S&V Weekly Newsletter Vol. 4 No. 48, Dec 3, 2018

This Newsletter is sponsored by SAFLIA

Please note: Click on any ad to go to the advertiser’s website

SADC-EU conference to discuss leather industry exports

Johannesburg (SA) – Leather industry exports from southern Africa to the European Union (EU) will be the focus of a conference in Johannesburg on Wednesday and Thursday this week.
       The Southern African Development Community (SADC) and the EU have a trade agreement, the SADC-EU Economic Partnership Agreement (EPA), which covers most SADC countries - SA, Botswana, Lesotho, Mozambique, Namibia and Swaziland.
       The SADC-EPA secretariat has organised a conference to be held at the Southern Sun OR Tambo on December 5 and 6. The draft agenda is headed 'Analysis of the export potential of SADC Value Chains to EU Markets: Pilot Case Study for the Leather Value Chain'.
       No speakers are named on the agenda. The topics include: 'Background to the assignment and some statistics of SADC-EU Trade, Overview of the methodology, pilot case study findings, challenges and the way it could be used, Introduction to the conceptual design, data sets and methodology, Regional Value Chain Development, ROO and results, Pilot product testing and results, Relevance and possible applications by countries, scaling up the data mining, how to make it accessible and relevance for FTAs.'
       It appears the secretariat has not informed anyone in the industry of the content. Even the Department of Trade & Industry's Priscilla Msiza, from the DTI's Europe Regional Organisations/International Trade and Economic Relations division, said: "The dti has also been invited to the event, so all the information we have is what we sent to you. You may communicate with the SADC-EPA Secretariat who are the organizers of the workshop for more details."
       The secretariat had not replied at the time of writing. The email address is: kdintle@sadc.int

Revenue, profit up over 10% as Pepkor seeks to distance itself from Steinhoff

Cape Town (SA) – The Pepkor group released its audited results for the year to September 30 last Monday (November 26), its first financial year as a listed company and the first results publication under the Pepkor name following the change from Steinhoff Africa Retail (STAR) Group.

Under the heading 'Strong performance from Pepkor Holdings in its first year as listed entity despite tough year', the highlights were:
Revenue up by 10,9% to R64,2 billion
Operating profit up by 10,7% to R6,4 billion (Excl once-off item)
More than 400 new stores opened
Maiden dividend 27,8 cents per share
Decisive action on corporate governance, transparency and disentanglement from Steinhoff International

Other extracts were: Despite the corporate turmoil of the past year, its fundamentals of delivering everyday products at affordable prices have delivered strong top-line revenue growth for the group. In a retail industry that is under severe pressure it delivered good results – proving that its defensive discount and value proposition can withstand a constrained economy and cash-strapped consumer.
       Group turnover was 10,9% higher at R64,2-billion for the year ending September 30, 2018 (2017: R57,85-billion), while operating profit, before capital items, excluding once-off costs, increased by 10,7% to R6.4-billion.
       The Group also took decisive action over the past year to strengthen corporate governance and independence. In line with International Financial Reporting Standards (IFRS), Pepkor revised its operating segments to better reflect the manner in which the group is structured and managed internally. This further enhances disclosure and should enable the investor community to better understand the group’s performance.
       Its Clothing and General Merchandise segment which includes, among others, Pep, Ackermans, Refinery and Tekkie Town is the largest contributor to group turnover and performed well despite significant pressure on consumers’ spending power as a result of a strained economy and significant selling price deflation. This segment’s revenue was up by 7% to R42,5-billion while operating profit was 8% higher to R6,1 billion. This segment - with a footprint of 4 200 stores - now does more than 1-million sales transactions per day, 6% higher than the year before.
       PEP remained true to its DNA of Best Price Leadership, passing on price benefits to customers. The brand continued to focus on being the price leader in its market and opened 137 new stores. Pep has achieved 19 successive years of double-digit operating profit growth – a clear indication of the power of this brand and management team.
       Ackermans continued to outperform its competitors in the SA apparel industry, opening 80 new stores and celebrating its ninth consecutive year of high double-digit operating profit growth – an exceptional performance in the South African retail market and clear indication that it’s product and value offering appeals to customers.
       Pep Africa had a challenging year marked by the lagging effect of low commodity prices, foreign exchange shortages, and high inflation rates that continue to weigh on consumer spending.
       Within Speciality, the Refinery and John Craig brands reported stellar performances and Tekkie Town continues to trade well.
       Commenting on the group’s overall performance, Leon Lourens, CEO of Pepkor Holdings says the Group’s defensive discount and value market positioning helped in an economy where consumers continue to face significant pressure on spending power. “The biggest challenge was the high deflation numbers that most of the brands had to combat and under these circumstances we are happy with the revenue growth that we were able to achieve” he said.
       Lourens added that “We have some of the most trusted retail brands in South Africa, supported by millions of customers. Our Group was one of the top performers in the market which proves the quality, stability and resilience of the underlying operating companies and its leadership.”
       Headline earnings per share (HEPS) was declared 36,7% lower at 84,5c (2017: 133,6c), although more than 20% of this decline (approximately 30 cents) is purely as a result of the group issuing 882 million shares during 2017 for the acquisition of Tekkie Town and upon its listing on the JSE.
       In addition, 2018’s earnings are impacted by 15 cents for once-off costs of R511 million pertaining to the provision for a corporate guarantee which is underpinned by the Steinhoff share price. This was already reported to the market by Pepkor in May 2018 and the group has conservatively provided for the full exposure.
       On a normalised basis the HEPS was 99.3 cents.
       Commenting on the tumultuous year for Pepkor, as it completed its first financial year as a listed company, Lourens says: “The Pepkor management team has made good progress in protecting Pepkor from Steinhoff International Holdings contagion, both mitigating impact on the group and its operations, and taking the opportunity to reassert Pepkor’s values. “I am particularly proud of how the management teams of the various operating companies continued to grow and lead their businesses during this difficult period.”
       Pepkor took decisive steps to mitigate the impact on its business and disentangling itself from Steinhoff. Major milestones include the refinancing of the Steinhoff shareholder funding and release from related financial guarantees, the name change to Pepkor and publishing of the 2018 audited results which confirmed that Pepkor’s accounts are above suspicion.
       Lourens concluded, “The attention of the corporate office can now shift back to retail – we plan to open 300 new stores in 2019, based on our defensive market positioning and focus on initiatives to gain market share. We have some of the most trusted retail brands in South Africa, supported by millions of customers, suppliers and our staff – and we’re determined to continue growing our business to deliver even better value to all our shareholders.”
       The board declared a maiden dividend of 27,8 cents per ordinary share.
       For the full report, go to: https://www.pepkor.co.za/sens/

Agent retires

East London (SA) – Veteran Bolton Footwear agent Garth Ewing will retire at the end of December. He said he and his wife would move to Port Alfred. Bolton has taken over his office, phone number and email address.

2019 Trade Fairs Another essential service from S&V

Please note that we have put a list of the 2019 trade fairs and conferences on our website, linked to their websites: http://www.svmag.co.za/events

They Said It

"I'm not too bad except I've got a slight hangover. I was making pork pies." - Russell Addinall of Studio Eclectica. If that strikes you as a non sequitur, he explained: "I drank a couple of bottles of wine while I was cooking." I would guess his favourite TV celebrity chef must have been Keith Floyd...

Exchange rates

Source: http://www.x-rates.com/calculator/

03/12/1939: Douglas Oates, retired, formerly Beier Safety Footwear, Pinetown.
03/12/19??: Brandon Geyser, EVA Industries, Durban.
03/12/1976: Quintin Marais, Rolfes Chemicals, Boksburg.
05/12/1941: Kishor Makan, agent, Johannesburg.
05/12/1961: Eckhard Marshing, ACA Threads, Cape Town.
05/12/1963: Dr Clive Jackson-Moss, ISTT, Grahamstown.
05/12/1970: Robert Chapman, Branded Footwear, Port Elizabeth.
07/12/1947: Denton Estment, retired, formerly Tuftex, Pinetown.
07/12/1960: Faldiela Paulsen, Dynatrade, Sandton.
07/12/1973: Brendan Thomas, Techmelt & Polymers, Pinetown.
08/12/1970: Doug Turner, Uniek Leatherworks, Polokwane/Pietersburg.
08/12/1972: Alan Shadbolt, Castaway Components, Cape Town.
08/12/1978: Barbara Wessels, Fleur Avant, Stellenbosch.
09/12/1944: John Watt, Bresan Footwear, Pietermaritzburg.
09/12/1949: Bob Ludlow, Albertina Bay, Durban.
09/12/1957: Rory Anderson, Rory Anderson Agencies, Cape Town.
09/12/1977: Yusuf Salie, AM Showroom/Shoe City, Marble Hall.
09/12/1990: Trent Hawke, Chillisource, Durban.

In Memoriam this week

03/12/2017: Jim Butterworth (b. 13/12/1937), retired, formerly Elliott Footwear [closed], Crown Footwear and Martin Johnson [closed], Durban.
04/12/2007: Neville Beckley (b. 27/01/1915), SA Footwear [closed], Durban.

Have you let us know about your birthday, or the birthdays of your colleagues? Our readers love this section, so please become part of it. This also applies to the In Memoriam section. Help us remember former colleagues.

Send us the links

We invite other businesses to send us links to websites, Facebook pages and the like which they feel would be of interest to others. The links below are from our database:

Traford Footwear, specialising in footwear imports: http://www.trafordfootwear.co.za/
Froggie, locally manufactured ladies fashion footwear & leather goods: https://froggie.co.za/

ABSA Agri Trends 23/11: Hides & skins prices

The average hide price over the past week was R4.15/kg green. NB* Hide prices are determined by the average of the RMAA (Red Meat Abattoir Association) and independent companies. On October 10, the average price for Dorper skins was R30.78, and for Merino skins was R91.28.

Classified Adverts

Shops for sale, Mpumalanga

Profitable footwear and clothing retailer (2 stores) for sale in Mpumalanga town.  No goodwill.  Pay only for stock, fixtures and equipment  +/-2.5m.  Property available for 250k.

Serious buyers can call 065 925 0359.

In need of a boardroom?

SAFLEC, situated at 6 Stedman Mews, 128 Jan Hofmeyr Road, Westville, has a boardroom for hire.
       It seats up to 12 people around a table, and has space to add up to 15 more chairs in the room. You are welcome to view the room before hiring.
       For more information, please contact Louise on 031 266 1473 or louise@saflec.co.za.
We look forward to being of service.

Contact us

News & Classifieds: Tony Dickson, +27 (0)31 209 7505, tony@svmag.co.za

Next newsletter: December 10, 2018.

SAFLIA enquiries: Tel 0800SAFLIA * Email info@saflia.co.za * Website http://www.saflia.co.za

Should you wish to subscribe email tony@svmag.co.za
Our website www.svmag.co.za