardyce is perhaps not the first name on the work with what they’ve got. For Allardyce, a central solutionlist. Arsene Wenger’s steady calculation, Jose Mourinho’s to this knotty problem was to exploit sports science.brutish pragmatism or Pep Guardiola’s collaborative He was an early proponent of “marginal gains”, anpanache probably grab more attention. approach that helped him to sign world-class playersBut there is gold there. I worked with Allardyce during who perhaps wouldn’t otherwise have looked at Boltonhis managerial years at Bolton Wanderers, and studied as an option.This combination of physiotherapy, sportshow he sought profound change without coercion. psychology, nutrition, and data analytics allowed playersWe can use some of these to build an idea of what an to play more regularly – especially in the crucial lastAllardyce Business School might look like. third of the season – because of their injury prevention1. Build for the long term strategy. It also prolonged the life of significant players like Youri Djorkaeff, Ivan Campo and Gary Speed.Football is dominated by the immediate: the next result Data analytics also gave his team an edge by spottingor the next sacking. But Allardyce focused on establishing Jose Mourinho where advantage might be gained, developing responsesdepartments and systems that would last beyond Manager of to set pieces, or identifying areas of the pitch where thehis tenure. He spoke at length about leaving a legacy opposition struggled. Manchester Unitedat Bolton that was not simply focused on achieving 3. Have a plan, and another planEuropean football – as the club did under his leadership.To this end, he strengthened the youth academy and Allardyce understood that things can get thrown off track.England’s Joe Hart celebrates with the squad after www.fin24.com/finweekDaniel Sturridge’s goal during the UEFA Euro 2016Group B match between England and Wales at StadeBollaert-Delelis on June 16 in Lens Agglo, France.42 finweek 25 August 2016

on the money management STATS FOR SAM‘BIG SAM’ ALLARDYCE ALLARDYCE HAS MANAGED 944 GAMES FOR SEVEN CLUBS AND HAS THREE HONOURS TO HIS NAME. Honours: Football League Third Division 1997-98 with Notts County; Promotion to Premier League 2000-01 with Bolton Wanderers; Promotion to Premier League 2011-12 with West Ham United. CLUB PERIOD HONOURS GAMES W D L TOTAL WIN% Blackpool PER HONOUR 44 23 35 102 43.14 Bolton Wanderers 153 104 114 371 41.24 Notts County 1994-1996 0 n/a 56 39 50 145 38.62 West Ham United 68 46 67 181 37.57 Blackburn Rovers 1999-2007 1 371 32 24 34 90 35.56 Newcastle United Sunderland 1997-1999 1 145 8 6 10 24 33.33 9 9 13 31 29.03 2011-2015 1 181 SOURCE: www.managerstats.co.uk 2008-2010 0 n/a 2007-2008 0 n/a 2015-2016 0 n/a Making a team effective means you have to plan across Allardyce remains famous for being able to take on various timeframes: for each game, for each segment of players whose psychometric profile might have put others the season, and across the season. You have to secure off. El Hadji Diouf was the most obvious example. stability and guard against the emotional drama caused Allardyce sought to understand them and ensured by results, good and bad. And you also have to spot when that key staff members like Mike Forde, the team’s it’s time to mix it up and play cards before a big game performance manager, did so too. I would argue that this instead of watching a series of pre-match videos. is secured through feel and intuition for the player and key In other words, build against chaos but then introduce to this is vulnerability, a sense of being wholehearted and it to good effect. Stability can cause boredom and worthy of emotional connection. regimented attitudes rather than provoking creativity. And so what do we learn at the Allardyce Business 4. Value people School, from a manager who has now reached what some would call the apex of his profession? For a start, itGetty Images/Alex Morton - The FA/The FA After one frustrating loss against Manchester He was an early is a very different kind of business school and City Allardyce asked where I was and offers a critique of contemporary business discovered I had been at a family wedding in proponentof “marginal management. Allardyce never shied away Edinburgh. In a fit of pique he argued that I was from fundamentals like planning and securing part of the Bolton family and as such should’ve gains”, an approach performance – they are the foundations been at the game. It sounds ridiculous, but that helpedhimtosign of success. But his lectures and seminars that motif of the Bolton family and of respect would also reject the short-term perspectives for each other ran through the club. Wins were world-class players of current business schools, emphasising shared with all who contributed. instead plans for the longer term which It’s not always easy to belong to a family; who perhaps wouldn’t leave powerful, positive legacies for the it can be suffocating. But being included and communities they are in.Getty Images/Kevin Barnes/CameraSport valued for your efforts remains with you forever. otherwise have looked In a market with substantial competition – Bolton Wanderers is in an area rich with 5. Listening at Boltonasanoption. exceptional football teams of higher pedigree In these days of leader/manager – you can’t simply secure competitive pronouncement, the art of listening is dying fast. Many advantage through something like sports science. managers seem pressured into rhetoric while many of us It is achieved through becoming an organisation become deaf to it. But what happens when you spend that people value, love and want to be a part of: fans, more time listening? Especially if you listen well and employees, players, and academics alike.The Allardyce accurately, as Allardyce does. During his time at Bolton, Business School would teach you to acknowledge he hated doing “the motivational speech” before the your organisation’s history and its connection with its game and rarely did.To everyone’s relief, I think. community. A legacy isn’t based on results alone but onImages: Getty Images/iStock Images 6. Be vulnerable how you play the game. ■ [email protected] Finally, it is important to be so secure in yourself that you can be honest about who you are and what you value and why – whether (as in Allardyce’s case) it’s the NHS, SarahGilmore is principal lecturer in organisational studies at the University of education, family, or the friends you have outside the game. Portsmouth.This article was first published byThe Conversation Africa and can be Take what you do very seriously, but take yourself less so. accessed at https://theconversation.com/africa. @finweek finweek finweekmagazine finweek 25 August 2016 43

on the money careersBy finweek team HOW TO MANAGE THE SITUATION:When you’re smarterthan your bossWorking under someone who doesn’t inspire you? It will require some strategising and gritting of teeth,s but you can make the best of a difficult situation. ACCENTUATE THE POSITIVE how me a man who is a good You need a functional relationship with your loser and I’ll show you a man who boss. Animosity wastes time and energy, is playing golf with his boss,” the and will not help you achieve success. So, journalist Jim Murray once wrote.Some bosses, however, make it virtually focus on building a mutually beneficialimpossible not to beat them.Their skills are relationship. Compliment them on theoutdated, they don’t see the big picture, things they do right, and ask for their advicethey constantly make stupid mistakes, cost from time to time.the company a lot of money and take “Importantly, find out what motivatescredit for your bright ideas. Worse, they your boss,” advises Tromp.This will helpearn much more than you. you identify how you can assist yourThis is an infuriating situation. manager, use your skills to complementYou have a few options. his weaknesses and make yourselfThe most self-defeating would indispensable.be to stand back and patientlywait it out while your boss ELIMINATE THE NEGATIVEeventually implodes under their Don’t complain about your manager toown incompetence. In the process, their bosses, or to the rest of your team.however, they could take down your Don’t try to resist their authority, andwhole division. avoid passive-aggressive behaviour.Another counterproductive option “Make sure that you are not seen aswould be to start fighting your boss on part of the problem,” says Lizel Stephan,every issue, constantly showing them up an executive and leadership coach at theon every error. Not only will this lead to Strong Foundation in CapeTown. “No-onelow-grade warfare with your manager, but it likes a person who is constantly criticisingmay even cost you your job and label you as or focusing on problems. Make sure youra troublemaker. “Make sure your frustration frustration doesn’t poison your own Instead, accept that your manager strong points, contribution andis flawed. And take a long, objective doesn’t poison your own outcomes.” She warns that frustrationlook at the situation. Yes, your boss strong points, contribution is a very dangerous emotion. “Not onlycan’t read a balance sheet and may does it pollute your own attitude, butstill believe that HTML is some sort and outcomes.” it also obstructs your own ability toof pool chlorinator. And of course their innovate and be creative.”strategic thinking sucks and their When you do have a problem withinterpersonal skills make Donald Trump your boss, keep the issue focused on thelook like Kofi Annan. In all of these areas, facts, and don’t get personal, says Tromp.your boss may be incompetent – but Also, keep communication channels openperhaps you can (grudgingly) admit that and discuss any issues before they becomethey are better at some things than you. real problems.Cognitive ability isn’t everything. Findsomething to respect. FOCUS ON YOUR OWN JOBAlso, acknowledge that you don’t A constant obsession about your manager’salways have the complete picture, says Dr incompetence is a major distractionMarlet Tromp, a life and business coach in Lizel Stephan that will, in the end, affect your ownJohannesburg. “Your boss also has a boss, Executive and development and work, says Stephan.and may face responsibilities and pressures leadership coach Instead of always focusing on whatyou are not aware of.” they’re doing wrong, make sure you’re44 finweek 25 August 2016 www.fin24.com/finweek

on the money quiz & crossword making the most of your own opportunities. Let’s get those brains into gear with this week’s quiz! You Focus on solving problems, saving costs, can also win a Freakonomics DVD by completing the online building sales and creating new business. version of this quiz, accessible via fin24.com/finweek from 22 August. Good luck! AVOID THE HOT SPOTS 1 True or false? Miner Harmony Gold recently 6 True or false? Capital & Counties Make sure you know what your manager’s declared a dividend – its first since 2012. is an auto manufacturing buttons are, and then refrain from pushing company. them, says Tromp. For example, some 2 In which discipline did sprinter Wayde managers have set ideas about how a van Niekerk set a new world record at 7 Which African country recently meeting should be conducted (with them the Rio Olympics? went to the polls? starting – and perhaps dominating – the discussion).Trying to change the things 3 Which country is property fund Echo ■ Zambia that your manager feels very strongly about Polska Properties headquartered in? ■ Kenya may be counterproductive. Instead, work ■ French Guyana around these quirks. 4 Which US personality claimed that there 8 True or false? Steinhoff recently Tromp cites the example of a client were no terror attacks before Barack acquired US-based whose boss had very weak interpersonal Obama became president? Mattress World. skills. She noticed that he would be particularly obnoxious with the team at ■ Mike Tyson 9 What sport does US Olympian Simone the start of the working day, but his mood ■ Rudy Giuliani Biles compete in? would steadily settle by mid-morning. She ■ Donald Trump then deliberately changed her schedule to avoid him first thing, which resulted in less 5 What does the abbreviation of local 10 True or false? Pokémon were featured conflict and less resentment from her side. political party AIC stand for? on last week’s cover of finweek. HELP YOUR MANAGER CRYPTIC CROSSWORD 645JD PERFORM BETTER ACROSS DOWN 1 A citizens’ band on top (4) 1 Can writer get copyright in kind? (8) As far as possible, support your manager 3 Instances of navel piercing declining rapidly? 2 If so, a restructuring is needed to generate in their job. Do more than is expected of (8) capital (5) 9 Take it no Hell exists (7) 4 It’s bliss, you say, to be with Italian girl (6) you and be strategic about where you can 10 Settle minimum of reckoning to date (2,3) 5 Derive great pleasure from star? (4,2,3,3) 11 Members of college admit Caledonian 6 Princess is a first child (7) assist. Offer to help them learn skills that 7 On trial in connection with murder (4) Fellows (12) 8 Onerous paperwork for opponents of Brexit you may already have. 13 Purify by ceremonial washing, taking a time (3-9) Yes, your boss will look better than they away in honour (6) 12 Woman should first get dry in a back garden 15 Street artist back at the ranks (6) should thanks to your efforts, but in the 17 No longer into spirits? (12) shelter (4,4) 20 Hired killer back in January, roughly (5) 14 Scenic tour including Eastern technology (7) 21 Uncivilised place is in Irish county (7) 16 Stone remains by the French river (6) 22 Financier has no end right to wealth (8) 18 Long story about lone antelope (5) 23 Post not for this zone (4) 19 Strike up a connection (4) end you will have established yourself as a team player and As far as someone who can be trusted. possible, Hopefully, your boss will also start giving you credit. support your “Where you can, support your manager’s strategy and vision,” manager in says Stephan. “But this does their job. not mean that you have to take responsibility for your manager’s mistakes. If you are constantly cleaning up your manager’s messes, and if his errors are causing substantial losses, it is your duty to escalate the problem.” In the end, approach the situation with your manager as a learning opportunity. “It demands great maturity to put someone else’s success above your own short-term gratification,” says Stephan.Gallo Images/Getty Images “But if you do commit to respecting your boss and focusing on the success of the team, even if you are not being inspired by their leadership, you will learn a lot and Solution to Crossword NO 644JD ACROSS: 4 Acclaim; 8 Static; 9 Abiding; 10 Actors; 11 Averse; 12 Love song; 18 Easy pace; 20 Sequel; strengthen your own ability to eventually 21 Angela; 22 Housing; 23 Legato; 24 Leisure DOWN: 1 Assails; 2 Tantivy; 3 Citrus; 5 Caggages; 6 Ladder; 7 Ionise; 13 One-liner; 14 Gateman; become a leader.” ■ 15 Hexagon; 16 Before; 17 Cursus; 19 Yonder [email protected] finweek 25 August 2016 45 @finweek finweek finweekmagazine

PikerOn margin VerbatimCrooks everywhere between seven countries including the Simone Anginavalo @JoziGoddess US, EU, Japan and China have so far Does Wayde have to wear that tracksuitOn 15 August, the US Securities and failed, despite investments of $15bn to during the medal ceremony, bathong? BreakExchange Commission (SEC) suspended date, it reported. a 17-year-old record then dress like Zakumi?trading in an unknown company calledNeuromama, which has a market Even if this failed to raise suspicion, Shut up, mike @shutupmikeginncapitalisation of about $35bn based on then surely the numbers don’t lie. Watching Olympic ping pong and thethin over-the-counter trades, Business Neuromama hasn’t filed any financial guys’ faces all have this same dull look thatInsider reported. information with the SEC since its says, “It’s too late for me to be this good at quarterly results for the quarter ending something else.” The SEC expressed concerns October 2013. At the time, this “$35bn”about the “accuracy and adequacy company had $1 081 in cash, $18.26m rob delaney @robdelaneyof information” about pretty much in “intangible assets” as its only assets, Me watching Olympic event: “Holy shit thateverything from the people running the zero revenue and a loss in the previous was amazing!”company to possible stock manipulation nine months of $500 811, according to Commentator: “Ooh, that was not good atand statements that it has an application Business Insider. all. He must be really upset with himself.”pending for a listing on the Nasdaq. In short Debbie Cameron @wordspinster But don’t have too much sympathy People talk about clickbait headlines, butfor investors who may be getting their Q: Why hasn’t Africa ever won Olympic what do we call a headline that does thefingers burnt. A brief read through its gold in basketball? reverse? Like ‘Golf struggles to find Olympic“businesses” should have raised red flags spirit’?– its assets supposedly include a search A: Because Africa isn’t a country.engine, NeuroZone, a “clone of Amazon ____________________________________ Prince Charles @Charles_HRH*and eBay”, and 500 expired patents If you’re wondering why the British are so(admittedly 100 patents are still valid, Q: What’s the difference between prayer good at cycling and rowing, take a look atthough details are scant). Notably it also in church and prayer in a casino? the cost of public transport. #Rio2016claims to own “Heavy Ion Fusion”, which ____________________________________claims to be developing atomic fusion, A: In a casino, you really mean it. Tom Eaton @TomEatonSAa cleaner and safer way of producing ____________________________________ #ANCNEC AGENDA:nuclear energy, Business Insider reported. Day 1: NEC to ask №1 to step down.A combined atomic fusion project If a tree falls in the forest and nobody Day 2, 3: №1 to explain to NEC how rent is hears it... extracted. ...then my illegal logging business is a Day 4: NEC to tell SA to sit down. success. Jarrod Mouton @Jarrod_m The dude next to me is eating a vetkoek the size of my head, and I’m having a naartjie. One of us is losing at life. Spence @Spenelo Social media really is like a fridge. I keep procrastinating by coming back here, knowing very well that there’s nothing new to be seen. *Parody account “Never be a spectator of unfairness or stupidity…The grave will supply plenty of time for silence.” − Christopher Hitchens, Anglo-American author, critic and journalist (1949- 2011)46 finweek 25 August 2016 www.fin24.com/finweek

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