Tag: unrest

Unrest costs PnP almost R1bn

Supermarket group Pick n Pay (PnP) says the July unrest cost it R930-million in lost sales. The company is the first food retailer to report on the effect the July unrest had on performance, according to a recent article by MoneyWeb.

Highlights below:

  • Pick n Pay’s two largest distribution centres in KwaZulu-Natal (KZN) were looted
  • 212 stores or 10% of the group’s estate were damaged by the looting in KZN and Gauteng
  • The booze bans as a result of lockdown restrictions cost the company R800-million
  • Insurance will cover the some of the loss
  • PnP recorded subdued growth in sales of 4.1% to R46-billion and a 3.4% decrease in gross profit to R8.4-billion, lowering its gross profit margin to 18.2% of turnover for the six months ending August 29, 2021.
  • The group reported a 40% increase in headline earnings per share (Heps) in the period to 61.28 cents (2020: 43.78 cents).
  • This increase was underpinned by a strong performance by its Boxer and Clothing businesses, pleasing momentum in omnichannel offers and effective management of working capital and capital investment
  • The group’s online on-demand delivering service – asap! – has grown by 200% since it was launched in July

KZN unrest cost Clicks more than R720m

Source: Fin24

The unrest in KwaZulu-Natal in July has had a big impact on Clicks, with the company downgrading its expected annual profit growth from 8% to 13% – to basically zero.

Some 6% of the company’s stores – 52 Clicks stores and one The Body Shop store – were looted and vandalised in the province. Eleven stores are still closed. Nine should be opened in this financial year, while the final two damaged stores will be opened in the 2023 financial year.

The UPD and Clicks distribution centres in KwaZulu-Natal were both looted and damaged, but have been reopened.

Additional costs were incurred for private security services to protect the distribution centres as well as air transportation costs to supply medicines from Johannesburg to KwaZulu-Natal.

Clicks has submitted a R726-million claim to Sasria – including R522 million for loss of stock and R182-million for the replacement of fixed assets.

The group has already received R217 million from Sasria, which will be accounted for in the 2021 financial year, which ended in August. The remaining amount will be recognised in the following year.

In April, Clicks expected an increase of 8% to 13% in diluted headline profit for the year to August.

But due to the impact of the civil unrest, and the fact that only 30% of the total Sasria insurance claim has been accounted, the group now expects its profit for the year ended 31 August 2021 to increase by 0% to 3%. Without the impact of the civil unrest, profit would have been in line with the previous 8% to 13% range, Clicks said.

Group turnover from continuing operations – Musica was closed in the past year – increased by 10.2% (compared to growth of 10.5% in 2020).

Sales at Clicks as well as Body Shop, GNC and Claire’s increased by 8.3% (8.4% in 2020) over the past year. Its pharmaceutical distributor UPD increased its turnover by 12.3% (2020: 11.2%) over the prior year.

“Sales in the last seven weeks of the financial year were significantly impacted by the civil unrest in KZN. In addition to the store closures due to damages and the temporary store closures at the peak of the violence, trading in the affected areas remains well below the levels of the previous year and this is expected to continue in the short term,” Clicks warned.

Clicks has now administered almost 600 000 vaccinations at 300 sites, and plans to open a further 268 sites in the coming weeks.


How Sasria will pay unrest claims

By Khulekani Magubane for News24

As the South African Special Risk Insurance Association (Sasria) works through claims in the wake of violent unrest and looting in July, any allocations beyond the R3.9 billion it got in July will be outlined in Finance Minister Enoch Godongwana’s medium-term budget policy statement.

This according to National Treasury’s deputy director-general for public finance, Mampho Modise, who was briefing Parliament’s Standing Committee on Appropriations on Tuesday.

The public unrest and looting in July had its beginnings in the outcry following the incarceration of former president Jacob Zuma for disregarding the Constitutional Court and refusing to subject himself to the Judicial Commission of Inquiry into State Capture. However, this quickly morphed into waves of violence that saw the looting and destruction of businesses, mostly in KwaZulu-Natal and Gauteng, with the cost of unrest exceeding R20 billion in KwaZulu-Natal alone and the impact on national GDP estimated to be R50 billion.

Sasria is a National Treasury entity that provides cover for loss or damage to insured property due to terrorism, political violence, strikes and riots. It has cover of up to R500 million and additional coverage of R1 billion. The association cannot cancel nor refuse cover. It said earlier in August that claims related to the violence had already surpassed R10 billion.

Modise also told the Standing Committee on Tuesday morning that a special appropriation bill to the tune of R32 billion would be funded through last year’s “higher-than-expected” revenue and would also go towards providing support towards people and businesses affected by July’s unrest, including those not covered by Sasria.

Modise said the allocations would be made in terms of the Public Finance Management Act (PFMA) and guidelines of each department. She said on top of higher-than-expected revenues, National Treasury requested that government departments re-allocate funds internally, rather than asking for more money.

“Funding for five votes was allocated, splitting the allocations in terms of section 16 of the PFMA for emergency funding and provisions for the Department of Trade Industry and Competition to assist companies affected [by the unrest], but not covered by Sasria,” said Modise.

Modise said the allocations of the special appropriation included R10 billion for the Department of Social Development, R1.3 billion for small businesses support to the Department of Trade, Industry and Competition and R3.9 billion for Sasria.

She said R16.7 billion for social development as well as R700 million to the Department of Defence and Military Veterans for the deployment of South African National Defence Force personnel and R250 million to the Police Ministry for appointment of more personnel to respond to unrest.

Regarding Sasria, Modise said National Treasury has been engaging regularly with the state-owned insurer and said the R3.9 billion injection gave Sasria room to balance its books as it works through claims.

“Because they don’t know how much they will need, since they have not assessed all of the claims, there is R3.9 billion and if there is more it can be dealt with in the medium-term budget policy statement, but this R3.9 billion is there to assist them,” Modise said.

Modise said 13.2 million people were likely eligible for a South African Social Security Agency’s Social Relief of Distress grant, which includes 7.3 million caregivers. A total of R26.7 billion will be transferred those in need.

Modise said the Department of Small Business Development and the Department of Trade, Industry and Competition made proposals for adjustments, with the Department of Small Business Development committing to reallocate R300 million internally.

The Department of Trade, Industry and Competition told National Treasury it will need R3 billion, but Treasury identified funds that could be reallocated. Following this, the department said it would reallocate R700 million from existing funds.

“When the riots started, the two departments approached Treasury. The Department of Small Business Development did a survey on the impact of the unrest and spoke to businesses. They are trying to do this on a continuous basis to update their numbers,” Modise said.

She said the Department of Public Works and Infrastructure would get R600 million for the refurbishment of critical infrastructure. A loan facility will assist manufacturers affected by unrest through restocking, fitting and other functions, she added.

She said the retail recovery support fund will provide interest-free loans to companies that are not covered by Sasria. Modise said the R12 billion contingency reserve has not be used for any new items outside of the health interventions.

The Standing Committee on Appropriations chair Sifiso Buthelezi said Sasria was due to appear before the committee on 8 September.


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