There are some companies that are synonymous with their CEOs and there are others where the role is a little more nuanced.
Take for example Sibanye-Stillwater. It’s hard to imagine the company without fire-breathing wheeler-dealer Neal Froneman, who has been at the helm of its transformation from a company with three old, deep-level gold mines in SA to a powerful mining company, commanding the heights of platinum group metals and now talking boldly about consolidating three big JSE-listed companies.
But the time is coming where Sibanye is going to be headed by someone else because Froneman has made it clear that his time at the helm of the company is coming to an end, and he is going to retire.
Similarly, Mark Cutifani at Anglo American, who has positioned himself as a voice of firm reason and set up the global miner as a force of good in environmental, social and corporate governance (ESG) issues that are the new touchstone for investors and resources companies.
Speculation has been around a while that his time is also running down at Anglo and the feeling is that once the new Quellaveco project is built, it should mark his departure.
Then you have CEOs such as Steve Phiri from Royal Bafokeng Platinum, who is going into his 11th year at the helm of the company. He’s softly spoken, reserved and lets his CFO, Hanre Rossouw, and COO, Neil Carr, do most of the talking at results presentations.
Phiri told Business Day that his time was coming to leave and that that was a discussion he would have with the board in 2022. He pointed out that few CEOs managed to oversee the construction of a large, R13.5bn mine and then got to head the company when it was in production, being two different skill sets.
Phiri said he’d been with RBPlat for 11 years. That’s a long time by today’s CEO standards, but it’s one that he can look back on with pride despite the difficult times in the past when he had to work hard to convince investors to back the company.
Growthpoint impresses by doing what Reits have committed to doing
Growthpoint Properties, SA’s largest landlord, has done an exemplary job in battling its way through the pandemic so far, managing to pay 80% of its distributable income for the six months to December as an interim dividend.
The company earned R2.5bn in distributable income in the reporting period, results showed on Wednesday, and management said the board would reward its shareholders with R2bn worth of dividends and hold on to the rest.
This is while some of its rivals have said in recent months that they will not pay dividends, be they interim for the six months to December or any dividend at all for their respective 2020 financial year.
Growthpoint is a real estate investment trust (Reit), which is mandated to pay a minimum of 75% of its distributable income as a dividend each year.
All Reits must pay such a cash distribution to their shareholders by no later than six months after their financial year-end, which is subject to meeting the solvency and liquidity requirements of the Companies Act.
Redefine Properties, one of Growthpoint’s old rivals, said in January that it would not pay any dividend for the full financial year to end-August 2020, because while it satisfied the solvency leg of the test, there may be insufficient headroom to absorb any further material negative loan-to-value (LTV) triggers if a cash dividend were paid.
LTV measures a company's debt relative to the value of its assets, and when its breaches 40%, a company may start to experience financial stress.
Redefine, Growthpoint and other listed Reits are trying to keep their LTVs below 40%, to appease fund managers who invest in their stock. SA fund managers tend to believe that an LTV in breach of 40% indicates financial stress for a Reit.
Investors will be pleased with how Growthpoint has improved its balance sheet over the reporting period.
Growthpoint’s group LTV decreased from 43.9% to 40.7% during the six months, with its SA LTV reducing from 39.8% to 35.5%.
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