Consumer counters rule in November · due to the falling gold price and work stoppages at its South Deep operation, which accounts for over 50% of overall production, due to upgrades

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DESK FROM THE

I N V E S T O R C A M P U S

3 December 2014

The big story this past month was the tumbling oil price, which has

dropped c. 40% since hitting a $116.12/bbl high in August last year,

closing end November at $70.15/bbl - a four-year low. This amid a

global oil supply glut and as US shale oil producers ramp-up

production. Added to that, an Organisation of Petroleum Exporting

Countries (OPEC) meeting in Vienna last week ruled out attempts to

stop the price decline by reducing production. The gold price was also

softer ending November a further 0.5% down MoM (it has now

dropped 3.1% YTD). With the US dollar rallying to new record highs

the rand stumbled a further 0.2% MoM (down 5.1% YTD), while the

strong dollar also impacted the gold price.

In the US, markets registered significant gains in November on the

back of generally good earnings reports and positive economic data,

including improvements in retail sales, a better GDP growth estimate,

improving consumer sentiment etc. Globally we had encouraging

confidence data from Germany, an unexpected interest rate cut by

the Chinese central bank which buoyed markets and European

Central Bank (ECB) Chief Mario Draghi reiterating the possibility of

additional stimulus measures in the euro area. However, continuing

tension in Ukraine (and between Russia and the West) as well as

disappointing data from Europe, China and Japan also weighed on

sentiment.

Locally, despite a tough consumer environment, we saw good MoM

performances from a number of retail and industrial counters which

also released impressive results in a difficult operating backdrop. On

the economic side, it would seem SA consumers will remain under

pressure for a while to come, with the National Treasury forecasting

economic growth of 1.4% for 2014, the lowest since the 2009

recession. On the JSE, the All Share Index moved the needle ever so

slightly with a gain of 0.4% MoM although the local market is up 7.9%

YTD. Not surprisingly the Resi-20 lost 6.3% MoM (down 13.3% YTD),

however the Indi-25 was up 1.7% MoM (ironically up 13.3% YTD –

the same as the Resi-20 drop) and the Fini-15 gained 3.0% MoM (up

22.6% YTD).

Consumer counters rule in November

Subscribe to this newsletter at


Top-20 shares: November performance

Source: Bloomberg. Anchor Capital

Share Market Cap

(Rmn)

Closing Price

31/10/2014

Closing Price

28/11/2014

%

Change

OCEANA GROUP LTD 11953 7580 10440 37.7%

GOLD FIELDS LTD 34269 3640 4742 30.3%

ZEDER INVESTMENTS LTD 10136 580 710 22.4%

SPAR GROUP LIMITED/THE 26837 12899 15756 22.1%

TONGAAT HULETT LTD 22023 14560 17314 18.9%

LEWIS GROUP LTD 7845 6645 7834 17.9%

MASSMART HOLDINGS LTD 31402 11913 14011 17.6%

TELKOM SA SOC LTD 36153 5856 6871 17.3%

PIONEER FOODS LTD 32325 11900 13933 17.1%

THE FOSCHINI GROUP LTD 30098 12464 14560 16.8%

TIGER BRANDS LTD 73491 33161 38650 16.6%

CORONATION FUND MANAGERS LTD 36963 9550 11056 15.8%

JD GROUP LTD 7555 2464 2814 14.2%

ASTRAL FOODS LTD 7352 15157 17190 13.4%

MMI HOLDINGS LTD 48164 2819 3155 11.9%

FINANCIERE RICHEMONT-DEP REC 590737 9267 10318 11.3%

RCL FOODS LTD/SOUTH AFRICA 16233 1598.91 1780 11.3%

DISCOVERY LTD 65284 10033 11150 11.1%

TRANSACTION CAPITAL 4635 730 810 11.0%

ARROWHEAD-A 6672 816 894 9.6%

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2


www.investorcampus.com I N V E S T O R C A M P U S

Among the month’s top-20 performers, Oceana Group emerged as

the best-performing share gaining 37.7% MoM after the Group

released FY14 results which showed that HEPS increased 16% and

dividends by 17% YoY, while revenue was up 7% to R5,04bn. The

company said this growth was on the back of improvements in three

of its four divisions, led by a 17% YoY increase in its canned fish and

fishmeal segment. FY14 inventory levels also decreased significantly

so the Group has been cash generative to the extent of R487mn vs a

cash decrease of R420mn in FY13.

Juxtaposed to the poor performance of other resource counters and

especially gold stocks as the price of the yellow metal remained

under pressure, Gold Fields’ share price rose 30.3% MoM (the

second-best performer) and has increased by 44.2% YTD. This was

despite the bullion producer posting a 6% decline in its 3Q earnings

due to the falling gold price and work stoppages at its South Deep

operation, which accounts for over 50% of overall production, due to

upgrades at the mine. However, Gold Fields remains one of the

lowest-cost operators, with a break-even price of $1,050/oz and with

gold trading at c. $1,182, it is set up to make a 15% free cash-flow

margin at $1,300/oz according to a report in Business Day.

In third spot among the top-20 best MoM performers, Zeder

Investments, which has a portfolio that includes agriculture as well as

food and related investments, saw its share price rocket 22.4%. In

early November the company said its sum-of-the-parts (SoTP)

valuation increased to R7.49. Zeder owns 30% of Pioneer Foods

(which itself was up 17.1% MoM and has gained c. 52% YTD) and

31% of Quantum Foods.

Close on the heels of Zeder, the Spar Group rose 22.1% for the

month despite concerns around local consumer spending as the SA

consumer remains under pressure on the back of high debt levels,

slow growth and unemployment. In August, Spar acquired an 80%

stake in Irish firm BWG, a Spar brand owner in Ireland and southwest

England, for R55mn with The Financial Mail reporting that after only

two months in its fold, BWG had boosted what would have been an

8.2% rise in Spar pre-tax profit into an 11.2% rise in the year to end

September. Sugar producer and property developer Tongaat-Hullet,

which reported a 17% YoY rise in 1H profit last month (on the back of

cost cuts and the sale of more sugar-related products), saw its share

price rising 18.9% MoM. The Group’s share price has jumped 52.3%

YTD. Lewis Group saw its share price climb 17.9% in November

following news that Competition authorities had given it the green-

light to acquire over 60 stores belonging to Ellerine, the furniture unit

of African Bank Investments (Abil). Media reports indicated that the

Lewis acquisition of Beares brand stores would allow it greater

exposure to higher-income markets.

In November, Massmart (+17.6% MoM) reported a slightly better-than

-expected rise in sales with total Group sales for the 44 weeks to 2

November, increasing to R62.5bn – up 10.4% YoY, while comparable

store sales increased by 7.3%. During the month the company also

filed a complaint with the Competition Commission against Pick n

Pay, Shoprite and Spar in an attempt to end lease exclusivity

agreements in the retail sector which it said, in many instances,

prevent it (through its Game stores) from offering groceries at the

retail level.

Telkom SA, which this week launched its fibre broadband in selected

suburbs in Gauteng, KwaZulu-Natal and the Western Cape,

continued on its upward trajectory rising a further 17.3% MoM. This

was despite the company reporting mixed 1H15 results, which saw

profit drop 62% YoY following a 1H14 medical-aid gain and costs

related to job cuts. However, net revenue was relatively stable at

R13.3bn (+1.6% YoY), while headline EPS (excluding one-off

expenses) increased 12.1% YoY to ZAc261.7 and operating

expenses were 2.4% lower at R9.2bn on the back of the Group’s

efforts to cut costs and streamline processes. Telkom also said it

plans on reinstating a dividend in FY15. To end November Telkom’s

share price has gained 145.4% with the company emerging as the

best performer on a YTD basis by far. Its closest competitor among

the top-20 stocks YTD is Astral Foods which is up 65.3% - less than

half of Telkom’s gains.

Another great performer this year has been Pioneer Foods which is

up 17.1% for November and 51.8% YTD. The company delivered

stellar FY14 results last month, with revenue increasing 9% YoY to

R17.7bn, adjusted operating profit up 46% YoY (to R1.68bn),

headline EPS coming in at ZAc637 (+37% YoY) and a final gross

dividend which rose by a meteoric 81% to ZAc156/share. This comes

as Pioneer continues to stage a recovery from a 2013 write-down of

the poultry unit it spun off and as it exits its agreement with PepsiCo

and after having completed the unbundling of Quantum Foods in

October.

The Foschini Group saw its share price rise 16.8% in November,

while its price has grown 52.1% YTD. This past month the retailer

announced the launch of what it called “an omni-channel online retail

platform” which will see all 17 of its store brands coming online.

Earlier in November it released 1H15 results which were described as

“satisfactory” in a difficult consumer environment. The results showed

that turnover increased 9.7% YoY to R7.31bn, while HEPS from

continuing operations was up 8% YoY to ZAc403.3. However, more

Top-20 shares: YTD


Share Market Cap

(Rmn)

Closing Price

31/12/2013

Closing Price

28/11/2014

%

Change

TELKOM SA SOC LTD 36153 2800 6871 145.4%

ASTRAL FOODS LTD 7352 10400 17190 65.3%

ZEDER INVESTMENTS LTD 10136 430 710 65.1%

SIBANYE GOLD LTD 17181 1230 2015 63.8%

RESILIENT PROPERTY INCOME 30316 5514.67 8791 59.4%

RMI HOLDINGS 61864 2745 4220 53.7%

PALLINGHURST RESOURCES LTD 3346 288.01 442 53.5%

TONGAAT HULETT LTD 22023 11370 17314 52.3%

THE FOSCHINI GROUP LTD 30098 9575 14560 52.1%

CAPITEC BANK HOLDINGS LTD 35489 20827 31626 51.9%

PIONEER FOODS LTD 32325 9180 13933 51.8%

ASPEN PHARMACARE HOLDINGS LT 181494 26872 40000 48.9%

GRAND PARADE INVESTMENTS LTD 3371 474 700 47.7%

PEREGRINE HOLDINGS LTD 5407 1662 2430 46.2%

TIGER BRANDS LTD 73491 26693 38650 44.8%

MR PRICE GROUP LTD 106632 16374 23618 44.2%

GOLD FIELDS LTD 34269 3289 4742 44.2%

EOH HOLDINGS LTD 13941 8050 11500 42.9%

NETCARE LTD 53243 2602 3640 39.9%

FIRSTRAND LTD 275413 3589 4970 38.5%

3



importantly its cash sales component rose by a significant 20.3%

YoY, accounting for 44% of total sales. The Group also completed the

sale of the RCS Group, in which it had a 55% stake, to BNP Paribas.

Tiger Brands (+16.6% MoM and up 44.8% YTD) seems to have

regained its lustre and re-rated following a trading update at the

beginning of November. The company also recorded strong FY14

results and overcame a disappointing first-half with headline EPS

from continuing operations increasing 15% YoY to ZAc1,804 - ahead

of market expectations. However, its full-year profit dropped 22% YoY

on the back of an impairment charge after it wrote down the value of

two businesses in Nigeria (Dangote Flour Mills and Deli Foods).

Coronation Fund Managers (+15.8% MoM) posted a 38% YoY surge

in profit for FY14 to R2bn, while assets under management were up

20% YoY and diluted headline EPS rose 37%. Coronation, the

biggest shareholder in Abil, also said that its retail business continued

to attract a disproportionate level of industry flows as total net inflows

amounted to R32bn.

MoM, JD Group was up 14.2%, while Astral Foods (up 13.4% MoM

and 65.3% YTD) was the second best performer on the JSE YTD.

The company released impressive results in November which

showed that the poultry producer recorded a 99.6% YoY increase in

FY14 headline earnings to R329.7mn, while revenue increased by

13% YoY to R9.6bn and operating profit rocketed 88% YoY to

R493mn. These results were a significant turnaround from FY13 and

were even more impressive if one considers the significant

challenges facing the poultry industry locally, including cheap imports

and record high feed prices.

MMI Holdings (+11.9% MoM) said in its 3Q14 trading statement last

week that new business recurring premiums increased 22% YoY,

mainly due to good growth in employee benefits. The Group also

indicated that the total present value of premiums (PVP) increased

30% YoY, adding that progress has been made with strategic

initiatives to diversify its earnings streams.

Rand-hedge, Richemont and RCL Foods both gained 11.3% MoM.

The weak rand has boosted Richemont despite the company

reporting disappointing 1H results, which showed profit for the period

falling 23% YoY to EUR907mn and the operating margin declining

160 bpts to 24.1%. Richemont said the decline in the Chinese market

was moderating but market pundits believe lower global growth,

especially in China, will likely continue to affect company earnings

negatively over the next few months.

Discovery Group, Transaction Capital and Arrowhead were up 11.1%,

11.0% and 9.6% MoM, respectively. Discovery released healthy

results in November and announced that it would partner with

Prudential by buying out the remaining 25% of Prudential’s UK private

medical insurance market business for GBP155mn. Transaction

Capital reported FY14 results which showed that it grew continuing

headline earnings 17% YoY to R330mn, with continuing EBITDA up

18% YoY to R159mn. The company also said it had R1.2bn in cash

to fund acquisitions for future growth. Last week Arrowhead

Properties announced it had acquired residential properties valued at

just over R1bn which means that once transferred, the Group will own

an overall residential property portfolio valued at c. R1.6bn. Earlier in

the month the company released results which showed the value of

its investment properties grew substantially in FY14. Distribution for

the year stood at ZAc133.24 per combined A and B unit - a 17.9%

YoY increase.

Finally, looking at the remainder of the top-20 YTD performers

Sibanye Gold (+63.8%) dropped to fourth spot (it had been swinging

between first and second spot over the past few months), followed by

Resilient Property Income Fund (+59.4%), RMI Holdings (+53.7%),

Pallinghurst Resources (+53.5%) and Capitec Bank (+51.9%). Aspen

has gained 48.9% YTD and last month said it was aiming to be

awarded c. 50% of the R24bn contract to supply anti-retrovirals in

South Africa. The Aspen share price also reached an all-time high of

R413.00 on 24 November. YTD, Grand Parade Investments

(+47.7%), Peregrine Holdings (+46.2%), Mr Price Group (+44.2%),

EOH Holdings (+42.9%), Netcare (39.9%) and FirstRand (+38.5%)

accounted for the remainder of the top-20 performers.

The shares making up the top-20 MoM worst performers and the top-

20 YTD losers were very similar with construction and resource

counters featuring prominently among both. Last month the

Competition Commission announced its referral to the Competition

Tribunal of a complaint around bid-rigging related to contracts for the

construction of 2010 Soccer World Cup stadia. Although Group Five

was not fined for widespread bid-rigging because it was the main

whistleblower and received immunity, it has now been implicated in

the stadia projects and the commission is seeking a penalty equal to

10% of its revenue in this case. MoM Group Five was the worst

performer dropping 29%, while YTD the share is down 34%. Added to

these woes, Group Five also released a trading update in November

which further dented investor sentiment as it warned that EPS and

HEPS for the six months ending 31 December would likely be more

than 20% lower YoY.

Other construction and engineering companies featuring prominently

among the bottom-20 shares included Aveng (down 16.0% MoM and

Bottom-20 shares: November performance


Share Market Cap

(Rmn)

Closing Price

31/10/2014

Closing Price

28/11/2014

%

Change

GROUP FIVE LTD 3026 3773 2677 -29.0%

YORK TIMBER HOLDINGS LTD 745 298 225 -24.5%

EQSTRA HOLDINGS LTD 1666 518 410 -20.8%

DRDGOLD LTD 925 309 247 -20.1%

ALLIED ELECTRONICS CORP-PRF 6267 2040 1705 -16.4%

ARCELORMITTAL SOUTH AFRICA 12370 3256 2725 -16.3%

AVENG LTD 6996 2026 1701 -16.0%

SASOL LTD 278232 54919 46195 -15.9%

PPC LTD 15352 2960 2557 -13.6%

STEFANUTTI STOCKS HOLDINGS 1157 671 580 -13.6%

PINNACLE HOLDINGS LTD 1819 1218 1055 -13.4%

BRAIT SE 36413 8288 7200 -13.1%

AFRICAN OXYGEN LTD 5900 1940 1706 -12.1%

ASSORE LTD 25085 20469 18043 -11.9%

OMNIA HOLDINGS LTD 12828 22000 19400 -11.8%

ELLIES HOLDINGS LTD 394 128 113 -11.7%

MURRAY & ROBERTS HOLDINGS 8583 2265 2010 -11.3%

BELL EQUIPMENT LTD 1137 1370 1219 -11.0%

MTN GROUP LTD 388913 24400 21817 -10.6%

WILSON BAYLY HOLMES-OVCON 8174 13001 12030 -7.5%

4



35.7% YTD), Stefanutti Stocks (-13.6% MoM and 44.4% YTD),

Murray & Roberts Holdings (-11.3% MoM and 25.0% lower YTD) and

Wilson Bayley Holmes Ovcon (WBHO -7.5% MoM). Aveng said

recently that its two-year order book contracted slightly (-2%) in the

three months through September, weighed down by the Group’s

Australian unit where various large contracts are being completed.

The company has also highlighted that its key markets (SA and

Australia) remained difficult due (in part) to the lack of infrastructure

spending.

York Timber continued its downward spiral emerging as the second-

worst performer MoM (-24.5%) while YTD the share price is down

38.4%. Company CEO Pieter van Zyl said in a recent Financial Mail

article that the company intends unlocking “the value of our timber

resources,” through a radical upgrade of York’s timber processing

facilities to bring them “…into line with international best practice,”.

With a MoM drop of 20.8%, Eqstra was the third-worst performer and

is also down 48.8% YTD. A lower gold price weighed on DRD Gold

which saw its share price decline by a further 20.1% MoM. The share

is now down 34.0% YTD despite the company posting an 18% QoQ

increase in revenue from R447.4mn in 4Q14 to R528.5mn in 1Q15

last month. Allied Electronics PRF shares dropped 16.4% MoM and is

now down 29.0% YTD.

Pressure continued on ArcelorMittal (down 16.3% MoM and 26.9%

YTD) with a global oversupply of iron ore, increasingly negative

demand out of China and no real catalyst (at least in the short term)

to push iron ore prices higher. Added to that, Parliament’s trade and

industry portfolio committee last month urged government to push

ahead with proposed measures to introduce a developmental price

for steel in order to promote beneficiation and, at the same time, there

is also the distinct possibility that the SA government will implement a

carbon tax which could cost the company upwards of R600mn p.a.

With the global slump in oil prices, Sasol’s share price dropped 15.9%

MoM. The counter was hit especially hard following OPEC’s decision

not to cut oil production in order to boost oil prices, which have

plummeted c. 30% so far this year. PPC saw its share price slump

13.6% as market uncertainty took its toll on the cement producer and,

added to that, the company posted poor FY14 results revealing that

cash generated from operations was down 10% YoY to R2.6bn, while

headline EPS was flat. Earlier in the month CEO Ketso Gordhan

resigned and then embarked on a campaign to get reinstated amid

media reports and accusations that the PPC board was dysfunctional.

Pinnacle Holdings dropped a further 13.4% MoM with the share price

now down 54.4% YTD. Investment firm, Brait saw its share price lose

13.1% MoM following the announcement that it was divesting of its

stake in retailer Pepkor. Brait said that it planned to spend the

R26.4bn it received from the sale on acquisitions in SA and Europe in

the next 18 months. Late last month African Oxygen (-12.1% MoM)

said it had initiated a cost-cutting plan as the company grapples with

weak local demand for its products.

Assore (-11.9% MoM and -47.0% YTD) continued to record

significant losses on lower iron ore demand, especially from China.

Last month the Group said it expected 1H profit to drop by as much

as 45% YoY due to the slump in iron ore prices, while HEPS was

expected to fall to R10.79 for the six months to end December

vsR23.52 in the same period last year - a decline of between 37.5%

and 45.9%.

Omnia Holdings, Ellies Holdings, Bell Equipment, MTN Group and

BHP Billiton were down 11.8%, 11.7%, 11.0%. 10.6% and 7.4%

MoM, respectively. Among these Ellies was the worst performer in the

YTD bottom-20 having lost 79.7% of its value, while Bell Equipment is

down 39% YTD. Omnia’s share price fell on the back of disappointing

results which saw revenue increase by only 1.1% YoY to R7.6bn,

profit dropping 4.7% YoY to R404mn and basic EPS sliding 4.9%

YoY to ZAc606.

With petroleum accounting for c. 25% of BHP Biliton’s EBIT, the

Group has also been impacted by the OPEC announcement last

week and MoM the share is down 7.4% just enough to land it in the

top-20 worst performers for November.

Other shares among the bottom-20 worst performers YTD, which

didn’t feature among the MoM worst performers, include Coal of

Africa (-52.7%), LonMin Plc (-43.5%), Kumba Iron Ore (-41.9%),

Impala Platinum (-34.4%), African Rainbow Minerals (-29.3%),

Harmony Gold (-27.3%), Adcock Ingram (-27.0%) and Exxaro

Resources (-24.0%). Coal of Africa last month completed the first part

of its capital raising, with the company receiving cash of $21.8mn for

the sale of 251mn additional shares, divided according to subscription

agreements on London’s Alternative Investment Market and the JSE.

Kumba’s share price also remained under pressure since the

company’s income is derived from iron ore, and the drop in the iron-

ore price has therefore weighed heavily on the counter. Lower

platinum prices and the after effects of strike action continued to

impact Lonmin and Impala, while Harmony has been a victim of the

lower gold price and industrial action.

In November, Adcock Ingram reported c. R50mn profit after tax in the

quarter to September. The company which was the object of a an

intense take-over bid between Bidvest and Chilean drug-maker, CFR

Bottom-20 shares: YTD


Share Market Cap

(Rmn)

Closing Price

31/12/2013

Closing Price

28/11/2014

%

Change

ELLIES HOLDINGS LTD 394 556 113 -79.7%

PINNACLE HOLDINGS LTD 1819 2315 1055 -54.4%

COAL OF AFRICA LTD 689 112 53 -52.7%

EQSTRA HOLDINGS LTD 1666 800 410 -48.8%

ASSORE LTD 25085 34061 18043 -47.0%

STEFANUTTI STOCKS HOLDINGS 1157 1040 580 -44.2%

LONMIN PLC 16920 5328 3010 -43.5%

KUMBA IRON ORE LTD 81987 44345 25771 -41.9%

BELL EQUIPMENT LTD 1137 2000 1219 -39.1%

YORK TIMBER HOLDINGS LTD 745 365 225 -38.4%

AVENG LTD 6996 2644 1701 -35.7%

IMPALA PLATINUM HOLDINGS LTD 49382 12300 8067 -34.4%

GROUP FIVE LTD 3026 4054 2677 -34.0%

DRDGOLD LTD 925 374 247 -34.0%

AFRICAN RAINBOW MINERALS LTD 27479 18900 13358 -29.3%

ALLIED ELECTRONICS CORP-PRF 6267 2401 1705 -29.0%

HARMONY GOLD MINING CO LTD 7897 2590 1882 -27.3%

ADCOCK INGRAM HOLDINGS LTD 9099 7090 5175 -27.0%

ARCELORMITTAL SOUTH AFRICA 12370 3730 2725 -26.9%

MURRAY & ROBERTS HOLDINGS 8583 2681 2010 -25.0%

5



Pharmaceuticals, saw the deal thwarted by Bidvest which replaced

Adcock chairman Khotso Mokhele with Bidvest chairman Brian Joffe.

Bidvest has refuted claims it is intent on increasing its stake (currently

at 21%) in Adcock even though the Competition Tribunal approved

the future acquisition of control of the struggling Adcock to above

35%. Exxaro has also seen its share price come under pressure on

the back of its exposure to iron ore through its ferrous metals

segment although the group also has exposure to coal, titanium

dioxide and other base metals.

6



Key Global Indices

JSE All Share - Last Month

South Africa Market Review

FTSE 100 - Last Month

UK Market Review

S&P 500 - Last Month

US Market Review

Asian markets are trading mostly firmer this morning, mirroring overnight gains

on Wall Street. In Japan, Takata Corporation climbed 2.6%, amid news that the

company would form a review panel to enquire airbag safety issues. However,

Otsuka Holdings slumped 4.4%, after the company agreed to acquire Avanir

Pharmaceuticals for a consideration of $3.54bn. In Hong Kong, Sands China and

Galaxy Entertainment retreated 4.3% and 3.6%, respectively. In South Korea,

Hyundai Motor advanced 1.4%, even after it posted an annual decline in US auto

sales for November. The Nikkei 225 Index is trading 0.7% higher at 17,791.74,

while the Kospi Index is trading 0.3% in the green at 1,970.98. The Hang Seng

Index is trading 0.2% in negative territory at 23,602.93.

Nikkei 225 - Last Month

Asia Market Review

US markets ended higher yesterday, after the release of upbeat US construction

spending data. Biogen soared 6.4%, following positive results from an early-

stage trial of its experimental drug to treat Alzheimer's disease. Alexion

Pharmaceuticals and Mallinckrodt rallied 4.3% and 4.0%, respectively. Valero

Energy and Marathon Petroleum surged 4.0% and 3.7%, respectively. Shares of

railroad companies, CSX Corporation, Union Pacific and Norfolk Southern

advanced 4.0%, 3.8% and 2.8%, respectively. However, Ascena Retail Group

dropped 0.7%, after reporting a drop in its 1Q15 revenue. The S&P 500 Index

advanced 0.6% to settle at 2,066.55, while the DJIA Index rose 0.6% to close at

17,879.55. The NASDAQ Index climbed 0.6% to finish at 4,755.81.

UK markets finished higher yesterday, led by a rebound in mining and energy

sector stocks. Tullow Oil, BP, Royal Dutch Shell ‘A’ surged 6.0%, 4.7% and

4.1%, respectively. Shares of BP and Royal Dutch Shell were further boosted

following speculation that the two oil giants were planning to merge. Friends Life

gained 2.4%, after it was acquired by Aviva in an all-share deal for a sum

totalling GBP5.60bn. Mining sector stocks, BHP Billiton and Rio Tinto climbed

2.2% and 0.7%, respectively. On the contrary, Royal Mail lost 3.0%, after the UK

regulator, Ofcom, announced that it would not enforce conditions for rivals in the

postal-service market. The FTSE 100 Index advanced 1.3% to close at 6,742.10.

South African markets closed higher yesterday, recovering some of losses

recorded in the previous session. ArcelorMittal South Africa gained 5.8%, after it

indicated that it would hand over the requested environmental information to an

environmental activist group. Gold Fields, Harmony Gold Mining and Sibanye

Gold rose 3.4%, 2.6% and 1.5%, respectively. Harmony Gold Mining revealed

that it would implement a new plan to return the Kusasalethu mine to profitability.

Barclays Africa Group, Nedbank Group and Standard Bank Group advanced

2.8%, 2.8% and 1.6%, respectively. However, Niveus Investments, Net 1 UEPS

Technologies and Omnia Holdings fell 15.2%, 7.1% and 4.3%, respectively. The

JSE All Share Index climbed 1.5% to close at 49,591.43.

48,614

49,446

50,278

51,109

31-Oct 11-Nov 20-Nov 1-Dec

6,389

6,532

6,675

6,818


1,992

2,026

2,060

2,094


16,250

16,780

17,310

17,840


Last Close 1D Chg 1D % Chg YTD% Chg 1M % Chg 1Y % Chg P/E Multiple (x)

JSE All Share 49,591.43 732.67 1.5 7.2 -0.3 11.0 17.11

JSE Africa Resource 10 43,803.17 978.73 2.3 -14.1 -7.1 -11.2 13.38

JSE Africa Financial 15 15,486.81 193.25 1.3 21.5 2.0 24.7 13.19

JSE Africa Industrial 25 61,516.75 931.94 1.5 12.9 1.3 18.3 22.30

FTSE 100 6,742.10 85.73 1.3 -0.1 3.0 2.2 19.24

German DAX 30 9,934.08 -29.43 -0.3 4.0 6.5 5.7 17.46

France CAC 40 4,388.30 10.97 0.3 2.1 3.7 2.4 26.29

S&P 500 2,066.55 13.11 0.6 11.8 2.4 14.8 18.31

Dow Jones Industrials 17,879.55 102.75 0.6 7.9 2.8 11.7 15.97

Nasdaq Composite 4,755.81 28.46 0.6 13.9 2.7 17.6 75.59

Nikkei 225* 17,791.74 128.52 0.7 8.4 7.6 12.8 21.87

Shanghai Composite* 2,776.48 12.93 0.5 30.6 14.2 25.2 13.28

Hang Seng Index* 23,602.93 -51.37 -0.2 1.5 -1.4 -1.6 10.30

*Time - SAST 6:00:00 AM

7



Commodities

At 06:00 SAST today, Brent crude oil rose 0.1% to trade at $70.73/bl. The

American Petroleum Institute report indicated that US crude inventories

shrank by 6.50mn bls last week. Yesterday, Brent crude oil fell 2.2% to

settle at $70.64/bl.

Yesterday, the Illinois North Central No.2 Yellow corn spot prices fell 1.1%

to $3.49/bushel.

At 06:00 SAST today, gold prices advanced 0.1% to trade at $1,199.44/oz.

Yesterday, gold declined 1.1% to close at $1,198.28/oz., as the US dollar

strengthened after data showed that construction spending in the US

improved for November.

Yesterday, copper declined 0.7% to close at $6,470.50/mt. Aluminium

closed 3.0% lower at $1,983.50/mt.

Currencies

Yesterday, the South African rand weakened against the US dollar, after

data released in the US showed that construction spending rebounded

more-than-expected for October. Going forward, market participants will

eye November’s SACCI business confidence survey in South Africa and

ISM non-manufacturing Purchasing Managers’ Index (PMI) report in the

US later today for further direction.

The yield on benchmark government bonds rose yesterday. The yield on

2015 bond rose to 6.06% while that for the longer-dated 2026 issue

advanced to 7.65%.

At 06:00 SAST, the US dollar is trading flat against the South African rand

at R11.1269, while the euro is trading unchanged at R13.7808. At 06:00

SAST, the British pound has remained flat against the South African rand

to trade at R17.4062.

Yesterday, the euro advanced against most of the major currencies, after

the eurozone’s annual producer price inflation numbers for October came

in line with market estimates. Traders will keep a tab on today’s services

PMI data across key European nations and the UK for further direction to

risk appetite.

At 06:00 SAST, the euro remained unchanged against the US dollar and

the British pound to trade at $1.2384 and GBP 0.7917, respectively.

Crude Oil and Corn Prices Spot

Gold & Platinum Prices Spot

Copper, Aluminium & Iron Ore Prices Spot (Rebased)

USD/ZAR Movement

EUR/ZAR Movement

GBP/ZAR Movement

3.3

3.4

3.5

3.6


68.3

74.1

79.9

85.6

$/b

us

he

l

$/b

bl

Crude - LHS Corn - RHS

1165

1198

1231

1264


1118

1157

1197

1236

$/o

z

$/o

z

Gold - LHS Platinum - RHS

10.8450

11.0248

11.2047

11.3845


13.4464

13.6852

13.9240

14.1628


16.9885

17.3439

17.6994

18.0548



80

90

100

110

Copper Aluminium Iron Ore 62% Fe Content - CFR Qingdao China

8



Yield Corner

% Closing

Yield

% Change

on Day

Yield % -

1M Ago

South Africa CPI* 5.90 0.00 5.90

South Africa Repo Rate 5.75 0.00 5.75

JSE SA Listed Property Index 5.83 -0.68 5.95

R157 (2015) (SA Bond) 6.06 0.73 6.26

R207 (2020) (SA Bond) 6.97 1.19 7.27

R186 (2026) (SA Bond) 7.65 1.15 7.90

US 10 Year Treasury 2.29 2.56 2.34

US 30 Year Treasury 3.01 1.68 3.07

Italian 10 Year Treasury 2.01 -0.20 2.35

German 10 Year Treasury 0.74 1.79 0.84

* As on October 2014

South African Government Bond Yields

JSE All Share Index - Major Gainers & Losers

Figures in bracket indicate (Last Close, Absolute Change, % Change)

5.8%

6.5%

7.2%

7.8%

8.5%

9.2%

Dec-13 Mar-14 Jun-14 Sep-14 Dec-14

R157 (2015) R186 (2026)

-16.8% -13.4% -10.1% -6.7% -3.4% 0.0%

Niveus Investments Ltd (3200.00, -574.00, -15.2%)

Net 1 UEPS Technologies Inc (13001.00, -998.00, -7.1%)

Omnia Holdings Ltd (18160.00, -816.00, -4.3%)

Allied Electronics Corp Ltd (1710.00, -73.00, -4.1%)

Bell Equipment Ltd (1150.00, -45.00, -3.8%)

Nampak Ltd (4175.00, -157.00, -3.6%)

Mpact Ltd (3448.00, -124.00, -3.5%)

Brimstone Investment Corp Ltd (1550.00, -50.00, -3.1%)

Anglo American Platinum Ltd (34896.00, -1102.00, -3.1%)

Tiger Brands Ltd (37261.00, -1137.00, -3.0%)

0.0% 3.4% 6.7% 10.1% 13.4% 16.8%

Stefanutti Stocks Holdings Ltd (675.00, 75.00, 12.5%)

Arrowhead Properties Ltd (950.00, 72.00, 8.2%)

Sun International Ltd/South Africa (12855.00, 856.00, 7.1%)

Ascension Properties Ltd (535.00, 35.00, 7.0%)

Delta Property Fund Ltd (865.00, 55.00, 6.8%)

ArcelorMittal South Africa Ltd (2750.00, 150.00, 5.8%)

Naspers Ltd (147999.00, 7702.00, 5.5%)

Kumba Iron Ore Ltd (26294.00, 1245.00, 5.0%)

Sasol Ltd (44986.00, 1937.00, 4.5%)

SA Corporate Real Estate Fund Nominees Pty Ltd (481.00, 18.00, 3.9%)

9



Dual Listed Companies - Price Differential

Company Name Price (R) - Local

Exchange Primary Exchange

Price (Primary Exchange)

Equivalent Price (R)

Price Difference (R)

Anglo American Plc 227.09 London Stock Exchange 13.07 GBP 227.41 -0.32

BHP Billiton Plc 261.89 London Stock Exchange 15.16 GBP 263.88 -1.99

British American Tobacco Plc 653.41 London Stock Exchange 37.53 GBP 653.25 0.16

Capital & Counties Properties Plc 65.60 London Stock Exchange 3.77 GBP 65.67 -0.07

Cie Financiere Richemont SA* 103.73 SIX Swiss Exchange 90.35 CHF 103.44 0.29

Intu Properties Plc 61.90 London Stock Exchange 3.57 GBP 62.17 -0.27

Investec Plc 101.16 London Stock Exchange 5.83 GBP 101.48 -0.32

Lonmin Plc 30.77 London Stock Exchange 1.78 GBP 31.02 -0.25

Mondi Plc 190.75 London Stock Exchange 10.94 GBP 190.42 0.33

New Europe Property Investments Plc/Fund 110.70 London Stock Exchange 8.00 EUR 110.25 0.45

Old Mutual Plc 34.62 London Stock Exchange 1.98 GBP 34.50 0.12

Pan African Resources Plc 2.03 London Stock Exchange 0.12 GBP 2.09 -0.06

Reinet Investments SCA* 25.50 Luxembourg Stock Exchange 18.36 EUR 25.30 0.20

SABMiller Plc 599.47 London Stock Exchange 34.33 GBP 597.55 1.92

AngloGold Ashanti Ltd 98.99 New York Stock Exchange 8.85 USD 98.47 0.52

DRDGOLD Ltd* 2.22 New York Stock Exchange 1.91 USD 2.13 0.09

Gold Fields Ltd 47.75 New York Stock Exchange 4.40 USD 48.96 -1.21

Harmony Gold Mining Co Ltd 18.74 New York Stock Exchange 1.78 USD 19.81 -1.07

Redefine International Plc/Isle of Man 8.86 London Stock Exchange 0.50 GBP 8.78 0.08

Glencore Xstrata Plc 55.50 London Stock Exchange 3.20 GBP 55.67 -0.17

* Depositary Reciepts (DR) trade in the ratio of ten DRs to each Company share; Exchange Rate - USDZAR:11.1269, EURZAR:13.7808, GBPZAR:17.4062, CHFZAR:11.449, Conversion rate as of 6:00 SAST

JSE All Share Stocks Hitting 52 Week High / Low

Company Name Closing Price (R) 1D% Chg 52 Week High / Low

Arrowhead Properties Ltd 9.50 8.2% Hits 52 Week High

Telkom SA SOC Ltd 67.50 -2.5% Hits 52 Week High

Omnia Holdings Ltd 181.60 -4.3% Hits 52 Week Low

10



Economic Updates

Key Economic Releases Today

Country SAST Economic Indicator Relevance Consensus/

*Actuals Previous/

**Previous Est. Frequency

Japan 1:50 Monetary Base (Nov) JPY259.36 trn* JPY255.75 trn Monthly

UK 2:01 BRC Shop Price Index (YoY) (Nov) -1.9%* -1.9% Monthly

China 3:00 NBS Non-manufacturing PMI (Nov) 53.90* 53.80 Monthly

Japan 3:35 Markit Japan Services PMI (Nov) 50.60* 48.70 Monthly

Spain 10:15 Markit Services PMI (Nov) 55.20 55.90 Monthly

Italy 10:45 Markit Services PMI (Nov) 50.20 50.80 Monthly

France 10:50 Markit Services PMI, Final (Nov) 48.80 48.80** Monthly

Germany 10:55 Markit Services PMI, Final (Nov) 52.10 52.10** Monthly

Eurozone 11:00 Markit Composite PMI, Final (Nov) 51.40 51.40** Monthly

Eurozone 11:00 Markit Services PMI, Final (Nov) 51.30 51.30** Monthly

UK 11:30 Official Reserves (Changes) (Nov) - -$652.00 mn Monthly

UK 11:30 Markit Services PMI (Nov) 56.50 56.20 Monthly

South Africa 11:30 SACCI Business Confidence Index (Nov) - 88.80 Monthly

Eurozone 12:00 Retail Sales (YoY) (Oct) 1.6% 0.6% Monthly

UK 14:30 Autumn Forecast Statement - - -

US 15:15 ADP Employment Change (Nov) 222.00 K 230.00 K Monthly

US 16:45 Markit Services PMI, Final (Nov) 56.50 56.30** Monthly

Canada 17:00 Bank of Canada Monetary Policy Report (3Q) - - Quarterly

Canada 17:00 Bank of Canada Interest Rate Decision 1.0% 1.0% -

US 17:00 ISM Non-Manufacturing PMI (Nov) 57.50 57.10 Monthly

US 21:00 Fed's Beige Book - - -

Spain - Consumer Confidence (Nov) - -10.00 Monthly

UK - Halifax House Prices (3m/YoY) (Nov) 8.0% 8.8% Monthly

Note: High Medium Low

The National Association of Automobile Manufacturers of South Africa (NAAMSA) indicated that new vehicle sales in South Africa

advanced 0.9%, on an annual basis, in November, compared with a 4.9% increase reported in October.

The number of people unemployed in Spain fell unexpectedly by 14.70K in November, compared with an increase in the number of

unemployed people of 79.20K reported in October.

The construction Purchasing Managers' Index (PMI) in the UK dropped to 59.40 in November from a reading of 61.40 posted in

October.

The producer price index in the eurozone eased 0.4%, on a monthly basis, in October, following a 0.2% climb posted in September.

The US Federal Reserve Bank (Fed) Vice Chairman, Stanley Fischer, cautioned that a decline in the US consumer prices would compel the

central bank to delay interest rate hike. However, at the same time, he hinted that the Fed might soon get rid of its forward guidance

language that interest rates in the nation would remain close to zero for a "considerable time”.

On a monthly basis, in October, construction spending in the US rose 1.1%, compared with a revised 0.1% fall recorded in September.

The official non-manufacturing PMI in China advanced to 53.90 in November from a reading of 53.80 registered in October.

In 3Q14, the seasonally adjusted Gross Domestic Product (GDP) in Australia rose 2.7%, on an annual basis, following a revised similar

rise reported in 2Q14.

11



South Africa

Arcelormittal South Africa Limited: The company announced that it would not challenge an appeal court ruling that the company must

hand over documents related to its largest steel plant to the Vaal Environment Justice Alliance (VEJA). Additionally, the company indicated

that it would raise its prices if the government implements a carbon tax in FY16.

Datatec Limited: The company announced that its subsidiary, Logicalis Group Limited, has inked agreements to acquire 100.0% of the

issued share capital of Inforsacom Holding GmbH, a German ICT services and solutions provider.

Curro Holdings Limited: The independent schools group announced that it has acquired St Dominic’s, a 123 year old independent school

in Newcastle.

Harmony Gold Mining: The mining company revealed that it would implement a new plan to return the Kusasalethu mine to profitability,

wherein it would commence a Section 189 consultation process in terms of the Labour Relations Act and would work with representative

unions to evaluate various options, including an option to cut jobs.

Crookes Brothers slashes interim dividend in bid to fund growth: Diversified agri-business Crookes Brothers on Tuesday cut its interim

dividend by 19.0% to R0.65/share for 1H15.

Alexander Forbes’ results ‘confirm suitability of strategic choices’: Diversified financial services group Alexander Forbes Group

Holdings lifted 1H15 headline EPS to R0.12 from a loss of R0.23 in the previous interim period.

Investors urged to stick with PPC’s board: PPC investors should vote against a resolution to remove the cement company’s board as its

activist shareholders have not made a compelling enough case for such drastic action, says global shareholder voting research firm Glass

Lewis & Company.

Illovo plans to boost diversification with Zambia distillery: Illovo Sugar plans to build an alcohol distillery in Zambia, its second biggest

market by earnings, as part of its long-term strategy to generate 20.0% of operating profits from downstream sources.

Uncertainty surrounds Cambist: A former employee at OneLaw, the company that operate(d) the Cambist Online Platform, has told

Moneyweb how staff members at the company were called together on Monday morning and dismissed with immediate effect.

S&P stay of execution gives Eskom bond lift: Standard & Poor’s decision not to cut Eskom Holdings SOC Limited to junk has given

some relief to holders of the South African power utility’s bonds.

Ford cancels SKF components contract, hits South African jobs: Some 250 jobs at a South African forging company could be cut after

US motor company, Ford, cancelled a components contract with SKF, just weeks after strikes hit car parts manufacturers, a union said on

Tuesday.

Strong balance sheet a competitive advantage in Africa: Access to funding is the top challenge in delivering large, complex

infrastructure projects, a PwC survey among 95 infrastructure owners, funders and representatives of construction and operating

companies and public enterprises in sub-Saharan Africa shows.

Wal-Mart's South Africa growth slowed by mall food fight: As South African supermarket chains seek to defend their business from the

encroaching heft of Wal- Mart Stores Inc., the US retailer is getting mired in a food fight at the mall.

Steinhoff unperturbed by Pepkor criticism: Steinhoff stuck to its guns over its handling of the Pepkor transaction at a fairly uneventful

AGM on Tuesday, as Chairman, Dr Len Konar said he would “disagree agreeably” with the views of corporate governance activist, Theo

Botha.

Cosatu calls for Eskom investigation: Trade union federation Congress of South African Trade Unions (Cosatu) has called on Public

Enterprises Minister, Lynne Brown, to investigate the root causes of the problems at Eskom and “take stern action against those who have

failed to do their job to ensure proper management of the entity”.

Sanral escapes the Moody's chop: Moody’s Investors Service has refrained from downgrading roads agency, Sanral, in spite of pressure

on Sanral’s cash flow following the announcement of a review panel to assess the impact of its controversial e-toll system in Gauteng.

UK and US

Microchip Technology: The company revealed its revised financial guidance for 3Q15, wherein it indicated that net sales are expected to

be down between 2.0% and 5.0% sequentially and non-GAAP EPS is estimated to be between $0.60 and $0.64. In its previous guidance,

the company expected its net sales to be down between 2.0% and 7.0% sequentially and non-GAAP EPS to be between $0.59 and $0.64.

Market expects the company’s 3Q15 EPS at $0.62 and revenue at $520.80mn.

Ascena Retail Group: The retailer, in its 1Q15 results, indicated that its net sales dropped slightly to $1.19bn from $1.20bn posted in the

same period earlier year. Its total net diluted EPS stood at $0.32, better than market estimates of $0.26/share. The company sees its FY15

adjusted diluted EPS from continuing operations in the range of $0.90 to $1.00.

Corporate Updates

12



OmniVision Technologies: In its 2Q15 results, the digital imaging products maker stated that its revenue declined to $394.05mn from

$397.25mn reported in the same period preceding year. Its non-GAAP diluted EPS was registered at $0.60, better than market expectations

of $0.51/share. The company expects its 3Q15 EPS in the range of $0.22 to $0.38, versus market consensus of $0.33/share and 3Q15

revenue between $275.00mn and $305.00mn, versus market anticipations of $331.70mn.

Bob Evans Farms: The company, in its 2Q15 results, revealed that its net sales increased to $333.28mn from $332.60mn posted in the

corresponding period a year ago. Its non-GAAP diluted EPS was reported at $0.36, better than market anticipations of $0.33/share. The

company sees FY15 EPS to be between $1.90 and $2.10, versus market consensus of $1.92/share.

Bazaarvoice Inc.: In its 2Q15 results, the company indicated that its revenue climbed to $47.33mn from $41.15mn registered in the

corresponding period earlier year. Its non-GAAP basic and diluted net loss per share was posted at $0.05, better than market expected loss

of $0.09/share.

Powell Industries: The manufacturer of packaged equipment, in its FY14 results, stated that its revenue rose to $647.81mn from

$640.87mn posted in the preceding year. Its diluted EPS stood at $0.20, compared with market estimated loss of $0.08/share. The

company sees its FY15 EPS in the range of $1.75 to $2.30, versus market consensus of $2.46/share and its FY15 revenue between

$650.00mn and $710.00mn, versus market expectations of $738.80mn.

Ford Motor: The company revealed that its US sales dropped 1.8% on an annual basis, to 187,000.00 vehicles in November. Markets were

expecting a drop of 2.0%.

General Motors: The company reported US sales of 225,818.00 vehicles in November, up 6.0% compared with the sales in the same

period prior year and more than market expected a rise of 2.6%.

Avanir Pharmaceuticals: The company announced that it has entered into a definitive agreement with Otsuka Pharmaceutical, wherein

the latter would acquire the former an approximate consideration of $3.50bn.

Cypress Semiconductor: The company announced that it has entered into a definitive merger agreement with Spansion, wherein the

transaction valued at approximately $4.00bn.

Idera Pharmaceuticals: The biopharmaceutical company revealed that it has come up with new preclinical data that showed cancer

immunotherapy with intratumoral injections of IMO-2055 and ipilimumab demonstrated potent and systemic anti-tumor activity in multiple

preclinical cancer models.

Merlin Entertainments: The company, in its trading update for the 47 weeks ended 22 November 2014, announced that the business has

traded well since the summer with all three operating groups reporting continued revenue growth. The company indicated that i t expects to

deliver EBITDA in the range of GBP407.00mn to GBP411.00mn for FY14, representing growth of between 4.4% and 5.4% year-on-year

compared with earnings of GBP390.00mn posted in FY13.

St. Modwen Properties: The company, in its FY14 trading update, stated that initial indications suggest that results would reflect an uplift in

property valuations, due to market driven movements in an improving regional market as well as the company’s own value add

development and asset management activities. Its profit before all tax is therefore likely to be at the top end of market expectations. The

company added that it remains in a strong position financially, approaching GBP200.00mn of undrawn facilities in place.

Northgate Plc: The company, in its 1H15 results, indicated that its revenue increased to GBP304.95mn from GBP288.78mn posted in the

same period last year. Its underlying diluted EPS rose to 28.00p from 18.00p recorded in the corresponding previous year. The company

also stated that its plans to open new sites in the UK are on track and trading from these new sites is exceeding its initial plans. The

company remains confident that it is well positioned to deliver further growth and attractive returns to shareholders. The company is

currently trading slightly ahead of its expectations.

Astrazeneca: The pharmaceutical company stated that the US Food and Drug Administration (FDA) approved it to file the new drug

application for its lung cancer drug, IRESSA.

Aviva Plc: The life and health insurer indicated that it has agreed to acquire Friends Life Group Limited for about GBP5.60bn. Following

acquisition, Friends Life shareholders would own about 26.0% of the issued ordinary share capital of the enlarged Aviva Group.

Howden Joinery Group: The company announced that its UK Howden Joinery depots have achieved product sales of GBP1.00bn in the

year to date as better consumer sentiment and several government initiatives continued to bolster the country's housing market.

Grafton Group: The company indicated that it has completed the acquisition of Crescent Building Supplies (Ruislip) Limited for an

undisclosed amount.

Mitie Group: The company stated that it has extended its transformational partnership delivering integrated facilities management (FM) for

Lloyds Banking Group to 2022.

Unite Group Plc: The developer and manager of student accommodation indicated that it has bagged planning approval for the

development of a one acre site in the centre of Aberdeen.

Kier Group: The company confirmed that Bev Dew would take up the role of the Finance Director with effect from 1 January 2015.

Corporate Updates

13



Financial Times

Overseas purchases of UK companies hit low: The number of British companies bought by overseas investors has fallen to the lowest

level for quarter of a century, according to new data on mergers and acquisitions published by the Office for National Statistics on Tuesday.

Schlumberger cuts seismic survey fleet as oil weakens: Schlumberger, the world’s largest oil services group, is cutting back its fleet for

offshore geological surveys and taking an $800.00mn write-down on the value of its ships, in the first significant cutback in the industry

following the recent fall in crude prices.

Lloyds sells Irish mortgage portfolio to Goldman Sachs and CarVal: Lloyds Banking Group’s troubled Irish loan book is now more than

two-thirds below its peak after it sold a GBP1.60bn portfolio of mortgages to Goldman Sachs and CarVal, the private equity group.

Jaguar Land Rover settles pay dispute: A pay dispute at Jaguar Land Rover that raised fears of a return to FY70s-style industrial strife in

British carmaking appears to have been resolved after the company parked plans to tinker with its pension scheme.

FinnCap boosted by strong pipeline of capital raising: FinnCap, the largest broker to Aim-listed companies, reported an increase in

revenue and profits during 1H15, boosted by a strong pipeline of capital raising.

Autonomy founder to call in US regulators: Autonomy founder, Mike Lynch, plans to ask US regulators to investigate evidence that he

believes shows Hewlett-Packard made “false representations to the market” over its massive writedown on its acquisition of the UK

software maker.

ITE Group sales fall but earnings beat expectations: The imposition of sanctions on Russia and the political crisis in Ukraine caused a

sharp decline in full-year revenues at ITE Group, although the trade show operator still managed to beat analysts’ expectations.

Times newspaper turns first operating profit since FY01: Rupert Murdoch’s Times newspaper titles have reported their first operating

profit in 13 years, bringing an end to a stretch of losses that totalled nearly GBP400.00mn.

Cenkos looks north to tap regional revival: Cenkos, the small-cap broker, is to open an office in the north of England, the second

London group in as many months moving to harness the spread of the UK’s economic revival to its regions.

Fillip for Olympic quarter cultural hopes: George Osborne has announced plans to support a major new cultural quarter at the Olympic

Park in East London, intended to lure big institutions such as the Smithsonian, the Victoria and Albert Museum and University College

London to the site.

Black Friday breaks records at John Lewis: The lure of Black Friday bargains lifted weekly sales at John Lewis to the highest levels in its

150-year history, with one tablet computer sold every second in the rush for pre-Christmas bargains.

UK oil groups to receive $40.00mn from Iraqi-Kurdistan deal: Gulf Keystone Petroleum and Genel Energy – the oil group run by former

BP Chief Executive, Tony Hayward, – have welcomed a deal between Baghdad and the Kurdistan Regional Government that has enabled

them to receive $40.00mn in overdue export revenues.

Early investors to make big gains on Lending Club IPO: High profile Wall Street names including Lawrence Summers, former US

Treasury Secretary, and John Mack, former Morgan Stanley Chief, stand to make tens of millions of US dollars when Lending Club lists on

the New York Stock Exchange next week.

Mexico exchange names Sacristán as new head: Mexico’s stock exchange has named a veteran financier, Jaime Ruiz Sacristán, to take

over as its president from January after the resignation of the long-serving, Luis Téllez.

Citigroup to close LavaFlow trading venue: Citigroup is to shut down the private trading venue that was fined by US regulators earlier

this year as the bank

Sanofi agrees EUR250.00mn R&D outsourcing deal: Sanofi of France has entered exclusive talks over a EUR250.00mn drug discovery

alliance with Evotec of Germany aimed at increasing productivity from its research and development effort.

Otsuka to buy US maker of promising Alzheimer drug: Otsuka Holdings of Japan has struck a deal to buy Avanir Pharmaceuticals of

California for $3.50bn in its second large acquisition in the US market in just over a year.

Coach and Brown Shoe Company vie for Stuart Weitzman: Coach, the US accessories group, is among a small list of bidders vying to

acquire Stuart Weitzman, the woman’s luxury shoemaker, in a deal that is likely to be agreed before the end of FY14.

Christie’s Chief Murphy to step down: Steven Murphy has stunned the art world by revealing he will step down as Christie’s Chief

Executive at the end of FY14, less than a month after the auction house smashed records for the biggest sale in history.

Chinese tech group Xiaomi to invest in Silicon Valley start-up: Xiaomi, the fast-growing Chinese smartphone maker, is making its first

US investment, as part of a $40.00mn fundraising for internet-of-things start-up Misfit.

Royal Mail shares fall as Ofcom rejects claims: Royal Mail shares fell after Britain’s postal regulator rejected the company’s argument

that its ability to deliver letters across the UK for a fixed price was threatened by new competitors.

BP: Rose 4.7% to GBP4.34, as speculation of a Royal Dutch Shell bid was given a wide airing.

Royal Mail: Lost 3.0% to GBP4.06, after regulator Ofcom said it would not take action to limit competition among direct mail-delivery

groups.

Corporate Updates

14



Lex:

Cigarettes: smoke ’em if you got ’em: Smokers in the developed world are out in the cold. Regulators have moved smoking from bars

into streets; advertising has moved from screens to, at best, still pictures. Two years ago, Australia introduced “plain” packaging – adorned

with such gruesome warnings that the adjective hardly fits. This week China, home to 300.00mn smokers and accounting for a third of the

world’s tobacco use, according to Euromonitor, announced a ban in Beijing’s indoor public spaces, to commence in June. The Ch inese

market is dominated by state-owned enterprises and counterfeit goods, so the direct impact on multinationals will be small. But the

message is clear. Growth will become harder to find, even in the emerging world. Forecasts are faltering: expected earnings per share have

fallen about one-tenth as the year has progressed. Typical is Philip Morris, with 70.0% of sales in emerging markets. Since its FY08 spin-off

from US-focused parent Altria, the company has achieved annual earnings per share growth of one-tenth. This year, growth will fall 6.0%.

Japan Tobacco and British American have a similar tale of woe. And yet the stocks are not cheap, on mid-teens multiples of FY15 EPS.

Saipem and South Stream: Eni ideas?: The Black Sea is the largest basin of anoxic water in the world: it lacks oxygen. So it is a bit like

the long-delayed South Stream gas pipeline to Europe from Russia. On Tuesday Vladimir Putin cut off the air entirely. The project will not

go ahead, he said. South Stream always had its doubters. But one committed fan was the Italian oil services company, Saipem. It won two

projects worth EUR2.40bn this spring to lay pipe under the Black Sea from Russia to Bulgaria. While Saipem has yet to receive formal

notice, termination of South Stream will hurt. The project represents over a tenth of its EUR22.50bn backlog. Next, assuming that Saipem

delivered roughly EUR2.00bn of the project next year (preparatory work had already begun), Credit Suisse thinks the company could lose

EUR200.00mn in operating profits, a fifth of the total. The shares lost 9.0%. South Stream is not the only problem. Saipem must contend

with the threat of declining capital spending from oil companies in the years ahead, and with a leveraged balance sheet. At over three times

net debt to earnings before interest, tax, depreciation and amortisation, Saipem stands out as the most indebted of its rivals. Technip (even

after recently buying CGG), Subsea 7 and Wood Group all carry little gearing. Russia’s decision on South Stream has left Saipem gasping.

Analysts expect cash flow after spending will be positive next year. If so, Saipem should use the money to cut debt and prepare for the new

atmosphere in the energy industry.

Aviva: hope springs: About GBP1.00bn. That is the amount of value that the stock market believes will be destroyed by Aviva’s acquisition

of rival UK insurer Friends Life. Before talks were announced last month, Aviva’s market capitalisation was GBP15.80bn. It closed on

Tuesday, when the deal was confirmed, at GBP14.80bn. And that was after a share price bounce – the details were apparently more

attractive than November’s outline. The GBP225.00mn of cost savings might be responsible. Taxed and capitalised they are worth about

GBP1.80bn, well north of the GBP400.00mn premium that is being offered. Add the savings to what the two businesses already produce,

and Aviva’s annual cash flow will improve from GBP400.00mn to about GBP1.00bn. That gave Aviva Chief Executive, Mark Wilson, the

confidence to raise this year’s final dividend by 30.0%. There will be more increases. The plan is to reduce dividend cover from 2.80 times

last year to 2.00 times over the medium term. There should also be cash to invest overseas or in back books of the life assurance business

(where Friends specialises). Perhaps the GBP1.00bn share price drop is harsh. The regulatory flux around such products suggests it is

difficult to predict who will benefit. And the deal will add several more years of restructuring to two companies that have already been

restructuring for years. All the while, competitors have been able to focus on selling and managing insurance policies.

Corporate Updates

15



Key Corporate Releases Today

South Africa

Full Year Consensus

Company Name Results Currency Estimated EPS Estimated Revenue (Millions)

No corporate releases today

UK

Full Year Consensus


Sage Group Plc FY14 GBP 0.22 1,313.82

Brewin Dolphin Holdings Plc FY14 GBP 0.17 292.14

Europe

Full Year Consensus


No corporate releases today

US

Full Year Consensus


Avago Technologies Limited 4Q $ 4.64 4,250.00

Brown-Forman Corp. 2Q $ 3.02 3,983.61

PVH Corp. 3Q $ 7.02 8,233.36

Synopsys Inc. 4Q $ 2.50 2,060.33

Verint Systems Inc. 3Q $ 2.78 905.88

G-III Apparel Group Limited 3Q $ 3.61 1,735.38

SeaChange International Inc. 3Q $ 0.24 145.57

Auris Medical Holding AG 3Q $ (1.15) -

Pacific Sunwear Of California Inc. 3Q $ (0.36) 805.07

Rosetta Genomics Limited 3Q $ (1.55) 3.12

Note: All Estimates are for Full Year

16



South Africa Ex-Dividend Calendar

Date Company Name Dividend Type Last Day to Trade Amount

- Investec Limited (INPP) Regular Cash 3-Dec-14 GBP0.08

- Afrimat Limited Interim 5-Dec-14 R0.13

- Ascendis Health Limited Final 5-Dec-14 R0.15

- Combined Motor Holdings Limited Interim 5-Dec-14 R0.33

- Holdsport Limited Special Cash 5-Dec-14 R0.99

- Holdsport Limited Interim 5-Dec-14 R0.85

- Hosken Consolidated Investments Limited Spinoff 5-Dec-14 1.2003:1

- Hosken Consolidated Investments Limited Interim 5-Dec-14 R0.35

- Ingenuity Property Investments Limited Regular Cash 5-Dec-14 R0.03

- Insimbi Refractory and Alloy Supplies Limited Interim 5-Dec-14 R0.02

- Investec Australia Property Fund (IAP) Interim 5-Dec-14 R0.38

- Investec Limited (INL) Interim 5-Dec-14 R1.46

- Investec Plc (INP) Interim 5-Dec-14 GBP0.09

- Investec Property Fund Limited (IPF) Interim 5-Dec-14 R0.55

- Mr Price Group Limited Interim 5-Dec-14 R2.12

- Pick n Pay Stores Limited (PWK) Interim 5-Dec-14 R0.09

- Pick n Pay Stores Limited (PIK) Interim 5-Dec-14 R0.20

- Tsogo Sun Holdings Limited Interim 5-Dec-14 R0.29

17 Anchor Capital (Pty) Ltd (Reg no: 2009/002925/07). An authorised Financial Services Provider; FSP no: 39834



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Consumer counters rule in November · due to the falling gold price and work stoppages at its South Deep operation, which accounts for over 50% of overall production, due to upgrades