Sibanye-Stillwater’s handling of its five-month gold strike by the Association of Mineworkers and Construction Union (Amcu) was more than just about its gold mines and set the tone for its proposed takeover of the world’s third-largest platinum miner.
The five-month strike, the second-longest by Amcu, coming in a few days short of its 2014 strike in the platinum sector, was marked by the absolute intransigence of Sibanye’s management to yield to the union.
Not only was Sibanye bound by agreements with three other unions with which it had signed a wage deal, but there was a much more important principle at stake in dealing with Amcu as the company headed into platinum sector wage talks and is in the process of incorporating Lonmin.
By proving its management resolve in the gold sector wage talks, which cost Sibanye about R2bn, it set the tone for its relationship with Amcu in the platinum sector where Sibanye is a relative newcomer.
Whether Amcu will again call its members out on a protracted strike to back its demands in the platinum sector will only be known as the talks in June progress and negotiators get a sense of the flexibility or hardline approach the union takes.
For Sibanye, it also sets the stage for the restructuring of Lonmin’s assets at which Amcu is the dominant union.
To say the relationship between Sibanye and Amcu, smarting from the humiliating climb down at the company’s gold mines, is bad is an understatement. Amcu president Joseph Mathunjwa will want to prove to his members and Sibanye that he and the union have muscle and clout.
Whether his members, who will well remember the financial hardships of the 2014 strike, have the appetite for another long strike, remains to be seen. They will have closely watched the way the gold strike ended and know that there’s a tough new player on the field.
Focus of ISA Holdings pays off
With investors still transfixed by moving and shaking for the sake of diversity and critical mass, it is refreshing to see that the enduring singular operational focus at small IT group ISA Holdings continues to pay off.
For more than two decades, ISA has churned solid and dependable profits from its security offerings without — even in lean periods — looking for growth via acquisitions.
There’s no doubt that ISA — like other singularly focused and cash-flush counters, such as Combined Motor Holdings, Nu-World and Spur Corporation — will increasingly be viewed as an attractive dividend play.
For the year to end-February, ISA proposed a final dividend of 19c/share plus a special distribution of 20c/share. ISA argued that the special dividend was justified in light of “unnecessarily high level of cash in the business [R63m or 40c/share as the end of the financial year], which was compounded by further cash inflows resulting from the settlement of the loan by our business partner subsequent to the current reporting period.”
Generous payouts would appear to be on the cards for the foreseeable future, not only because ISA has a stout balance sheet but also because ISA’s annuity “subscription type” is ticking over nicely. Turnover from this segment increased markedly to R85m.
Considering that the chances of pursuing acquisitions are slim, ISA could be a worthwhile yield-sweetener in the years to come — especially if its project business picks up.
Even though ISA is trading close to an all-time high, the share offers value on a high, single-digit earnings multiple and a handsome 11% yield.
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