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COMMUNICATION AND LIAISON NEWSDESK Friday 10 September 2010

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COMMUNICATION AND LIAISON NEWSDESK Friday 10 September 2010 Powered By Docstoc
					               COMMUNICATION AND LIAISON
                         NEWSDESK
                 Friday 10 September 2010


Insurance / Assurance / Multi-nationals


Sanlam rides out tough conditions
INSURER Sanlam has posted a slight drop in headline earnings in the six
months to June, but said the overall business performance was better
than expected.

This was despite a tough trading environment locally and in its foreign
markets, according to group CEO Johan van Zyl.

The drop in earnings was offset by an increase in new life business
volumes, which grew 13%, and an increase of 16% in the net value of
new covered business to R283m.

But it experienced a decline in net inflow of new funds, which fell to
R6,6bn, down from R7,7bn.

Mr. van Zyl said he was pleased with the results, pledging to tough it out
for the remainder of the year, which he warned would be equally difficult.

This was because economic recovery and growth in SA, Africa and
beyond was taking longer than expected.

“In challenging business conditions during the six months ended June
30, the group performed well, with all key performance indicators
reflecting a satisfactory result on a comparable basis,” he said.

“This again confirms the group’s track record of resilient results as our
diversification strategy, combined with prudent operational and financial
practices, contributed towards its defensive character in adverse trading
conditions.

“The group’s core operations continue to provide a stable base,
complemented by an increasing contribution from investments in new
growth initiatives.”
Normalised headline earnings per share grew 2% to 80,5c, but diluted
headline earnings per share fell 5% to 79,2c.

Although headline earnings fell 4% to R1,61bn, its core earnings of
R1,84bn were 2% up on the corresponding period last year.

Mr. van Zyl said the performance of the key business segments was
pleasing, with its key operations in SA, the UK and India operating
profitably despite the effect of the recession.

Old Mutual analyst Paul Kahumuza said yesterday that Sanlam had not
disappointed despite a slight dip in headline earnings. “It is a stable and
predictable business and has produced good results, although they were
on the lighter side in terms of earnings.

“We have seen some good performance, particularly the UK business,
which had been suffering both in terms of earnings and new business,”
he said.

Mr. van Zyl said total new business volumes, excluding white label
business, decreased 3%, while new life business volumes increased 13%,
with strong contributions from the South African and UK operations.

The rest of the African operations also registered growth in business
volumes despite the difficult economic environment and the strong rand.

“New investment business declined by 8% from the high base in 2009,”
he said.

Business Day

Sanlam wants to target teachers for personal
loans

JOHANNESBURG - Sanlam said it was cautious of entering the micro-
lending environment, but was looking at expanding its personal loan
business to target professionals like teachers who had job security and a
track record of regularly paying their premiums.
"We are very careful of that (micro-lending) space. We don't really have
the expertise and where we can partner with people ... What we will do
however, what we have agreed on at Sanlam, is we have a fairly good
Sanlam personal loan business where we have been offering people who
have been paying regularly their premiums over a long period. We have
been offering them credit", Sanlam CEO Johan van Zyl said at an interim
results presentation on Thursday.
"We will expand that very slowly ... where we have people like teachers
and others with fairly secure jobs, very good track records of paying
premiums with us. We will expand that business, but I don't think that
we can call that micro-lending."
The CEO said management would work hard on maintaining its position
as South Africa's second largest insurer.
Sanlam believes Africa presents a number of opportunities especially in
countries like Nigeria, Malawi and east Africa and would continue
diversification in non-life business. The company said India also
presented good opportunities saying its JV in the Asian country had
issued 90 000 policies in the month of July. The group was also looking
at bulking up in the UK.
But Van Zyl noted that uncertainty and volatility in global markets was
likely to continue for a while, adding that its retail customer remained
under pressure and had seen a delay in recovery in the middle-level of
the income market
"Some of the challenges that we have ladies and gentlemen is persistency
particularly in the lower-income market in South Africa and Africa. When
people do lose jobs the lower-end of the market faces pressure," said Van
Zyl, adding that there were processes in place to control this.
"Persistency experience weakened at Employee Benefits and Sanlam
Developing Markets, which contributed to an overall R39m negative
persistency experience for the group in 2010 compared to marginally
positive experience in the first half of 2009," a results statement said.
Persistency is a percentage of an insurance companies already written
policies which remain in force without lapsing.
Van Zyl added that cost control was key going forward and the group
would discontinue business lines that it was unhappy with and focus on
the profitable part of the business.
Normalised headline earnings per share grew 2% to 80.5c in the six-
months to end June versus the corresponding period. New business
volumes for the period were down 3% to R50bn, but new life business
volumes rose 13% and the net value of new covered business was up
16% to R283m. Group equity value per share increased 7% to 2 479c per
share. A deteriorating underwriting environment and the strengthening
of the rand impacted results.
However, the insurer said it had R2.8bn in surplus capital after spending
over R1bn on a share-buyback. It said it would look for good
opportunities to avoid sitting with lazy capital.
Moneyweb
Sanlam settles pension fund disputes
Sanlam said Thursday that it has reached an agreement with the
curators of four pension and retirement funds on a settlement of
disputes that originated from the removal of surpluses from these funds
in                              the                              1990s.

The settlement agreement provides for Sanlam, without admission of
liability, to pay the Funds the sum of R175 million on specific terms and
conditions       accepted    by    the   curators     and      liquidators.

The Chief Executive Officer of the Financial Services Board (FSB),
although not a party to the settlement agreement, played an integral part
in the negotiations leading up to the settlement, Sanlam said.

The funds concerned are the Datakor Group Pension Fund and
Retirement Fund, the Cortech Pension Fund - all three under
curatorship - and the Picbel Groepvoorsorgfonds, which is in liquidation.

Sanlam said it has made several offers since 2006 to settle the matters
as part of an earlier undertaking given to the FSB and to the National
Prosecuting Authority (NPA).


Sanlam provided an undertaking to participate fully in all investigations
into allegations in respect of the removal of surpluses from the Funds in
the 1990s and to make every effort to see to it that the members of the
Funds       are      compensated      for      any     losses    suffered.

Sanlam added it continues to believe that it did not participate in any
unlawful action involving the surpluses, but that the settlement is in the
interests of the members of the Funds who have incurred losses.

The liquidators and curators have agreed to continue to take all
reasonable steps to recover the losses suffered by the Funds from all
other parties and persons against whom the Funds may have claims for
such                                                           losses.

"The net amount of all such recoveries up to a maximum of R25 million
will        be          paid         back          to       Sanlam."

As previously reported, Sanlam has made provision for the payment of a
possible settlement amount as a contingency.
Business Report

Sanlam pays R175m to settle pension scam
Insurer Sanlam set aside R175m to settle an 18-year-old pension fund
dispute relating to the misappropriation of pension fund surpluses in the
1990s, which affected about nine pension funds and thousands of
pensioners.
"We are very happy to say we have settled all outstanding issues on this
... The provision has been R175m for that and we disclose that fully,"
Sanlam CEO Johan van Zyl told an audience at an interim results
presentation in Johannesburg.
The settlement follows a scandal investigated by the Financial Services
Board and the National Prosecuting Authorities. It involved an illegal
scheme called Ghavalas.
The scheme, said to have been masterminded by Peter Ghavalas, a
former assistant general manager of Nedbank Investments, removed
surpluses from pension funds without fully disclosing this to the
Registrar of Pension Funds. Sanlam was implicated as an administrator
of the funds, but distanced itself from the individuals who developed the
Ghavalas option.
During investigations it emerged that a dividend of R44.1m had been
received within the Sanlam Group as a result of the implementation of
the Ghavalas scheme. Nine pension funds were affected.
Pension funds affected by the scam included Datakor, Mitchell Cotts,
Picbel, Cortech, Lucas SA Pension Fund, Sable, Power Pack and,
Jacaranda Pension Fund.
"Although it was not legally liable to do so Sanlam, without admission
of
liability, unconditionally paid the sum of R106m to the curators of the
two Datakor and the Cortech funds on December 14 2006 in respect of
the R44.1m. This amount represents the capital amount of the dividend
plus interest thereon from November 24 1997 to date of payment," said a
statement.
"Sanlam continues to believe that it did not participate in any unlawful
action involving the surpluses, but that the settlement is in the interests
of the members of the funds who have incurred losses."

Moneyweb
Market Abuse

PIC ‘cannot thwart sale of Nedbank’
THE sale of a majority stake in Nedbank to HSBC — a deal that could be
worth more than $7bn — would not be derailed by the Public Investment
Corporation’s (PIC’s) reported refusal to part with its shares in the bank,
parent company Old Mutual and banking analysts said yesterday.

A senior executive at the PIC, which is the single largest institutional
investor in Nedbank, was quoted by the Moneyweb website yesterday as
saying its stake was not for sale.

The comment by the PIC could set the scene for wrangling over the final
price that Nedbank’s minority shareholders want HSBC to pay to own up
to 70% of Nedbank. Sources said yesterday some shareholders want
HSBC to pay them as much as R155-R165 a share, a premium to its
closing price yesterday of R139.

HSBC, Europe’s largest banking group and the fourth-largest in the
world by market capitalisation, plans to buy all of Old Mutual’s 51,5%
stake.

Old Mutual’s head of investor relations, Patrick Bowes, said he did not
believe the PIC’s decision was an issue to worry about.

“Just for clarification, in terms of the potential offer, as this would be
made to all shareholders, one not taking up the offer leaves other
shareholders with additional opportunity to participate,” Mr. Bowes said.

He declined to discuss the deal as Old Mutual was now barred from
making any comment until HSBC has concluded its due diligence of
Nedbank, and made a decision on whether to make a firm offer to its
shareholders.

According to Nedbank’s share register at the end of June, the PIC was
the second-largest shareholder, owning up to 7,62%.

Other institutional investors are Lazard Asset Management of the US,
which owns 4,92%, Coronation Fund Managers with 2,63%, and Sanlam
Investment Management with 1,89%.

“The Old Mutual stake is already a majority stake at around 51,4%,
anyway,” the PIC’s Penny Motsamai was quoted as saying by Moneyweb.
“So while we see no reason to block the deal, we would prefer not giving
HSBC more than what they already have from Old Mutual.”

Ms Motsamai could not be reached yesterday to clarify her comments.

Coronation Fund Managers analyst Neville Chester said the sale would
go ahead even if the PIC or other minorities kept their shares. “They (Old
Mutual) have a controlling stake (which) they are prepared to sell, so if
they agree on terms with HSBC and get all the regulatory issues on their
side, it is not going to stop the deal,” Mr. Chester said.

Sanlam Investment Management analyst Patrice Rassou said the
decision by the PIC would not “be a deal breaker”. If Old Mutual was
prevented from voting on the deal, that could present a problem, but not
necessarily scupper the transaction, he said.

The banking regulator has reacted cautiously to the proposed deal,
saying the interest by HSBC was good for SA and the banking sector.

Business Day


General

Rates cut to 30-year low to kickstart recovery
THE Reserve Bank cut interest rates to a 30-year low yesterday, warning
that the pace of recovery would slow in the months ahead.

Strength in the rand figured in the Bank’s widely expected decision to
cut its repo rate by half a percentage point to 6%, as it helps to improve
the inflation outlook.

But the currency firmed after the news, showing that the high “yield
appeal” of local assets was still intact for global investors.

SA’s benign inflation outlook created room for monetary policy to
“provide additional stimulus to the somewhat fragile recovery of the
domestic economy, which remains vulnerable to the uncertain global
environment,” the Bank said.

Governor Gill Marcus said scope for further rate cuts was limited, but
dismissed speculation that interest rates would inevitably rise next year.
Most analysts said it was clear the downward cycle had ended, but
interest rates were likely to remain “on hold” for longer than expected,
possibly until 2012.

Business Unity SA welcomed the decision. It acknowledged that other
policy shifts were needed to boost modest economic growth, but
suggested interest rates may have to be reassessed again.

Ms Marcus said the Bank would remain “forward-looking” and informed
by close scrutiny of economic data, as well as other developments. The
Bank has now reduced its repo rate by six percentage points since late
2008. That has taken the prime lending rates of commercial banks to
9,5% — their lowest since 1980.

Despite this, SA’s pace of growth was expected to “remain below potential
for some time, against the backdrop of a fragile global economy”, the
Bank said.

Although fears of a reversion to recession in advanced economies had
“diminished somewhat, the downside risks remain high”. That would also
keep global inflation pressures at bay.

The decision of the Bank’s monetary policy committee (MPC) yesterday
was simplified by lower than expected inflation in SA, which allowed it to
revise its inflation forecasts down.

Consumer prices were likely to average 3,7% in the third quarter of this
year, well inside the official target range of 3%- 6% and well below the
Bank’s forecast in July of 4,5%. They would then average 4,8% next year,
and rise to 5,1% by the end of 2012, the Bank said.

The “decision to cut the repo rate ... was absolutely the right thing to
have done”, said Standard Chartered’s regional research head for Africa,
Razia Khan. “Inflation has behaved better than expected and looks like it
will remain benign for longer.”

The Bank said growth during the second quarter of the year — which
slowed to 3,2% from 4,6% in the first quarter — had been surprisingly
low, mainly due to a sharp contraction in mining. “Growth in the second
half is expected to moderate further,” it said. Spending was likely to
moderate in the aftermath of the World Cup, and price hikes during the
event had quickly reversed, it said. High wage settlements were the main
threat to the inflation outlook, it warned. Unless accompanied by higher
productivity, the pay hikes could put pressure on domestic prices and
hurt SA’s global competitiveness.
They were also likely to have a “negative impact” on jobs.

Strength in the rand could lead to lower than expected inflation, and
make the currency a bit too strong for SA’s recovery. There was little the
Bank could do about this as it was driven by foreign capital inflows, the
MPC said.

The search for higher yield by pension funds in developed economies was
affecting other emerging markets, and appeared to be more long term
than in the past, it said. Citigroup trader Julian Wilson said the global
trend would probably lift the rand to the key R7/ level, despite the cut.

Business Day



JSE decides not to pursue ABSA
Absa has escaped censure from the JSE after the premature publication
of its interim results in the Financial Mail a day earlier than planned.

The JSE said in a statement that while Absa had breached a rule of its
listing requirements through the premature release of price sensitive
information to the market before posting it on the exchange's news
service, it had decided to let the matter rest.

This was because Absa had swiftly moved to release the results, about
half an hour after its shares were suspended for the premature
publication of the results, and also the results were in line with the
lender's earlier trading update to shareholders. In addition, there was
little impact on trading of Absa shares and the lender had immediately
notified the exchange of the breach.

"Absa is also further implementing a number of enhanced governance
actions and controls to ensure that a similar incident does not occur in
future, including reviewing third party supplier governance and limiting
publication to daily newspapers," said the JSE

Business Day

More interest rate cuts unlikely — Marcus
THE Reserve Bank sent a clear signal yesterday that interest rates are
unlikely to fall any further, after cutting its key repo rate to 6% and
driving prime lending rates to a 30- year low.
But the Bank’s governor, Gill Marcus, also moved to damp down
widespread speculation that interest rates will rise next year.

“The scope for downward movement is seen to be limited, but this will be
assessed on an ongoing basis,” she said after the Bank’s policy meeting
ended.

But in reply to a question, she said it would be wrong to make any
assumptions on the direction of interest rates over the next year.

“We haven’t given any indication of when we would raise rates … don’t
assume that we are agreeing or disagreeing … given our outlook in terms
of growth and interest rates,” she said.

Some economists said the bleak outlook for growth seen by the Bank and
the benign inflation outlook mean interest rates are unlikely to rise until
2012.

“Given that inflation is expected to remain within the target range until
the end of 2012, we expect the repo rate to be unchanged (until the
second quarter of that year),” Absa Capital economist Gina Schoeman
said.

The Bank revised its growth forecast for this year down to 2,8% from
2,9% at its last policy meeting in July. It also lowered its forecast for next
year to 3,2%, from 3,6% at its May meeting.

Growth in the second half of this year is likely to moderate further, and
remain below its potential pace for “some time” against the backdrop of a
fragile global economy, the Bank said.

But in the context of its flexible inflation-targeting mandate, a lower price
profile over the next two years gave it the green light to cut interest rates.

Consumer inflation is set to average 3,7% in the third quarter of this
year, below its estimate of 4,7% in May.

The Bank sees it rising to an average 4,8% next year and reaching 5,1%
in the final quarter of 2012 — also slightly below its July forecast of
5,3%.

Some economists still see scope for further rate cuts, if growth and
inflation continue to fall below expectations, which is possible due to
fallout from an “uncertain” global environment.
“We believe there is still downside risk to interest rates, although a
further cut would require negative growth surprises both globally and
locally,” Nedbank economist Isaac Matshego said.

A few others agree. But most analysts believe the falling cycle of interest
rates is over.

“The economy is growing, this is a step to support that,” Ms Marcus told
journalists.

Wage settlements above the inflation rate of 3,7% will help boost
consumption, but are also the main upward risk to the inflation outlook,
the Bank said.

The exchange rate of the rand, which firmed after the rate cut, remained
the “main downside” risk to inflation, it said.

A strong rand curbs inflation by keeping prices of imports lower but also
erodes the competitiveness of local exports.

The volatile unit initially firmed by a few cents to R7,16/ after the rate
decision. Later it fell back to R7,21, its level just before the news. The
rand has appreciated by 5,7% against a trade-weighted basket of
currencies this year.

The unit had sustained its rally despite further accumulation of foreign
exchange reserves by the Bank including the use of long-term swaps to
back the process.

The gains were driven by the search for higher yields by foreign fund
managers in developed countries, where interest rates are close to zero.
The flows into emerging markets appear to be “long term” in nature, the
Bank said.

Business Day

Marcus       cuts      key      rate      to      expected       6%

Yesterday's decision by Reserve Bank governor Gill Marcus to cut the
bank's repo rate by a half percentage point to 6 percent may signal a step
change                 in                 monetary                 policy.

The bank's benchmark prime and mortgage rates fell in line with the
repo rate to 9.5 percent - a level last seen towards the end of 1979.

Structural changes in the global economy are channelling strong
investment flows to emerging market economies - particularly into
bonds.

Importantly, Marcus pointed out that, in contrast to previous years,
when "the flows appeared mainly speculative in nature", they now appear
to be longer-term investments by foreign pension funds and other fund
managers.

The trend followed sovereign risk crises in euro zone countries earlier in
the year which turned emerging markets into relative safe havens.
Longer-term funds will provide more stability for the rand, which in turn
will create a more benign inflationary environment, leaving scope for
flexibility             in                monetary                 policy.

Marcus also spoke of a changed approach to monetary policy,       involving
foreign exchange swaps. This is a technical device which allows   the bank
to intervene in the foreign exchange market without incurring     the huge
costs associated with accumulating additional foreign             reserves.

The rand, which had appreciated by 4.6 percent against the dollar since
the July meeting of the bank's monetary policy committee (MPC), gained
more ground yesterday to be bid at R7.1793 at 5pm, 5.42c stronger than
a day earlier. The appreciation seemed perverse as the decision to keep
the rate on hold in July also strengthened the currency. At the time
Marcus was criticied by economists, trade unions and exporters who
hoped     for    a     rate    cut   and     a     weaker     currency.

Yesterday brought the rate cut but not a weaker rand.

Business Day

Rates cut to 30-year low to kickstart recovery
THE Reserve Bank cut interest rates to a 30-year low yesterday, warning
that the pace of recovery would slow in the months ahead.

Strength in the rand figured in the Bank’s widely expected decision to
cut its repo rate by half a percentage point to 6%, as it helps to improve
the inflation outlook.

But the currency firmed after the news, showing that the high “yield
appeal” of local assets was still intact for global investors.

SA’s benign inflation outlook created room for monetary policy to
“provide additional stimulus to the somewhat fragile recovery of the
domestic economy, which remains vulnerable to the uncertain global
environment,” the Bank said.

Governor Gill Marcus said scope for further rate cuts was limited, but
dismissed speculation that interest rates would inevitably rise next year.

Most analysts said it was clear the downward cycle had ended, but
interest rates were likely to remain “on hold” for longer than expected,
possibly until 2012.

Business Unity SA welcomed the decision. It acknowledged that other
policy shifts were needed to boost modest economic growth, but
suggested interest rates may have to be reassessed again.

Ms Marcus said the Bank would remain “forward-looking” and informed
by close scrutiny of economic data, as well as other developments. The
Bank has now reduced its repo rate by six percentage points since late
2008. That has taken the prime lending rates of commercial banks to
9,5% — their lowest since 1980.

Despite this, SA’s pace of growth was expected to “remain below potential
for some time, against the backdrop of a fragile global economy”, the
Bank said.

Although fears of a reversion to recession in advanced economies had
“diminished somewhat, the downside risks remain high”. That would also
keep global inflation pressures at bay.

The decision of the Bank’s monetary policy committee (MPC) yesterday
was simplified by lower than expected inflation in SA, which allowed it to
revise its inflation forecasts down.

Consumer prices were likely to average 3,7% in the third quarter of this
year, well inside the official target range of 3%- 6% and well below the
Bank’s forecast in July of 4,5%. They would then average 4,8% next year,
and rise to 5,1% by the end of 2012, the Bank said.

The “decision to cut the repo rate ... was absolutely the right thing to
have done”, said Standard Chartered’s regional research head for Africa,
Razia Khan. “Inflation has behaved better than expected and looks like it
will remain benign for longer.”

The Bank said growth during the second quarter of the year — which
slowed to 3,2% from 4,6% in the first quarter — had been surprisingly
low, mainly due to a sharp contraction in mining. “Growth in the second
half is expected to moderate further,” it said. Spending was likely to
moderate in the aftermath of the World Cup, and price hikes during the
event had quickly reversed, it said. High wage settlements were the main
threat to the inflation outlook, it warned. Unless accompanied by higher
productivity, the pay hikes could put pressure on domestic prices and
hurt SA’s global competitiveness.

They were also likely to have a “negative impact” on jobs.

Strength in the rand could lead to lower than expected inflation, and
make the currency a bit too strong for SA’s recovery. There was little the
Bank could do about this as it was driven by foreign capital inflows, the
MPC said.

The search for higher yield by pension funds in developed economies was
affecting other emerging markets, and appeared to be more long term
than in the past, it said. Citigroup trader Julian Wilson said the global
trend would probably lift the rand to the key R7/ level, despite the cut.

Business Report

Marcus cuts key rate to expected 6%
Yesterday's decision by Reserve Bank governor Gill Marcus to cut the
bank's repo rate by a half percentage point to 6 percent may signal a step
change                 in                 monetary                 policy.

The bank's benchmark prime and mortgage rates fell in line with the
repo rate to 9.5 percent - a level last seen towards the end of 1979.

Structural changes in the global economy are channelling strong
investment flows to emerging market economies - particularly into
bonds.

Importantly, Marcus pointed out that, in contrast to previous years,
when "the flows appeared mainly speculative in nature", they now appear
to be longer-term investments by foreign pension funds and other fund
managers.

The trend followed sovereign risk crises in euro zone countries earlier in
the year which turned emerging markets into relative safe havens.
Longer-term funds will provide more stability for the rand, which in turn
will create a more benign inflationary environment, leaving scope for
flexibility             in                monetary                 policy.

Marcus also spoke of a changed approach to monetary policy, involving
foreign exchange swaps. This is a technical device which allows the bank
to intervene in the foreign exchange market without incurring the huge
costs associated with accumulating additional foreign reserves.

The rand, which had appreciated by 4.6 percent against the dollar since
the July meeting of the bank's monetary policy committee (MPC), gained
more ground yesterday to be bid at R7.1793 at 5pm, 5.42c stronger than
a day earlier. The appreciation seemed perverse as the decision to keep
the rate on hold in July also strengthened the currency. At the time
Marcus was criticised by economists, trade unions and exporters who
hoped     for    a     rate    cut   and     a     weaker     currency.

Yesterday brought the rate cut but not a weaker rand.

The large differential between local and offshore rates has been
supporting the currency. Offshore investors have been borrowing in low
interest rate currencies and investing in emerging markets, where the
yields                           are                           higher.

The differential is still wide, however. Central banks in advanced
economies have key rates of between zero and 2 percent. Chris Hart, an
economist at Investment Solutions, said in recent weeks central banks in
those countries had made it clear that they were keeping rates at present
levels for the foreseeable future. With no hope of better yields from
advanced economies, institutional funds stepped up their investments in
emerging                                                      economies.

"There's a constant current flowing from developed to emerging markets,"
Hart                                                               said.

The rate cut may persuade consumers to start borrowing again. Credit
extension has started to recover with growth in household credit rising
about 5 percent year on year in July. Though the ratio of household debt
to disposable income remains high, at 78.4 percent, the 6 percentage
point fall in rates since December 2008 has cut the cost of servicing debt.

Jacques du Toit, an analyst at Absa, said the ratio of servicing household
debt (interest payments) to income was 8.1 percent of household income
in the first quarter from 12.3 percent in the fourth quarter of 2008.
Consumption contributes about 60 percent to total gross domestic
product, so a recovery in household spending could support the
economy. Annual growth subsided from 4.6 percent in the first quarter to
3.2             percent            in              the             second.

Business and some economists had hoped that the MPC would cut by a
full percentage point. And there are expectations of a further half
percentage point cut at the next MPC meeting in November.

Business Report


SENS
DATE      TIME   COMPANY               HEADLINE
10.09.2010 11h29 Metmar Ltd                   MML - Metmar Limited - Update on developments at
                                              Kalahari Resources
10.09.2010 10h09 Cape Empowerment Ltd         CAP - Cape Empowerment Limited - Further Cautionary
                                              Announcement
10.09.2010 09h57 Astrapak Ltd                 APKP - Astrapak Limited - Dividend declaration in respect of
                                              426.192 Cents per
10.09.2010 09h51 Hudaco Industries Ltd        HDC - Hudaco Industries Limited - Acquisition of Filter and
                                              Hose Solutions (Pty)
10.09.2010 09h41 BioScience Brands Ltd        BIO - BioScience Brands Limited - Further cautionary
                                              announcement
10.09.2010 09h40 Absa Group Ltd               ASA/ABSP - Absa Group Limited/ Absa Bank Limited -
                                              Notice of dealings in
10.09.2010 09h25 Queensgate Hotels and Lei...QHL - Queensgate Hotels And Leisure Limited - Renewal of
                                              cautionary
10.09.2010 09h00 JSE Ltd                      GEN - ADW - Emphasis of matter
10.09.2010 08h58 Barnard Jacobs Mellet Hol... BJM - Barnard Jacobs Mellet Holdings Limited -
                                              Announcement and cautionary
10.09.2010 08h15 Lonrho Plc                   LAF - Lonrho Plc - Appointment of broker
10.09.2010 08h08 SABMiller plc                SAB - SABMiller Plc - Amendments to the $300 000 000 of
                                              6.625% guaranteed
10.09.2010 08h00 Marshall Monteagle Holdin... MTE - Marshall Monteagle Holdings Societe Anonyme -
                                              Dealing in securities by
10.09.2010 07h05 Capital Shopping Centres ... CSO - Capital Shopping Centres Group Plc - Notification of
                                              major interests in

Moneyweb


Auditors


SA in top spot for auditing, reporting standards
SA HAS moved into the top spot in the ranking of auditing and reporting
standards out of 139 economies, according to the World Economic
Forum’s (WEF’s) Global Competitiveness Report 2010- 11, which was
released yesterday.
This was an important move up from last year’s second place, and fourth
place in 2008.

Bernard Agulhas, CEO of the Independent Regulatory Board for Auditors
(Irba), said that the implications of such a ranking should be comforting
for South African businesses and financial institutions, including
overseas investors. “The global economic meltdown has seen
governments facing new challenges with regard to debt, unemployment
and growth, and respond by investigating reforms in institutions and the
markets. In this environment, regulators and standard-setters such as
Irba must remind government that today’s decisions and economic
strategies affect the future of our country,” he said.

SA was one of the first countries to adopt international auditing
standards. “This was a very strategic decision at the time, as far as back
as 2005, when we realised that the world needs to understand the
standards against which financial statements are prepared, as well as
the standards against which they are audited.”

Mr. Agulhas, however, cautioned against any decisions that might hurt
SA’s international standing as a respected regulator and standard-setter.
“This does not mean that we slavishly follow global trends — we have to
adapt standards and regulations to best serve the South African public.”

Kathy Robison, head of risk management at audit, tax and business
advisory firm Mazars, said: “SA has always been a global leader for its
accounting and auditing standards.”

However, Ms Robison said that the auditing and accounting profession
could be under threat if SA did not improve the quality of education,
particularly in subjects such as maths and science. The WEF report
ranked SA as having one of the worst education systems in the world.

There are about 4500 auditors. “There is just not enough growth of
auditors taking place within the profession,” said Ms Robson. “SA is
going to struggle to maintain such high auditing standards.”

Andrew Hannington, who is national chairman of PKF chartered
accountants and business advisers, said that the WEF ranking was very
high for a developing country such as SA, particularly having regard to
the fact that the profession was battling to find auditors and chartered
accountants and retain them.

“The high ranking places an unnecessary strain on the profession. It is
totally unnecessary to place a country such as SA ahead of first-world
countries, particularly having regard to its gross domestic product,” he
said.

Deepak Nagar, managing partner of Grant Thornton’s Durban office, said
that the ranking would instill confidence locally and from a foreign
perspective.

Business Day


Other Regulators

Competition body probes plastic pipe makers
THE Competition Commission yesterday said it was investigating anti-
competitive behaviour among manufacturers of plastic pipes.

The pipes are used in plumbing in all types of building and the
companies being probed — Flo-Tek Pipes and Irrigation, DPI Plastics,
Andragm Gazelle Plastics, Swan Plastics, MacNeil Agencies, Petzetakis
and Marley Pipe Systems — control most of the market.

Their collusive behaviour is said to have pushed up prices and increased
the costs of construction. “Municipalities, construction companies and
members of the public were the main end-users of the plastic piping and
therefore the victims of the manufacturers’ cartel arrangements,”
competition commissioner Shan Ramburuth said.

He said the commission had identified the construction industry as a
priority sector and aimed to stop anticompetitive behaviour, such as
colluding on material prices and forming cartels. “Our intention in this
sector is significant in the context of government spending commitments
to infrastructure.”

Collusion was uncovered in the multibillion-rand industry in 2007 when
one of the companies, DPI Plastics, filed a merger notification with the
commission.

During the course of the merger investigation, the commission found
evidence of price-fixing, bid-rigging, discounts and the allocation of
customers among the manufacturers.

DPI plastics has requested leniency in exchange for co-operation with the
commission, while Marley Pipe Systems paid the commission more than
R31m in exchange for immunity and co-operation in the prosecution of
other companies.

The commission has asked that the Competition Tribunal impose an
administrative penalty of 10% on the annual turnover of producers. The
amount each would be charged is confidential, but is believed to run into
tens of millions of rand.

The Competition Commission said it had not sought any relief against
DPI Plastics because it applied for immunity from prosecution and a fine
in terms of the commission’s corporate leniency policy. DPI’s immunity
application was submitted on January 8 2008.

“Our focus on (the construction sector) is evident in the various cases in
progress ... the commission initiated investigations in a number of
product markets which potentially raise the cost of infrastructure
projects. These also included steel products, wire, bricks, building
aggregates and cement,” Mr. Ramburuth said.

The construction sector has been significantly affected by the global
economic downturn, with a decline in the residential housing market and
the unwillingness of corporates to invest in projects. It can thus ill afford
to bear the brunt of any anti- competitive behaviour, say analysts.

Business Day


Media
E.tv and Multichoice awarded mobile TV
licences
The Independent Communication Authority of South Africa (ICASA) has
awarded both E.tv and Multichoice licences to provide mobile TV.

“E.tv and MultiChoice did not have other competing bidders with respect
to the multiplexes they applied for... as a result, the authority has
decided to grant the licences toboth,” Icasa chairman Stephen Mncube
said in Johannesburg.

ICASA initially wanted to launch mobileTV prior to the recent FIFA 2010
world cup, but after missing the deadline an invitation was sent out in
April of this year.

Applications were received not only from MultiChoice and E.tv but also
the Mobile TV Consortium and Super 5 Media.
MultiChoice, the Mobile TV Consortium and Super 5 Media were all
initially disqualified for failing to comply with regulations regarding the
preliminary requirements of mobile TV.

Following this, E.tv applied for 40% capacity of the frequency, after
which a second invitation was sent out in May this year for the
remaining 60 percent.

Two applications were received from MultiChoice and Super 5 Media.

“Unfortunately, Super 5 Media withdrew its application,” Mncube said.

Icasa councillor Robert Nkuna said if everything went according to plan,
the services would be available to the public within 12 months.

It is at this stage unclear as to how much mobile TV will cost the public

Business Day

Editors in talks with ANC on new approach to
self-regulation, tribunal
SENIOR African National Congress (ANC) officials were told yesterday the
media was setting up a committee of high-level stakeholders to look at
ways of improving self- regulation and addressing some of the concerns
raised by the ANC.

Yesterday’s meeting between the South African National Editors Forum
(Sanef), ANC secretary-general Gwede Mantashe and other senior party
members in Johannesburg comes a week before the party’s national
general council meeting in Durban, where the proposed media appeals
tribunal will be discussed.

Last month, the Press Council of SA announced that it would be
reviewing its complaints procedures and the South African Press Code —
the yardstick used by the ombudsman to assess the validity of
complaints against the press.

Sanef chairman Mondli Makhanya said yesterday that the editors’ forum
and Print Media SA were convening a high-level review, headed by a
retired judge, to look at the present media environment and where it can
be improved.
The two bodies are putting together a panel and finalising terms of
reference. “What we want at the end is to have a Rolls-Royce self-
regulation system,” Mr. Makhanya said.

“The panel will (include) representatives from business, academia, media
— anyone who has an interest in media,” he said.

The study is expected to take between three and six months, and the
findings will be made public. The council’s review, on the other hand, is
expected to be completed by November.

President Jacob Zuma, who has been on the receiving end of critical
news reports about his personal affairs and performance, has made his
support of a media tribunal clear, arguing that those wronged by print
media have no mechanisms to protect their rights.

In response to a question in Parliament by the Democratic Alliance on
Wednesday, Mr. Zuma said an apology ordered by the press ombudsman
often did not address massive damage that could be done by inaccurate
news reports.

He said the review by the council was the result of the ANC raising the
issue. The idea of a tribunal , which would be answerable to Parliament
and able to issue big fines against journalists, is seen by many in the
media and institutes of learning as an attempt to control the media.

Mr. Makhanya said he saw yesterday’s meeting as encouraging. The two
groups have agreed to hold further discussions.

Business Day

Humour (‘1’)

May those who love us love us,
and those who do not love us,
may God turn their hearts,
and if He cannot turn their hearts
may He turn their ankles
that we may know them by their limping.
~Irish Prayer
Just because you're not paranoid doesn't mean they're not out to get you. ~Colin
Sautar

				
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