Finweek UK 20 March 2014

Finweek UK 20 March 2014

finweek A NEW WAY TO MATCH UP WITH THE Entrepreneurs BIG GUYS I MADE A million AND SO CAN YOU! INVESTMENT INSIGHTS FROM LEADING ASSET MANAGERS FINFUND What will Standard Bank do with all that CASH? PETMIN LISTED PROPERTY CORONATION SMALLER COMPANIES FUND MAKE MONEY WITH Meet Sylvia Gruber of rubybox.co.za START-UP 9 771024 740005 12941 SA: R23.50 (incl. VAT) Other countries: R20.61 (excl. VAT) www.finweek.com 20 March 2014 MONEY. POWER. Entrepreneur Chris Bischo Jeep with ® F INFUND YOUR QUARTERLY REVIEW OF SA FUNDS GLOBAL GROWTH STORY INVESTORS BUY THE Inside finweek A NEW WAY TO MATCH UP WITH THE Entrepreneurs BIG GUYS I MADE A million AND SO CAN YOU! INVESTMENT INSIGHTS FROM LEADING ASSET MANAGERS FINFUND What will Standard Bank do with all that CASH? PETMIN LISTED PROPERTY CORONATION SMALLER COMPANIES FUND MAKE MONEY WITH Meet Sylvia Gruber of rubybox.co.za START-UP 9 771024 740005 12941 SA: R23.50 (incl. VAT) Other countries: R20.61 (excl. VAT) www.finweek.com 20 March 2014 MONEY. POWER. Entrepreneur Chris Bischo P10 HOW TO MAKE A MILLION IN FIVE YEARS OR LESS Cover story: Kristia van Heerden Cover concept: Zandri van Zyl Cover story layout: Beku Mbotoli On the cover: Chris Bischoff Photographer: Dino Codevilla Make-up: Rouge SA P43 Finfund Your quarterly review of SA funds P8 The rise of the supercar market P24 Petmin now seeking growth closer to home 4 Feedback From our readers 6 Trending N ews preview 8 Context The rise of the supercar market 10 Cover How to make a million in five years or less 18 Insight Emerging vs developed market challenges 22 Investment Listed property consolidation excites 24 investors; Petmin now seeking growth closer to home 25 Index-linked investments: The art of passive punting 28 What happens when mines die 30 Simon Says Standard Bank, Southern Ocean, Clover 32 Small Cap Petmin on the rise 33 Fund Focus Coronation Smaller Companies Fund 34 Invest DIY How to manage investment risk 35 House View Punts 36 Start-ups In the mind of Sylvia Gruber 38 Technology Tested: Slack 39 Time for David to cuddle up to Goliath 40 Life The week that was in SA sport 45 Finfund Set for another reasonable year 46 Slightly improved domestic outlook on the cards 48 Caught up in an emerging-market storm 49 Corporate investors target fixed income funds to ‘sweat’ their cash 50 The active versus passive debate 52 Predictability: a highly sought-after commodity for i nvestors 53 Don’t overreact! 54 Understand your Allan Gray Stable Fund investment 55 Making sensible use of ongoing opportunities 55 Sasfin Premier Logistics lifts its game 60 Directors & Dividends Dea lings and payouts 62 In Brief Crossword P36 In the mind of Sylvia Gruber FEEDBACK 4 FINWEEK 20 MARCH 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) Contact Finweek, P O Box 785266, Sandton 2146, tel (011) 217-3000 or feedback@finweek.co.za THIS WEEK’S CONTRIBUTORS Kelly Berold kellyberold@gmail.com Simon Brown simon@justonelap.com Simon Brown heads justonelap.com, a free resource of financial information and investment education. Blair Burmeister blairb@finweek.co.za Warren Dick warrendick7@gmail.com Simon Dingle simond@finweek.co.za Jessica Hubbard jessicah@finweek.co.za Graeme Joe graeme@butterbean.co.za Tandisizwe Mahlutshana tandisizwem@finweek.co.za David McKay david@miningmx.com Garth Theunissen thewritegarth@gmail.com Kristia van Heerden kristiav@finweek.co.za For more information, visit finweek.com Acting editor Willem Kempen responds: With the type of information in ques- tio n readily available elsewhere much sooner than Finweek can publish it, we decided to rather use the space to give readers more of the type of content that we excel at. We’d love to hear what other readers think as well. COMPANIES & INVESTMENTS F ar from being a high-brow investor, my investment deci- sions are based on a single con- cern: how much money can I make from as s mall a n invest ment as p os- sible? In Finweek terms, I’m the Little Leagues. In the 16 Janua ry edition, I mentioned that fees are one of the major concerns when investing. I’m not alone in my dread of fees. Financ ial advisers con- stantly remind our readers to keep a c lose eye on the costing struct ure of products before investing. As an investor of my own mone y (thankfully only my own) I have to admit to a deg ree of re luctanc e when inv estiga t- ing fees. It’s just such a drag. If you can actually get to the literature on product fees, it’s so full of jargon that a layperson can only understand it with much ef fort. Finweek reader Irene Botha can relate to my frustr ation and asked me to do Top40 ETFs: All things aren’t equal report card, only inste ad of subjects, you have a group of very big compan ies. An index is not a product, just a report, so you can’t buy it. That’s where ETFs come in. An ETF is in its essence a col lection of shares that track a spec ific index. If, for example, you wanted to invest in the sweet chilli sauce s ector, you would buy an ETF that consists of all the sweet c hilli sauce companies – one for each company. The ETF is therefore the product th at tracks the index. (To save you some time, I should tell you that there’s no ETF in South A f- rica that tracks sweet chilli sauce.) You can buy ETF products from va rious financial service prov iders and online pl atforms. Many people (myself included) star t their investment portfolio by investing in a Top40 ETF, but sadly it’s not free. Before I choose an ETF produc t, I have to com- pare the costs. It’s a lot like buying eggs, actually. some digging into the fees of various products. I’m going to do just that, work- ing on the assumption that you invest directly and not th rough a broker. First, I need to explain three concepts that will help us understand what I’m on about, namely indices, ETFs and the total expense ratio (TER). For the sake of comparing apples with apples, we have to make sure that we’re comparing the fees of like products. For that reason, I’m going to look at the fees involved in Top40 exchange-traded funds (ETFs). H owever, to underst and what an ETF is, we have to understand what an index is. See how this is al ready getting out of hand? An index is a way for us to see what the market is up to. It tracks the performance of certain sectors of the ma rket (or the market as a whole) to see if the sector is making or losing money. Think of it as a 26 FINWEEK 13 FEBRUARY 2014 Gallo Images/Thinkstock EDITORIAL ACTING EDITOR WILLEM KEMPEN 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 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 021-443-9975 SUBSCRIBER ENQUIRIES ELMARIE EYGELAAR 021-443-9828 CHEAPER ETFS? Great article about the Top40 ETFs (Fin- week, 13 February issue)! I have a question related to costs: if I were to go the route of using a bro- ker instead of buying an ETF through one of the providers I would obviously incur bro- kerage as a one-off cost. Sub- sequently, I would only incur annual charges related to the TER (total expense ratio) but not the annual platform fee. This would amount to a saving of 0.65% per annum if I use the Satrix platform. Am I correct in this? I guess the only downside in going this route is that if you buy and sell regu- larly, then brokerage costs would be much higher than the 0.1% transaction charge Satrix would charge? Michael Gers Finweek journalist Kristia van Heerden responds: While you are correct in assuming that you will be saving on a platform fee, it’s important to keep in mind that bro- kerage fees are usually higher than the brokerage fees incurred on an ETF platform. Having said that, if you aren’t planning on selling often and your ETF investments get to a certain amount (R100 000 or more), you could save quite a bit by transferring the balance of your ETF to a broker to save on the annual platform fee. In fact, my personal financial adviser told me to do just that. It’s very important to compare apples with ap- ples, so take time to com- pare brokerage fees and different platforms. Ask yourself as many “what if” questions as you can think of and try to figure out how different sce- narios would impact the fees you incur. Once you’ve done all your research, run it by a financial adviser or a clever friend to make sure that your logic pans out be- fore making a decision. LET US KNOW There used to be a regular page with share prices and other useful information on the second and third pages from the back. Nowadays, I almost never see that, and I miss them because they used to provide a great summary of the market after all the tips and ideas. Don’t you want to bring it back? How often can we expect it? Herman Perry This plan gives you Completely Unlimited Calls, Unlimited On-net Data, Unlimited SMSs and free Wi-Fi. 65045/POV/E Get unlimited benefits on the network that keeps you connected. BEST FIXED & MOBILE BROADBAND IN SA* VOTED Features: Dual Shot camera + S Translator + Group Play Samsung Galaxy S4 R1 499PM X 24 On Completely Unlimited Plan Includes: Unlimited Calls Unlimited On-net Data Free Wi-Fi SIM Only R1 199 PM X 24 On Completely Unlimited Plan 79 PER MINUTE FOR 35 COUNTRIES # INTERNATIONAL CALLS TO Telkomshop.co.za10213 @TelkomZA TelkomZA Terms and conditions apply and can be viewed at Telkomshop.co.za. E&OE. Deal available until 31 March 2014 or while stocks last. All mobile deals are available to individual consumers or businesses. Free Unlimited Wi-Fi (10GB Fair Usage Policy applies). Free CLIP & Itemised Billing (email). *MyBroadband February 2014 service-satisfaction and perception survey. # Calls to 35 selected international destinations. All international calls made to destinations other than the specifi ed destinations will be charged at existing standard international call rates. Calls are to be billed on a per-minute basis. Dial *120*8686# to find the nearest Telkom Store 6 FINWEEK 20 MARCH 2014 THERE’S BEEN A LOT of talk over the last couple of years about what the workforce of tomorrow will look like. Business today is a competitive place where the only constant is change. In the 2020: The New World of Work report, workforce solutions provider Kelly Services explains how futurists have focused, perhaps arbitrarily, on the year 2020, plastering across the Internet thoughts and ideas about how every- one’s concept of a normal day of work will be shattered in just a few short years. But many of these changes are hap- pening already, and by 2020, companies that fail to embrace some very funda- mental ways in which the global work- force is transforming will fall behind the competition. “Making sure that you understand future trends will ensure that you can adapt and therefore grow your busi- ness steadily, rather than run the risk of becoming irrelevant,” says Ravi Goven- der, head of small enterprises at Stand- ard Bank. He explains that entrepreneurs tend to get caught up in the day-to-day operational trap of chasing deadlines and taking responsibility for multiple functions within the business, however, he thinks that they need to pay more attention to preparing themselves for change instead. “Essentially, you need to look at events differently and proactively navi- gate your next challenge. Where most people see disruption and fight against change, you must see opportunity and embrace what change has to offer,” says Govender. “To prepare effectively, you must identify which events have the great- est potential to disrupt it. You also need to consider which sources to consult to stay ahead of the curve. Most important- ly, you should have a long-term view of where you want your business to be in, say, five years,” he says. One of the major trends impacting businesses is technology. New processes and products are constantly being intro- duced. The dropping price of broadband and the introduction of a wider variety of cheaper devices, with smartphones leading the pack (particularly in emerg- ing markets), are making it easier to access information. “You may have to view your opera- tions, products and services in this light,” notes Govender. “Instead of buying equipment that could be obsolete within a year, you could be better off saving the capital and leasing equipment instead. If your business relies on marketing, the technological revolution could mean swopping from printed material to elec- tronically-delivered catalogues.” He says that asking, “What if?” about your business and the industry that you work in is also important. Think about new processes that could be introduced, which competi- tors could enter the market and how your products or services would meas- ure up. The key to success is being able to look at your business with a critical eye, evaluate how it operates, and how things could be improved to maintain your competitive edge. Evaluate your customer base. Always be aware of who your customers are, what they want and where they live. By keeping an eye on the area in which your business is situated or areas you serve, you can identify chang- es in the neigh- bourhood and be able develop your offerings accordingly to increase your sales. Govender explains: “You may find, for example, that young, upwardly mobile professionals are buying or renovating houses in the area. By knowing this, you could develop products or services that would be of interest to them and cre- ate new market opportunities for your business. “It may seem irrelevant to think about the environment when considering your small business. The truth, however, is that people are becoming increasingly conscious about the impact they have on the environment.” It would be misguided to think that your business won’t be impacted because people love your products and don’t care about the materials or packaging you use. By taking action to ensure that you use recyclable materi- als and that your products have no or a reduced adverse impact on the planet, you could be safeguarding the future of your business. In his TED talk titled Profit’s Not Always the Point, COO of Unilever Harish Manwani argues that 21st century com- panies have to look beyond self-interest and embrace responsible growth if they want to thrive. He urges companies to define a purpose that embraces respon- sibility. ■ Gazing into the crystal ball of work Trend ing BY BLAIR BURMEISTER business i tuat e d e as y o u , y o u c a n f y chan g - th e nei gh - h oo d an d b le develo p off erings accordingly to increase s ales. o vender explains: “You may f ind, f o r ple, that young, upwardly mobile ssionals are buying or renovating BY BLAIR B U RMEI S TE R Gallo Images/Thinkstock INSIGHT Absa Bank Ltd Reg No 1986/004794/06 Authorised Financial Services Provider Registered Credit Provider Reg No NCRCP7 Be physically and financially fit for your retirement You invest in yourself every day. Why not invest in your future too? Investing in our uniquely designed, low cost Core Retirement Annuity is as easy as starting a work-out regime. With the right attitude and commitment, your finances will be in shape in no time. Let us show you how, from the bank that’s here for you to prosper. Apply directly at absa.co.za/retirement TJDR 55878/E INSIGHT Context www.finweek.com THE RISE OF THE 8 FINWEEK 20 MARCH 2014 SUPERCAR SURGE (US) 12 000 4 000 2008 2013 NEW REGISTRATIONS Maserati Ferrari Bentley Lamborghini US SOURCE: Edmunds.com, IHS Inc. PULLING AWAY Supercar sales Total vehicle sales (% change in sales between 2009 and 2013) -35% 33% THE BIG NAMES in sports cars are all cashing in on the American public’s ever-increasing appetite for generously priced cars. At the recent Geneva Motor Show, Lamborghini unveiled the Huracan ($182 000) and Ferrari the California T (about $205 000). Maserati, which has been doing especially well in the US, showed o its Alfieri concept car. Porsche went bigger with the 918 Spyder, with a listed price of $845 000. 500 1 500 2 500 4 000 2008 to 2013 SUPERCAR MARKET INSIGHT LIFE IN THE FAST LANE Sales of sports and luxury vehicles are proving to be highly resilient, both in South Africa and abroad. A Porsche has again been voted South Africa’s Car of the Year. In many markets it would seem that sports and exotic cars are outperforming other cars, not just on the road but also on the sales sheets and the bottom line. SOURCE: WesBank Large Entry-level Medium Sports/Exotic Luxury SUV SA % GROWTH (OR DECLINE) IN SALES IN VARIOUS VEHICLE SEGMENTS 2002 2013 -60 80 0 ACCORDING TO THE National Association of Automobile Manufacturers of South Africa (Naamsa), new vehicle sales in the Sports and Exotics category increased by 27% in 2013, making it the fastest-growing market segment for the year. However, growth still slowed down in almost all sectors. SELECTED SA LUXURY BRAND TOTAL SALES IN FEBRUARY 2014 FERRARI JAGUAR LAND ROVER MASERATI PORSCHE 4 714 2 96 How to make a mill COVER 10 FINWEEK 20 MARCH 2014 Can it be done? Can you be a million rand richer five years from now? [...]... your ideas We told people that we were this massive company If you’re not confident, just fake it You will get there.” Visit Finweek. com for a video interview with Chris Bischoff ■ FINWEEK 20 MARCH 201 4 15 COVER Let income streams become a flood 16 FINWEEK 20 MARCH 201 4 year in the UK you aren’t susceptible to capital gains tax With the value we added to the house, we re-mortgaged and bought another property,... relevant adjustments sooner rather than later ■ FINWEEK 20 MARCH 201 4 13 COVER A millionaire in our midst This week’s cover star Chris Bischoff and his brother Nic raised R1.5m on Kickstarter for their new computer game, Stasis Impressive though it may be, the Kickstarter campaign wasn’t the brothers’ first foray into the millionaires’ club 14 FINWEEK 20 MARCH 201 4 COVER G rowing up, the brothers around... Somkhele produces about 1.2m tons per annum of anthracite, 50% of which goes to the domestic market and 50% to the export market “We Petmin Limited Cents 260 240 220 200 180 160 Apr 201 3 Mar 201 4 SOURCE: McGregor BFA 32 FINWEEK 20 MARCH 201 4 truck our anthracite to the dry bulk terminal at Richard’s Bay and export it from there The domestic ferrochrome producers who consume our anthracite, and who... challenging for entrants from emerging markets ■ FINWEEK 20 MARCH 201 4 19 BECOME A MEMBER TODAY! FOR ONLY R29.50 PER WEEK Take out a premium subscription to Finweek magazine and become a member of the Finweek Club for only R1 470 per year All members will be entitled to unrivalled discounts from great brands The club benefits will include a full-year subscription to Finweek magazine (print or digital), discounts... export nor domestic coal quality – which it sells to merchants who 24 FINWEEK 20 MARCH 201 4 mix it with other grades and then onsell to Eskom Petmin now wants more of this business, especially as Eskom is something of a captive market Eskom has estimated that there’s some 1.8bn tons to 2bn tons of coal supply shortfall from 201 8 to 204 0, so it’s desperate for supply Doig says the company has been approached... Annuity Properties 8.5% - - R103m Texton Consortium Vunani Property Investment Fund Manco Arrowhead Jika Properties Redefine Annuity Manco Source: Momentum Asset Management, Finweek 22 FINWEEK 20 MARCH 201 4 INVESTMENT through to 201 3, although the trend is reversing at the moment “When the price-to-book valuation of the sector is at a premium, players tend to go to the market to raise capital as their... daunting prospect But for many, it is the only way forward – and the natural next step in a company’s life cycle In our previous two articles in this series, Finweek explored the opportunities presented by the nascent African 18 FINWEEK 20 MARCH 201 4 e-commerce industry, as well as the ways in which businesses can position themselves for success in fast-growing African markets While these markets are... stripping the mine’s assets It doesn’t help that Goldrich shares two directors with Aurora Bly voor was closed in 201 3 by Village Main Reef (VMR), the share price of which is experiencing a bit of a comeback: up 44% since end January According to VMR CEO Ferdi Dip- Ferdi Dippenaar 28 FINWEEK 20 MARCH 201 4 penaar, shareholders like the fact that he has minimised the firm’s liabilities to Blyvoor and another... PERFORMANCE Asset class 1 Year 3 Year pa 5 year pa 10 Year pa Property 8% 17% 19% 23% Inflationlinked bonds 1% 11% 10% 11% Bonds 1% 8% 8% 9% Cash 5% 5% 6% 8% Equity 21% 18% 21% 20% Source: Momentum Asset Management FINWEEK 20 MARCH 201 4 23 INVESTMENT Petmin now seeking growth closer to home BY DAVID MCKAY P Gallo Images/Thinkstock etmin, a R1.15bn mid-tier mining company, dabbled in an international diversification... off the ground I have a 36 FINWEEK 20 MARCH 201 4 marketing background, so I could cover the end-consumer part My business partner, former editor of Glamour magazine Margaux Knuppe, covered the brand component I also had experience in tech, so I managed to work with a freelancer to create rubybox.co.za 1.0 It took us four months to launch, which we did at the end of August 201 1 Give us a brief rundown . absa.co.za/retirement TJDR 55878/E INSIGHT Context www .finweek. com THE RISE OF THE 8 FINWEEK 20 MARCH 201 4 SUPERCAR SURGE (US) 12 000 4 000 200 8 201 3 NEW REGISTRATIONS Maserati Ferrari Bentley Lamborghini US SOURCE:. TOTAL SALES IN FEBRUARY 201 4 FERRARI JAGUAR LAND ROVER MASERATI PORSCHE 4 714 2 96 How to make a mill COVER 10 FINWEEK 20 MARCH 201 4 Can it be done? Can