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Five things making headlines in South Africa today

The dark side of business rescue, Massmart, Woolworths and Santam results, Motus looks to international expansion.

Here’s what caught our attention on Thursday:

1. Behind the scenes of business rescue

A recent Section 417 report reveals the underlying violation of business rescue practitioners in the case relating to the liquidation of Benoni-based crane supplier Harrison and White Investments. In an exclusive investigation, Moneyweb has revealed the extent to which business rescue proceedings can be abused to the detriment of creditors.

Key players in the business rescue process of the aforementioned include well known corporate lawyer and chairman of the Nova Property Group Connie Myburgh and business rescue practitioner Hans Klopper. According to Moneyweb, these individuals were also involved in the rescue efforts of Sharemax and Picvest – two major failed investment schemes in South Africa.

Read: The dark underbelly of the business rescue industry

2. Massmart results

Wholesale giant and retailer Massmart is reporting a loss of R832.4 million for the six months ended June 2019. The company says its losses were incurred after the gross margin decreased by 36 basis points and expenses increased by 7.6% as a result of new stores and other cost pressures. Massmart says its losses were also impacted by a 52% decrease in trading profit to R318.9 million, as well as the poor exchange rate. The company is reporting a headline loss of R796.6 million and a headline loss per share of 364.7 cents. The retailer is banking on improvements in the second half and fourth quarter, which includes Black Friday sales and the festive season. No dividend is being declared for the period.

Read: Massmart in need of an ‘Edcon-like’ overhaul?

Massmart looks to new CEO to beat slump

3. Woolworths results

Impairment costs at Woolworths’s Australian David Jones unit are still weighing on the company’s revenue. For the 53 weeks ended June 30, 2019, Woolworths is reporting a 4.6% decrease in headline earnings per share to 330.4 cents and a 2.1% decrease in adjusted diluted headline earnings per share to 356.3 cents for the period. Both margins exclude the impairment of the David Jones assets. According to the announcement, an impairment charge of A$437.4 million was recognised in June, reducing the valuation of the David Jones unit to A$965 million.

Group sales increased by 5.8% due to stronger performances in the second half in both the food and fashion categories. Turnover and concession sales increased by 3.9% to R78.2 billion and a final gross cash dividend per ordinary share of 98.5 cents is being declared.

4. Santam results

Financial services company Santam is reporting a 3% decrease in headline earnings per share to 990 cents for the six months ended June 30, 2019. The insurer’s gross written premium increased by 9% to R17 billion and net asset value increased by 3% to R9.1 billion. Santam’s return on capital amounted to 25.4% and gross claims paid out jumped by 8% to R9.7 billion. The company says it delivered a ‘solid performance’ in a more challenging environment compared to 2018. It says its Santam Specialist business experienced strong growth in the property and engineering classes while good progress was made in establishing a Pan-African specialist insurance business with Saham Finances. The benefits of which should start to be realised from 2020 onward. An interim dividend of 392 cents per share is being declared, up 8%.

5. Motus plans international expansion

The vehicle business of Imperial Holdings, Motus, is planning to expand its operations into selected international markets. According to Moneyweb, Motus CEO Osman Arbee says the UK and Australia are two markets that the company is considering. He says the expansion would also entail the introduction of additional brands in areas close to its existing dealerships. He added that the dealerships in the UK and Australia would provide the group with a rand hedge. 

Read: Motus planning to expand into selective international markets

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