Finweek UK 20 February 2014
finweek MONEY. POWER. M Start-up feature Meet the team from Weaver SHABBA: AND YOUR MONEY RICH KIDS A SOCIALLY RESPONSIBLE entrepreneur LESSONS IN Life hacks for ANY money personality MONEY STANLIB BOND FUND EXXARO ONELOGIX MAKE money WITH www.finweek.com 20 February 2014 SA: R23.50 (incl. VAT) Other countries: R20.61 (excl. VAT) 9 771024 740005 08937 The accolades we’ve won over the years are proof that we do. www.stanlib.com STANLIB is an Authorised Financial Services Provider 10221 Compliance number: 3DR068 Success follows passion. Some choose not to follow their passion. finweek MONEY. POWER. M Start-up feature Meet the team from Weaver SHABBA: AND YOUR MONEY RICH KIDS A SOCIALLY RESPONSIBLE entrepreneur LESSONS IN Life hacks for ANY money personality MONEY STANLIB BOND FUND EXXARO ONELOGIX MAKE money WITH www.finweek.com 20 February 2014 SA: R23.50 (incl. VAT) Other countries: R20.61 (excl. VAT) 9 771024 740005 08937 Cover story: Tandisizwe Mahlutshana Cover concept and layout: Beku Mbotoli Photo: Gallo images/ Getty images: Drum/ Lubabalo Lesolle P10 LIFE HACKS FOR ANY MONEY PERSONALITY P56 Road Test: Sony PS4 Inside 4 Feedback From our readers 6 Rewind & Fast Forward News review and preview 8 Context Corruption in South Africa 10 Cover Life hacks for any money personality 18 Insight Entrepreneur turned activist 22 Right of Reply A view from SA’s accounting body 24 The Gab Why I banned brainstorming 30 Investment Industrials present risk, resources & banks 32 opportunity; Windows of opportunity for miners 34 Killer Trade: Exxaro Resources selling momentum is 36 slowing; Mining’s evil triplets 37 Invest DIY Understanding the retailer sector 38 Pro Pick Simon Property Group 39 House View Punts 40 Traders Analysts giving you the low-down 41 Simon Says Adapt IT, BSI Steel, Satrix 42 Small Cap Steady growth for OneLogix 43 Fund Focus Stanlib Bond Fund 44 Entrepreneur Six ways to raise our kids to be entrepreneurs 48 Start-ups: Understanding Kiril Dobrev 50 Money Born rich; Lessons from death 54 Goodwill in valuation 56 Technology Road Test: Sony PS4; Al to improve Africa 58 Life H ow we spoil ourselves (and how we afford it) 60 Directors & Dividends D ealings and payouts 62 In Brief Crossword; Sudoku; Tweets P44 Six ways to raise our kids to be entrepreneurs P24 Why I banned brainstorming P18 Entrepreneur turned activist FEEDBACK 4 FINWEEK 20 FEBRUARY 2014 Feedback PUBLISHED BY MEDIA24 WEEKLY MAGAZINES PRINTED BY PAARL MEDIA AND DISTRIBUTED BY ON THE DOT HEAD OFFICE 40 HEERENGRACHT, CAPE TOWN, 8001 OR PO BOX 1802, CAPE TOWN, 8000. PHONE 021-406-4552 GAUTENG OFFICE 5 PROTEA PLACE, PROTEA PARK, SANDOWN, 2196 OR PO BOX 785266, SANDTON, 2146. TEL 011-217-3053. WEBSITE www.finweek.com OVERSEAS SUBSCRIBERS +27-21-405-1905/7 FINWEEK SUBSCRIBES TO THE SOUTH AFRICAN PRESS CODE WHICH COMMITS US TO JOURNALISM THAT IS TRUE, ACCURATE, FAIR AND BALANCED. IF YOU THINK WE ARE NOT COMPLYING WITH THE CODE, CONTACT THE PRESS OMBUDSMAN AT 011-484-3612 OR ombudsman@presscouncil.org.za © FINWEEK 2011 ALL RIGHTS RESERVED. TO INQUIRE ABOUT PERMISSION TO REPRODUCE MATERIAL CALL OUR ARCHIVE AT 021-406-3232. SUBSCRIBERS 0861 000 571 subs@finweek.co.za SHOPS 0861-888-989 assistance@onthedot.co.za INQUIRIES Share your thoughts with us on Twitter (@Finweek) or find us on Facebook (facebook.com/Finweek) EDITORIAL EDITOR MARC ASHTON DEPUTY EDITOR TANDISIZWE MAHLUTSHANA MANAGING EDITOR NICOLE BOUCKAERT JOURNALISTS AND CONTRIBUTORS SIMON BROWN, SIMON DINGLE, GLENDA WILLIAMS, JESSICA HUBBARD, DAVID MCKAY, BRUCE WHITFIELD, KRISTIA VAN HEERDEN, GLENDA WILLIAMS, DANIELLE GARRETT, BLAIR BURMEISTER, WARREN DICK SUB-EDITORS WILLEM KEMPEN, STEFANIE MULLER, JUSTINE OLIVIER OFFICE MANAGER THATO MAROLEN LAYOUT ARTISTS BEKU MBOTOLI, TSHEBETSO DITABO, ZANDRI VAN ZYL GENERAL MANAGER CHARLENE BEUKES PUBLISHER LEE-ANNE COOSNER PROJECT MANAGER DEIRDRE MCDONALD CEO: MEDIA24 MAGAZINES JOHN RELIHAN CFO: MEDIA24 MAGAZINES RAJ LALBAHADUR ADVERTISING SALES AND SOLUTIONS SALES DIRECTOR CRAIG NICHOLSON 011- 322-0731 BUSINESS MANAGER (KZN) EUGENE MARAIS 031-566-4178 BUSINESS MANAGER (DIGITAL) TERANCE WINSON 021-443-9418 NATIONAL SALES MANAGER WEATHERTON NYAMBEU 011-217-3185 CIRCULATION SALES & SOLUTIONS CIRCULATION MANAGER ARMAND KASSELMAN 0 21-443-9975 SUBSCRIBER ENQUIRIES ELMARIE EYGELAAR 021-443-9828 IN COMPANIES, UNITY IS VITAL Good to read Finance for non-financial sorts and to agree with some, but not all of what Paul Maughan writes. However, he is correct in detecting my irritation, irritation that he still peddles the accountant versus marketers (and every- one else) argument. As a lecturer I would suggest he should know better. This is an argument that sadly still exists in some companies, and is debilitating to their per- formance. Not an argument that exists in top global FMCG (fast-moving consumer goods) companies. Writing as long ago as 1997 in the publication Brand Valuation, published in London by Interbrand/Pre- mier Books, I refer to the issue and to the harm internal strife does to external per- formance of a company. Fast-forward to last month and the chief marketing officer (CMO) of Deloitte (where accountants are grown) was telling a Corporate Citizenship Conference at the Harvard Club in New York that 85% of all corporate value creation comes from intan- gibles. That is worth repeating: yes, 85%. But your writer would be quick to point out this would not apply in the min- ing sector! Just as in any rugby side you have the specialist skills of a hooker, prop (both loose and tight head) and that is only three of the fifteen players, so in business you require an array of skills. But the bottom line is that you all play for the same team, and teams that play as one are the most successful. Jeremy Sampson Visiting Professor at the UCT Graduate School of Business COMMENTS ON ETFS In reference to Top40 ETFs: All things aren’t equal (13 February edition), great article! I have a question related to costs: if I were to go the route of using a broker instead of buying an ETF through one of the pro- viders, I would obviously incur brokerage as a one-off cost. Subsequently, I would only incur annual charges related to the TER but not the annual platform fee. This would amount to a saving of 0.65% per an- num if I use the Satrix platform. Am I cor- rect in this? I guess the only downside to going this route is that if you buy and sell regularly, brokerage costs would be much higher than the 0.1% transaction charge that Sat- rix would charge. Kind regards, Michael Gers THIS WEEK’S CONTRIBUTORS Marc Ashton marca@finweek.co.za Tandisizwe Mahlutshana tandisizwem@finweek.co.za Blair Burmeister blairb@finweek.co.za Lisa Illingworth lisa@lkdesines.co.za Gavin Symanowitz gavin@blockbusterinnovation.com David Mckay david@miningmx.com Moxima Gama moxima@themoneyhub.co.za Simon Brown simon@justonelap.com Warren Dick warrendick7@gmail.com Colette Symanowitz colette@mbaconnect.net Gregg Sneddon gregg@thefinancialcoach.co.za Glenda Williams glendaw@finweek.co.za Kristia van Heerden kristiav@finweek.co.za Simon Dingle simond@finweek.co.za For more information, visit finweek.com Contact Finweek, P O Box 785266, Sandton 2146, tel (011) 217-3000 or feedback@finweek.co.za Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton Investments. This material does not constitute investment advice or an invitation to apply for securities. Investors should seek professional nancial advice and obtain a full explanation of any proposed investment before making a decision to invest. Investments involve risks. The values of investments can go down as well as up, and investors may not get back the full amount invested. © 2014 Franklin Templeton Investments. All rights reserved. GLOBAL PERSPECTIVE. LOCAL EXPERTISE. There’s a world of investment opportunity out there, if you know where to look. With over 600 investment professionals and offices in more than 30 countries, Franklin Templeton offers investors a unique perspective on the increasingly important and complex world of global investing today. To put our 65 years of global investment experience to work for you, visit franklintempleton.co.za or contact your nancial advisor. INVESTMENT OPPORTUNITiES SPAN THE GLOBE. SO DO WE. R ecently Janet Yellen was sworn in as the new chairperson of the US Federal Reserve. With the global economy still fragile, there are some interesting parallels to be drawn between the role that Yellen will ful- fil and the pressures on South Africa’s own Reserve Bank Governor Gill Marcus. Could they be a force to shape global finance over the next few years if they worked closer together? Vunani Securities economist Ilke Smit describes the waters Marcus is navigat- ing: “South Africa is an economy currently struggling with below-potential economic growth with inflation expected to breach the upper limit of the target band (3%-6%) soon.” Isaac Matshego, an economist at Ned- bank, says that one of Yellen’s major chal- lenges, which is different from Marcus’s, is ending the massive monetary stimulus that has been implemented in the US over the past four years. The US GDP growth rose to just over 4% in the third quarter of 2013 as both consumer spending and business investment strength- ened. Yellen therefore has to normalise US interest rates as the US recovery gains momentum and unem- ployment continues to drop, says Matshego. Another differ- ence between the two countries is the savings rate. The US enjoys a positive sav- INSIGHT 6 FINWEEK 20 FEBRUARY 2014 Rewind lights that there is another economic factor the two could work together on and learn from one another. Says Smit: “A macro-economic conun- drum especially rife in South Africa, which is starting to plague the US economy in ever greater terms, is inequality in income distribution. Unequal income distribution does not affect monetary policy in the short term, but does lower the potential level of economic growth in the long term, which could be something rising the complexity of US monetary policy making in due course.” Flow of advice is therefore another poten- tial benefit, says Lings, because no central bank has all the answers. “That interaction between the Sarb and the US Fed can be extremely helpful for SA as it can help as well when it comes to policy formulation and studying other models.” SA’s current Monetary Policy Commit- tee (MPC) framework was adopted from the Bank of England MPC, and was strength- ened by former member, Ian Plenderleith. Plenderleith was appointed deputy governor of the Sarb in 2003 under former Governor Tito Mboweni and worked with Marcus and Xolile Guma as joint deputy governors. Despite being different, economic growth and job creation are top priorities for both central banks. The Fed pursues a dual mandate of price stability and job creation while the Sarb only pursues one mandate, price stability. Lings, however, says that Marcus’s policy suggests that she assumes a dual mandate and takes into account the growth rate and job creation. Tandisizwe Mahlutshana tandisizwem@finweek.co.za A Gill and Janet affair for SA ings rate, whereas SA consumers are traditionally “dis-savers”. Says Smit: “When interest rates rise consumers do not have a buffer in the form of savings to assist consumption and drive economic growth, and in an environment of positive savings, stimu- latory monetary policy has not driven current account deficits wider and encouraged dis-saving – where in SA, these dynamics have adversely impacted the currency, which is currently the main risk to the inflation outlook.” Both Yellen and Marcus face different challenges as their macro-economic con- ditions vary vastly. But does that mean that SA should not pursue a relationship with the US Fed or vice versa? Kevin Lings, chief economist at Stan- lib, says that a close working relationship with the US Fed could be valuable to SA in a number of ways. One is the poten- tial for flow of research and infor- mation between the two central banks. The economic research unit at the US Fed is made up of three teams, the Division of Research and Statistics, the Divi- sion of Monetary Affairs, and the Divi- sion of International Finance, together employing approx- imately 450 staff members, about half of whom are PhD economists. Smit, too, high- Image: Reserve Bank Gill Marcus INSIGHT FINWEEK 20 FEBRUARY 2014 7 ROBOTIC, DRIVERLESS CARS might sound like inventions from the distant future (or a science-fiction film) but they could be arriving sooner than you think. Vehicles capable of driving them- selves already exist (believe it or not) and could be driving you to your des- tination sometime in the next 10 years. PIONEERS Google has been working on self-driv- ing t echnology since 2010, including testing a fleet of self-driving cars along California roadways. The project is cur- rently being led by Google engineer Sebastian Thrun, director of the Stan- ford Artificial Intelligence Laboratory and co-inventor of Google Street View. Nissan has also joined Google in the race to make driverless cars a reality and announced in July last year that it will be ready with multiple, commercial- ly-viable Autonomous Drive vehicles by 2020. Nissan’s team of engineers has been carrying out intensive research on the technology for years, alongside teams from the world’s top universities, including MIT and Stanford. Ford, Audi, Mercedes, Toyota and Volvo have also expressed their inter- est in developing the technology, as the cost comes down. Elon Musk, the South African expat billionaire who is CEO and chief prod- uct architect of electric vehicle com- pany Tesla Motors, is trying his hand, too, and has made the promise that his company will produce a driverless ve- hicle within the next three years. However, his three-year timeline is more ambitious than those set out by other car makers. Analysts say that it will take 10 to 15 years before self-driv- ing cars become a reality. BENEFITS OF AUTONOMOUS D R IVING For businesses, th e most exciting pro- spect will be the savings that could be made using driverless delivery vehicles that would cut out the cost of employ- ing drivers. Not having to concentrate on driv- ing could also make the car yet another extension of the office, opening the possibility of efficient remote working while commuting by road. From a societal point of view, fully autonomous vehicle tech- nology has the potential to reduce crashes, ease congestion, improve fuel economy, reduce parking needs, bring mobility to those unable to drive, and dramatically change the nature of travel over time. Road accidents are one of the top three leading causes of death globally. On average, there are 13 802 fatalities per annum in SA; the estimated cost of these road crashes (per annum) is R307bn, which is 7.8% of SA’s GDP. Thrun helped build Google’s driver- less car, powered by a personal quest to save lives and reduce traffic acci- dents. As he repeatedly mentions in his TED Talk, the mass adoption of a self- driving car may lead to more efficient and accident-free roads. SELF-DRIVING TECHNOLOGY EX P LAINED Thrun explained to The Hu ffington Post in an interview: “The car technology we have been working on at Google uses radar, GPS, cameras, a rapidly spinning Lidar laser, and other devices to navi- gate properly and understand a com- plex driving environment.” Google hopes its driverless cars will reduce traffic accidents by 90%, reduce wasted commute time and energy by 90% and reduce the number of cars on the road by 90%. Potential benefits are substantial but significant barriers to full implementa- tion and mass-market adoption still remain. Of course, along with individu- ality, privacy would be sacrificed, since each car or pod would now be a piece of data with its movements constantly being tracked. Blair Burmeister blairb@finweek.co.za Step into the driverless future Trend ing Nissan’s Autonomous Drive vehicle INSIGHT Context www.finweek.com CORRUPTION IN 8 FINWEEK 20 FEBRUARY 2014 PROVINCIAL CORRUPTION CONCERNS With 38% of total corruption allegations reported in 2013, Gauteng topped the provincial charts. Reports of corruption in the Free State increased from 7% in 2012 to 14% in 2013. The Eastern Cape and KwaZulu-Natal (KZN) followed closely at 13%. 38% Gauteng 5% 1% 13% 14% 5% 4% 7% 13% 18% 48% 16% 3% 15% Local government Provincial government National Government State-owned entity Other* CORRUPTION IN GOVERNMENT *’Other’ includes corruption within municipal owned entities, NGOs and charities, unions, or unknown. The landscape of corruption in Government shifted significantly this year. Reports on corruption in local and national government make this an area of concern for Corruption Watch. At roughly 33% each, local and provincial government shared similar volumes of reports. Notably, the dramatic increase in reports, which focused on provincial government, was driven by our focus on schools in 2013. Schools were the source of the highest percentage of corruption concerns reported to Corrup- tion Watch in 2013. Across all categories, the most prevalent type of corruption was abuse of Government resources by a public ocial, which increased from 32% to 43%. Cases in which cor- ruption in procurement processes was confirmed decreased by 7%, comprising 16% of the total number of corruption cases. Bribery was confirmed in 13% of cases and incidents of corruption in employment also decreased, taking place in 8% of cases in 2013 versus 12% the previous year. RAISING RED FLAGS TOP FOUR SECTORS FEATURED IN CORRUPTION REPORTS IN 2013 38% Schools 10% Trac & licensing 3% Healthcare 2% Water SOUTH AFRICA INSIGHT R SOURCE: Corruption Watch 44% Financial mismanagement 24% Theft of goods and funds 16% Corruption in procurement processes HOT SPOTS IN SCHOOLS The most prevalent types of corruption reported in 2013 were financial mismanagement, theft of goods and corruption in procurement. CORRUPTION UNDERMINES THE DELIVERY OF BASIC SERVICES. It destroys public trust and confidence in leadership and in our key public and private institutions. It also threatens economic stability and investment. South Africa is grappling with corruption, and in 2012 it was ranked 69th of 176 countries surveyed in terms of corruptness. Below, Finweek takes a look at a Corruption Watch report on the statistics on corruption and how everyone can contribute to its prevention. COVER 10 FINWEEK 20 FEBRUARY 2014 Life hacks for ANY money Getty Images/ Gallo Images [...]... Limpopo in June 201 2, 12 500 or its announcement of zero 90 fatalities from July 201 1 could 60 sweeten investor confidence 30 Reporting a 40% drop in 201 2 0 headline earnings in February 201 3 deepened losses further, 34 FINWEEK 20 FEBRUARY 201 4 with Exxaro plunging to the 13 480c/ share support level To add fuel to the fire, the majority of operations were disrupted last year at Grootegeluk mine in Limpopo,... that he’s working on adding further investments to his wealth portfolio Among those is another Taste Holdings franchise The Fish & Chip Co He currently owns one store ■ FINWEEK 20 FEBRUARY 201 4 17 INSIGHT Insight 18 FINWEEK 20 FEBRUARY 201 4 INSIGHT Entrepreneur turned activist LIFE IN THE PALESTINIAN WEST BANK WANTING MORE OUT of life, South African entrepreneur Sarah Robinson took time out of her role... the price per 100g for foodstuff, price per litre for liquids, price per kilogram for cheese and meat and price Kristia van Heerden kristiav @finweek. co.za FINWEEK 20 FEBRUARY 201 4 15 COVER H e put his name in the history books when he scored the first goal of the 201 0 FIFA World Cup the first time it was held on African soil With that dramatic goal, Siphiwe Tshabalala also became South Africa’s darling... a different manner than one would typically expect from local football players Gallo images/ Getty images: AFP Finweek deputy editor Tandisizwe Mahlutshana finds out more about the player’s money personality Siphiwe Tshabalala celebrating his 201 0 FIFA World Cup goal 16 FINWEEK 20 FEBRUARY 201 4 COVER IT IS SAID THAT THERE ARE FIVE TYPES OF MONEY PERSONALITIES, NAMELY: THE SAVER, THE RISKTAKER, THE SECURITY-SEEKER,... your own to give you a good balance Enjoy! Marc Ashton marca @finweek. co.za FINWEEK 20 FEBRUARY 201 4 11 COVER THE RISK-TAKER – YOU ARE A RISK TAKER IF: The downside to this personality is that: THE SAVER – YOU ARE A SAVER IF: The downside to this personality is that: LIFE HACK: BUY A CAR AT THE END OF A MONTH OR YEAR… AND, IF POSSIBLE, PAY CASH Finweek contributor Simon Brown puts this one to good use... established: 200 5 Founders: Sarah and Jonathan Robinson Mission: To source and roast the best beans that Africa has to offer Notable achievements: The company was the first roaster of certified Fairtrade coffee in South Africa Goal: It strives to make a sustainable difference in the lives of African coffee produces by personally sourcing quality coffee through direct fair trade 20 FINWEEK 20 FEBRUARY 201 4... firm Investment Solutions show that 68% of the market views the industrials sector as least favourable for 201 4 while 56% seem buoyant about the resources sector According to the survey, 55% of managers see the JSE All Share Index ending the year within a range of 44 000-48 000 30 FINWEEK 20 FEBRUARY 201 4 points while 30% felt it could outperform to the 48 000-52 000 range Says Glenn Silverman, chief investment... you don’t have the inclination to collate the documentation, then you are actually making your life more stressful Face up to the stress, allocate a day and get it done 14 FINWEEK 20 FEBRUARY 201 4 COVER Six ways to be more frugal in 201 4 Getty Images/ Gallo Images MONEY HACK #2: TRY PREPAID FOR A MONTH Buying prepaid airtime is a good way to determine if you’re paying too much in telephone charges When... you’re earning more than R30 000 per month, you are amongst the top 1% of earners in the world according to the World Bank The financial crisis and recession of 200 8 should have changed the way you think about these issues FINWEEK 20 FEBRUARY 201 4 13 Getty Images/ Gallo Images THE SECURITY-SEEKER – YOU ARE SECURITY-SEEKER IF: LIFE HACK: LEARN THIS ONLINE SHOPPING TRICK You have accepted that you are... the United Nations Conference on Trade and Development, has caused a direct loss of more than $1bn to Palestinians in Jerusalem, and continues to incur $200 m per year in lost opportunities ■ Lisa Illingworth lisa@lkdesines.co.za FINWEEK 20 FEBRUARY 201 4 21 RIGHT OF REPL Y Reply A view from SA’s accounting body T he model used for educating chartered accountants [CAs(SA)] in South Africa was developed . its prevention. COVER 10 FINWEEK 20 FEBRUARY 201 4 Life hacks for ANY money Getty Images/ Gallo Images COVER FINWEEK 20 FEBRUARY 201 4 11 personality T he. Co. He currently owns one store. ■ INSIGHT 18 FINWEEK 20 FEBRUARY 201 4 Insight INSIGHT FINWEEK 20 FEBRUARY 201 4 19 LIFE IN THE PALESTINIAN WEST BANK Entrepreneur