Stellenbosch wine giants see hardly any dissent

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It is probably wrong to draw conclusions from a sample of just two but nevertheless… it’s hard to avoid the conclusion that Stellenbosch is not a hotbed of shareholder activism.

At Distell’s annual general meeting (AGM) earlier this week, and at Capevin’s yesterday, several resolutions received 100 percent support from shareholders.

Even in the old South Africa, where mid-nineties was pretty much taken for granted, 100 percent was rarely achieved.

That said, there was evidence of some shareholder engagement at both meetings. At the Distell meeting “only” 67.6 percent of shareholders voted in support of the resolution placing 10 percent of the unissued shares under the control of the directors.

The chairman told the meeting that the directors used this authority to allocate shares to executives as part of their remuneration. He did acknowledge that the 10 percent figure was probably too high and that 5 percent would be sufficient.

Given that the board hasn’t been generous in its allocation of shares to executives in the past, the 10 percent figure seemed unnecessarily high. Business Report was informed that since the formation of Distell, only 7.7 million shares have been issued to executives. There are 203.3m in issue. But for whatever reason, the board decided to secure approval for 10 percent. This figure might be reduced for next year’s AGM.

That is, unless Richard Rushton, who is set to take over as managing director from Jan Scannell, decides to pursue a more generous remuneration policy along the lines pursued by his employer SABMiller.

As it happens, it seems it was SABMiller that accounted for most of the vote against the resolution.

Over at Capevin, there was generally unanimous support for the resolutions although its one active shareholder, Chris Logan, questioned why the special resolution on share buybacks is always included given the company never buys back its shares. “It’s a strategy,” was the explanation.

Broadcasting wars

It is accepted in business that for all the seemingly convivial above-board agreements there are shady dealings lurking about. The local broadcasting environment appears to be no different as the mudslinging between prominent broadcasters has cast a murkier picture of the industry.

Pay-TV giant MultiChoice and free-to-air broadcaster e.tv are at loggerheads, with each accusing the other of shenanigans in the build-up to the national migration from analogue to digital broadcasting.

MultiChoice is accusing e.tv of covertly setting the stage for its launch of a pay-TV business in the near future – at the expense of government and, by extension, taxpayers. It says an indicator of this is that e.tv wants conditional access, an encryption technology in set-top boxes for the government’s digital migration project, so that in time e.tv will approach viewers to purchase additional channels using the same boxes.

By this approach e.tv would circumvent the set-up costs associated with rolling out encrypted boxes as a broadcaster.

There is evidence to suggest e.tv somewhere along the line changed its original position, which was to reject conditional access at a hearing before the industry regulator in 2008. E.tv said then that it would be unconstitutional and nowhere globally in a government project of this nature had conditional access been included before.

E.tv meanwhile is pointing fingers at MultiChoice, saying it is planning to piggyback on the digital terrestrial television (DTT) channels of the SABC, the state broadcaster, when the national digital migration project is launched.

In the DTT process, free-to-air broadcasters such as the SABC and e.tv will receive more channels to broadcast content compared with the limited channels available due to spectrum constraints under analogue broadcasting.

Mining

Anglo American Platinum (Amplats) is expected to release its production report for the third quarter today, a week after reaching a compromise deal with the Association of Mineworkers and Construction Union (Amcu) over its restructuring plan. Its production report is perhaps the best reflection of the state of the industry, given that the group is the biggest platinum producer.

It has been a troubled quarter.

Royal Bafokeng Platinum (RBPlat), the platinum junior, reported that tons milled decreased by 13 percent year on year in the three months to September because its concentrator had been offline for 15 days. RBPlat also said that capital expenditure had been cut by 27 percent.

The mining sector is not a good place to be right now, and this year has been challenging, especially for platinum producers who face tight cash flows and have slashed capital spending to focus on cost reduction.

Mining companies want to take it on themselves to drive a campaign to educate their employees about the market pressures to avoid strikes, which have been a major challenge as wages comprise between 50 percent and 60 percent of costs.

They also want to tweak bonus incentives to make them more attractive to the unions, according to analysts.

Meanwhile, it is now business as usual at the Rustenburg operations of Amplats after a compromise deal ended the 11-day Amcu led strike last Monday.

The good news was that both management and the workers had claimed victory, noted Peter Major, a mining analyst at Cadiz Corporate Solutions.

Amplats agreed to pay voluntary separation packages to 3 300 employees previously earmarked for retrenchment.

The compromise agreement goes to confirm that there will basically be minimal retrenchments but those that do occur will be at high cost, Major said.

“It just saves up further restructuring problems for after the election, restructuring that in the long run will have to occur given a still weak global economy and weak commodity demand as China slows.

“What it means in the short run is that risk is contained by both Amcu being ‘grown up’ while companies are willing to settle early to avoid violence and extended outages.”

Edited by Banele Ginindza. With contributions from Ann Crotty, Asha Speckman and Dineo Faku.


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