| Wed 8 Dec 2004, 12:57 | | Sanlam switch takes Gold Fields back to square one |
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Sanlam switch takes Gold Fields back to square one
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WE may never know what happened during the threehour adjournment of yesterday`s Gold Fields shareholders` meeting in Johannesburg, when the Gold Fields management was nowhere to be seen. But it has since been disclosed that one shareholder, now believed to be Sanlam, had sent its representative to the meeting to overturn an earlier proxy vote, which had been supportive of Gold Fields management.
As a result of this 11th-hour manoeuvre, the motion to reverse-list Gold Fields` assets outside the Southern African Development Community region into IAMGOLD of Canada was narrowly defeated.
Harmony chairman Patrice Motsepe and CE Bernard Swanepoel are on the board of Sanlam, but Swanepoel insists that the board would not have become involved in how the asset manager would vote on the IAMGOLD deal.
One has to assume that there were no efforts by Gold Fields management to do more than verify and clarify Sanlam`s intentions during the three-hour break. But three hours does seem like a long time in which to make one phone call, and does it explain the absence of so many Gold Fields bosses?
Now, with the IAMGOLD vote out of the way, Gold Fields management must come up with an alternative strategy not only to fend off Harmony`s hostile takeover bid, but to deliver value to its shareholders.
It won`t be easy, but one thing is certain, it will again be standing room only at the next Gold Fields shareholders` gathering, when the game will again be to try to monitor Sanlam`s voting pattern.
Senwes turnaround
AGRICULTURAL services group Senwes is slowly breaking away from its unpleasant past.
In the past five years, the former agricultural co-operative has had its share of financial trouble, suffering losses of almost R700m between 2000 and 2002.
At the height of its problems, the company`s management accused former executives and external auditors PricewaterhouseCoopers of negligence.
But a bold three-year strategy to turn the company around and realise shareholder value is working wonders for the group.
Results for the six months to October show that Senwes has reduced its debt from R2,2bn in 2002 to R600m.
The turnaround has come at a price, though. Senwes has had to sell its 6% interest in diversified food group Pioneer Foods for R104m. It needed the money badly, and desperate times call for desperate measures.
For Senwes shareholders, the turnaround strategy has started paying dividends, literally.
For the first time in five years, the company has paid an interim dividend. It showed positive cash flow of R448m. Its revenue was also up compared with last year`s.
But Senwes is unlikely to repeat the good performance of the first six months, because farmers tend to buy on credit for summer-crop plantings. Added to that is the effect of the El Nino weather phenomenon on this season`s plantings.
Last week`s statement by the South African Weather Services that SA is experiencing a `weak` El Nino may prompt grain farmers to plant less. That may lead to increases in grain prices, especially maize.
As the experience of previous years has shown, the group`s revenue is susceptible to fluctuations in grain prices, as its grain division is one of the company`s core businesses.
HCI`s cash problem
A WORRYING aspect in otherwise impressive results from Hosken Consolidated Investments (HCI) for the six months to September is a dramatic fall in cash flow from operating activities to R29m from R203m in the corresponding period last year.
After disposing of some of its investments the group ended September with R539m in cash, up from R196,7m in September last year, but the figures raise a question about core operations.
Company secretary Kevin Govender explains the cash flows from operating activities reflect e.tv`s generation of about R60mR70m in cash in the six-month period, about half of which was reinvested in programming.
The comparison with the year-ago period is misleading. In 2001-02, when Warner Bros exited e.tv, the free-to-air broadcaster built up programme inventory to about R300m worth of programming.
In 2002-03 the inventory was gradually wound down, so last year`s six-month figures reflect a period of no investment in programming, and cash flow was artificially high.
This year it invested in programming again. With rand strength it is getting better quality for less, entering into four-year deals, pegging costs at about R6/. Next year`s interim cash flow from e.tv would be expected to be about R60m to R70m again, though that depends on what other investments management decides to make.
Spend, spend, spend
WITH Christmas just around the corner, banks will again be the winners as many consumers spend with plastic. And with interest rates at their lowest in decades and more cuts possible, the outlook is rosy.
First National Bank`s figures show that credit card spending is 21,2% higher than last year. And December spending is typically 31% higher than the average for the rest of the year.
October`s DI900 returns to the Reserve Bank (individual banks` balance sheets) show that Standard Bank has been the biggest winner. Since January, its creditcard lending has grown more than 30% to R6,5bn. Absa shows 17% growth to just more than R5bn, while FirstRand Bank`s rose 11% to R4,5bn and Nedbank`s is 8% up at almost R3,5bn.
