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100COMPANIES
NOVEMBER 12 2017
www.businesstimes.co.za
Business Times
Sunday Times Top 100 Companies
Over five years
www.deloitte.com/za
November 12 2017 3
Business Times
Sunday Times Top 100 Companies
Business leader of the year: Lesetja Kganyago
Kganyago:
easily our best
civil servant
His numerous accolades aside, Reserve Bank
governor also proves to be a man of the people
By ASHA SPECKMAN of domestic and international markets based
on his history as deputy governor under Gill
W
hile most public figures Marcus and as deputy director of the National
and politicians would Treasury.
be happy to see Kganyago, 52, is proud of the Reserve
monuments of Banks recent court triumph over the public
themselves, Reserve protector, who had suggested a review of the
Bank governor Lesetja central banks mandate and that a clause in
Kganyago says statues are for the dead. the constitution giving it independence be
Kganyago is not keen to be immortalised in rewritten.
stone and neither is he planning to write an The Reserve Bank argued the public
autobiography in spite of his numerous protector had acted beyond her mandate and
achievements his most recent accolade is that her powers did not extend to
an award for central bank governor of the recommending constitutional changes. At the
year for sub-Saharan Africa by the time there was speculation that the public
international publication Global Markets. protectors actions might have been part of
He is also the Top 100 business leader of attempts to capture the Reserve Bank, state-
the year for 2017. owned enterprises and the NPA.
I would not write an autobiography
because you are what people see you to be, Welcome contestation
he says. I would rather leave South Africans Kganyago says: Im glad that the courts ruled
to characterise who I am. Lets not talk about in our favour. Does that mean the contestation Reserve Bank governor Lesetja Kganyago. Picture: Alaister Russell
statues, Im still alive. I think statues belong to about the mandate of the Reserve Bank or its
people who have passed away. independence has gone away? No, it has not needed tight fiscal and loose monetary policy. committee has reached an understanding of
On his awards, he shrugs and says: The gone away, even after that we were still the That seems to have served us well getting into the direction of macroeconomic policy and
awards are more about the institution than subject of a policy conference of the ruling the 2008 crisis and when looking back we inflation. The committee meets every quarter.
they are about me. party. We were just glad that they [the ANC] could see maybe fiscal policy should have This interview comes just a few weeks
They talk about the fact that South Africa said the independence of the Reserve Bank is been tighter than what it had been and maybe short of a sovereign ratings review by S&P
has got solid institutions and that those sacrosanct. it would have allowed monetary policy to be Global Ratings and Moodys this month. Fitch
institutions are living true to their mandates Weve got to understand that once the looser. Ratings is still to confirm its schedule.
as enshrined in the constitution. matter was raised, contestation in society South Africas vulnerabilities, such as a
Kganyago is speaking in his moderate- begins. A conversation like that is always A consistent manner large current account deficit, have diminished
sized office enveloped by glass panels and welcome. In the aftermath of the global financial crisis it and its foreign debt, especially that held by
overlooking Pretoria. The threat to the Reserve Banks was clear that the Treasury had to embark on corporates, is low factors the ratings
Cas Coovadia, MD of the Banking independence came from people who do not a path of fiscal consolidation, something that agencies mentioned three years ago, he says.
Association South Africa, says Kganyago is seem to be understanding constitutionalism. Kganyago says the Treasury is doing in a The country also has a positive net
one of the best and brightest state officials. Its a combination of populism, politics, manner that is consistent with supporting the international investment position, meaning
Since his appointment as governor in late ignorance, lack of information and lack of underlying economic recovery. there are more South African assets outside
2014 he has shown the strength of character understanding, he says. Three years ago ratings agencies flagged the country than there are assets held by
required to reconcile the competing demands We have been spending a lot of our time the vulnerability of monetary policy when foreigners in South Africa. Which then
of his position and also to defend the office explaining not just the mandate of the inflation was outside the 3%-6% target. They means that if there is a reversal of flows,
Reserve Bank but the role of central banks in were concerned the bank would be unable to
society. provide monetary stimulus.
Kganyago says the Reserve Banks We have since come within the target and
independence is constitutionally guaranteed our projections were that inflation will
because of concerns that it had not acted remain within target, which is why in July we
independently before democracy. were able to provide some monetary relief to
Kganyago has shown But the public protector also wanted the try to support the economy. The future of
bank to play a more transformative role in In the cycles for monetary policy to be
rare traits courage and society, something the bank vehemently loose, fiscal policy must be tighter [but] it
this country is
a willingness to fight for opposed. doesnt follow the other way around. in our hands. We
The authors of our constitution were very The inflation target has also been a topic of
the integrity of the clear when they were creating institutions discussion. Two months ago at a lecture at owe it to the
institution he represents that these institutions have particular
mandates [that] theyve got to live [up] to.
Unisa the governor spoke about adjusting this
to bring it in line with South Africas trading
generations that come
The subject of development is complex partners.
and it needs government and society to be There were calls from elsewhere not
against attacks on its mandate. pulling together. That is why we have a within the Reserve Bank to say that this South Africa has that cushion of a net
In a period of low growth and recession National Development Plan, which calls for target was adopted in 2000. We must ask the international investment position, he said.
Kganyago maintained a firm policy of various arms and institutions in government question: is it still relevant? South Africans are eternal optimists. I
monetary discipline, cutting interest rates to be doing particular things in order to get The point we were making is we think it think in the case of ratings agencies the future
where it could drive growth, Coovadia says. development going, Kganyago says. is still relevant, but if there has to be a revision of this country will be what South Africans
But under the governors watch the Reserve He is firm that the role of the Reserve Bank to the inflation target we think that it cant be make of it, he says.
Banks monetary policy committee had also is primarily to keep inflation in check and revised higher. It would be revised lower. The rating we have in the future is not in
resisted cutting rates when it risked fanning protect the value of the currency. Other emerging markets had lower the hands of the ratings agencies. Its in our
inflation and harming the poor. The relationship between fiscal and inflation targets, and South Africa, with hands, its what we do with the credit
Kganyago has shown those rare traits monetary policy are also clear. Both are higher inflation, was losing competitiveness. concerns that have been raised.
among civil servants these days courage stabilisation policies and the position in the The review of the target range is the The future of this country is in our hands.
and a willingness to fight for the integrity of economic cycle determines the fiscal posture preserve of the macroeconomic management We owe it to the generations that come that
the institution he represents, Coovadia says. or monetary policy posture that must be committee, made up of officials of the when they ask what we did with this
Gina Schoeman, South Africa economist at pursued. Treasury and Reserve Bank who advise the challenge, wed be able to look back and say
Citibank, says Kganyago has earned the trust In the run-up to 2008 we said that we finance minister and governor once the This is what we concretely did.
November 12 2017 5
S
outh Africas first black billionaire,
mining magnate Patrice Motsepe,
has been voted by a panel as I have a long-term
Sunday Times lifetime achiever at
the age of 55 and shows no sign
obligation to the
of ending his quest to make his mineworkers on whose
mark in business and philanthropy.
The panel included business leaders backs the South African
Wendy Lucas-Bull and Bobby Godsell.
Motsepes story is one of firsts. He became
economy was built
the first black partner in a top five law firm,
Bowman Gilfillan, in 1994. He later built the
first black-owned mining business, African was built, and many come from poor villages
Rainbow Minerals. Today Motsepe is in rural areas.
executive chairman of African Rainbow Motsepe studied mining and business law.
Minerals, which has investments in ferrous I loved law because at that stage as a student
metals, platinum, base metals and gold. there werent that many entrepreneurial
Through African Rainbow Capital, Motsepe is opportunities for businessmen who were
launching a new bank, TymeDigital by living in the townships. Our parents were not
Commonwealth Bank South Africa. allowed to operate businesses in areas where
He sits on several company boards, black people were not allowed to live.
including as nonexecutive chairman of He benefited from BEE laws, but said
Harmony Gold and deputy chairman of building world-class, globally competitive
Sanlam. He was voted Sunday Times business companies is vital.
leader of the year in 2002, and has topped the All South Africans must benefit from the
Sunday Times Rich List. In September he was growth of the economy, and poor,
honoured by Forbes Magazine as one of the unemployed and historically disadvantaged
worlds 100 greatest living business minds, people must participate and benefit, he said.
alongside Warren Buffett, Bill Gates, Jeff Inclusivity is important for long-term
Bezos and Mark Zuckerberg. political stability.
Motsepes father, Augustine, was an You have to encourage the government to
entrepreneur who owned two grocery stores, do business with all of its citizens on a
a restaurant, a bottle store and a liquor hall competitive and ethical basis. There should
frequented by mineworkers in Ga-Rankuwa, be zero tolerance of corruption.
outside Pretoria. What is he most proud of? To see that
The businessman that inspired me most many of the businesses we have formed have
was my father, said Motsepe. He used to really made a significant contribution in the
wake us up, when I was about six years old, at lives of many people.
5am so that we could go to the market in Motsepe said ARM saved tens of thousands
Pretoria to buy fruit and vegetables for the of jobs in the gold-mining industry through
grocery store. What I know about business is the merger of ARMgold and Harmony and has
primarily what I learnt from my mother and created thousands of jobs. We and our
my father. partners have invested approximately R70-
Motsepe attended a Catholic boarding billion in the South African mining industry
school in Aliwal North in the Eastern Cape for over the past 12 years and we employ more
10 years from the age of five. The school than 55 000 employees in South Africa. This
played an important role in building the is a significant contribution to our people and
values, ethics and principles that I try to country that is often not recognised.
uphold today. I was privileged when I finished Patrice Motsepe. Picture: Getty Images As for a legacy, it is important to have
university and started working and training made a humble contribution to improving the
as a lawyer; I worked with conservative and living conditions of the poor and unemployed
many old-fashioned lawyers in South Africa and languages together. marginalised. He talks of running world-class and to creating opportunities for others.
and the US and was influenced by their His passions include business, mining, companies, of the importance of partnership
adherence to good values and ethics. financial services and football and he devotes between the government, the private sector, Obligation to all
much of his fortune and time to philanthropy. civil society, workers and trade unions. How does he feel about South Africas
First family He said his ownership of Mamelodi Motsepe is passionate about the private economic outlook?
He is part of the countrys first family. His Sundowns football club is one of his sector. He has not done business with the You cannot significantly build investor
sister Brigitte is the wife of Minister in the initiatives to give back. government directly, apart from the licences confidence if theres a perception that theres
Presidency Jeff Radebe. His other sister, Dr But ownership of a soccer team is not and other rights that his businesses have had corruption in the country and that there isnt
Tshepo Motsepe, is married to Deputy something hed recommend as an to obtain. That was a deliberate attitude on effective action being taken against those
President Cyril Ramaphosa. Motsepes wife, investment. Its almost like a bottomless pit. my side. We would focus on the private sector, who are corrupt.
Precious Moloi-Motsepe, is a medical doctor But for us of course we had a broader because that is what we understand better, The recipe for the growth of an economy
who has promoted local fashion. objective. We need to maintain contacts and and what we find extremely exciting. In the and a country is not a secret those
Motsepe is surrounded by strong women. relationships between South Africans from private sector it is the very best that always economies that have grown significantly and
I think the strongest was my mother. Even as different backgrounds and focus particularly prevail. You dont only have to work hard and increased the standards of living of the poor
a young boy I had very, very strong sisters and on the poor sport is a very, very powerful sacrifice, youve got to be innovative and and unemployed, and have also created a
a very strong mother, and thats beautiful. tool to bring all South Africans together. creative, and theres got to be a competitive growing middle class, are the economies
Strong people inspire you, they encourage Motsepe talks of ethics and values and of advantage. where private sector investment was
you, but they also make you respect and the need to include the poor and welcomed, and where the regulatory, the
admire their very special qualities. Humble contribution legal, the socioeconomic environment was . . .
He credits his family for encouraging His group is now looking at the renewable encouraging for investment and growth.
perseverance. I grew up in a very positive industry through African Rainbow Energy The Motsepe Foundation has granted more
family with encouragement, self-belief, and Power, which Motsepe formed a few than 1 200 bursaries.
even when I had failures in life and business. I years ago. The company intends selling What does he still want to achieve? I
am still going to have other failures in the electricity to Eskom, businesses and other think the key issue now is more in terms of
future, [but] that shouldnt discourage you, I worked with buyers. making this country a better place. Those of
because if you have a very optimistic outlook In spite of the tough environment, Motsepe us who have a platform should use that
you will see opportunities in life. But you
old-fashioned lawyers is still passionate about mining and not just platform to make South Africa a better place
must also work hard and be innovative. and was influenced by because he believes there is a competitive for all its people. This includes running our
Motsepe has no plans to go into politics. future in the sector. businesses as best we can . . . We also have a
Some of us have to live a life where you dont their adherence to good I look at myself as having a long-term broader obligation to all the people of this
seek the votes of people but focus on uniting
and bringing South Africans of different races
values and ethics obligation to the mineworkers of this country
on whose backs the South African economy
country . . . to make this country the best it
can be for the benefit of all our people.
6 November 12 2017
Business Times
Sunday Times Top 100 Companies
Adapt IT / Fortress Income Fund
Newcomer jumps
up the ranks
Wed like Adapt
It to be a
business that
exports
Software specialist Adapt IT pursues rapid growth intellectual
through acquisitions and targeting overseas markets property
By ASHA SPECKMAN When we started we were quite clear that the political environment as well as the confi-
we are developing a software business, said dence in the South African market. So, our
If you had searched for this years runner- Shabalala. business also suffers in that environment.
up among the Top 100 companies five years But software is as important and high- This had limited growth and in such a situ-
ago, you would have battled to find it. But in value an item for companies as is infrastruc- ation the company had turned to its acquisi-
just 60 months software developer Adapt IT ture, especially in recent times of increased tion strategy.
has blasted through the ranks to become one competition, and this has resulted in high an- In early October, Adapt IT issued a caution-
of the 2017 Top 100 Companies surprise new- nual receipts for Adapt IT. ary statement to shareholders indicating that
comers pipping longtime rival EOH, which Adapt IT services the mining, education, fi- it was in acquisition discussions.
for the first time in years has fallen out of the nancial services, energy and hospitality sec- Shabalala declined to reveal the details, ex-
top 10 over a five year review. tors. Among its South African clients are state- cept to say: Its either going to fall into the cat-
Adapt IT CEO Sbu Shabalala said the com- owned further education and training col- egory of beefing up our existing business or
panys annual revenue growth, from R300- leges, which operate student registration sys- entering a new sector. Were quite excited to
million to just over R1-billion over the five tems on Adapt IT software. find it. Wed be looking at both local and inter-
years, was the outcome of consistency, drive Over the past five years the share price of national.
and focus even as the company has received the JSE-listed company has climbed from Adapt ITs vision is to grow company rev-
some criticism in recent months for its growth R1.23 to R9 by the end of August this year. That enues to R3-billion by 2020 and diversify rev-
through an aggressive acquisition strategy. is a substantial 51% compound annual growth, enue streams to 70% local and 30% interna-
Fiercely defensive of this strategy, Shabal- although the share price has slipped marginal- tional.
ala said that early in its history the company ly since August. At this point we quite like the Australasian
realised that to enter a sector and build a pres- The 2017 Top 100 Companies survey covers market. A lot of South Africans are based in
ence took at least 15 years. It takes even the period from the beginning of September this market, as well as how corporate Aus-
longer to have the upper hand or to become 2012 to the end of August this year. tralia works with corporate South Africa.
the largest player in the software industry. Industry analysts who had questioned We want to continue and improve that re-
The type of businesses that Adapt IT has set Adapt ITs acquisition thirst were concerned lationship.
its sights on as acquisition targets have typi- about the rate of growth of the existing busi- The company has also established a pres-
cally operated for 20 to 25 years, and have dif- Adapt IT CEO Sbu Shabalala ness, said Shabalala. ence in Botswana and Kenya as it wants to sell
ferentiated themselves in the market. The rate of growth was driven purely by more to the Africa market, which is the next
Theyve added substantial customers with sales of existing software to new clients. The frontier for automation.
different software, which if we were to build it In 2003, when the company opened, the environment for sales is very low and we are Wed like Adapt IT to be the type of busi-
would have taken us 20 years, said Shabalala market was not accustomed to a business fo- seeing it now. ness that exports intellectual property, and
from the companys headquarters in Durban, cused squarely on selling software. Most com- Its a function of customers wanting to that is at the forefront of ensuring that our
where he now oversees a software group with panies were offering a mix of hardware com- hang on to cash a little bit longer and not mak- clients participate in the fourth industrial rev-
a reach into 40 countries on six continents. ponents and the like. ing expansion decisions until they understand olution, said Shabalala.
Naspers / Comair
Comair flies
high despite To take the right
decision and
dark times do it efficiently
requires the right Comair CEO Erik Venter
Business savvy, family people and right technological change. Ultimately the biggest
values hold it together experience impact on us has been adoption of the tech-
nology and pace of adoption and structures
weve had to put in place to accommodate
By ADELE SHEVEL So how does CEO Erik Venter see the dif- back quite rapidly. They like the environment, this. Its becoming quite a meaningful com-
ference between Comair and other airlines? its collaborative and not status driven. petitive advantage, the flexibility to rapidly
Comairs standout performance is all the Ultimately it comes down to corporate Non-aviation business expansion is cur- and effectively implement new technologies.
more pronounced given the dire situation of culture. Anyone can acquire aircraft and sys- rently the real driver of growth for the compa- The 2017 financial year saw a return to prof-
SAA and other airlines around the world. tems, but to take the right decision and do it ny, as there is no growth in the domestic avia- it. The company reported a 54% increase in
While the national carrier continues to re- efficiently requires the right people and right tion market in this economic climate. In profit to R297-million and a 28% increase in
ceive billion-rand bailouts, Comair has deliv- experience. You need the right culture to at- order to still deliver growth weve had to look cash generated by operations for the financial
ered sterling shareholder returns over the past tract and retain those people, he said. at other avenues, he said. year ended June.
five years no small feat given the challenging Venter said there was an enormous amount Currently about 20% of profits are derived Comair also won about R1.16-billion in
environment the industry operates in. of institutional memory in Comair, helped by from non-airline sources, and the plan is to damages from SAA arising from anticompeti-
The company has focused on non-aviation a low staff turnover rate. About half of the em- grow that to 50% over the next two years. tive conduct. SAA is appealing.
drivers to grow the business and has en- ployees have more than 10 years service. The biggest challenges have been the Bidvest owns 27% of the company, but Ven-
hanced productivity with technology. Even people who have left have come downturn in the economy and the pace of ter said it was very arms length.
8 November 12 2017
Business Times
Sunday Times Top 100 Companies
Mondi Plc / Capitec
Capitec outperforms
expectations again
Challenger the adding a substantial cushion on per-
forming loans and was funded
only bank through deposits.
In the last reporting period, it
to get double-digit was the only South African bank to
bottom-line achieve double-digit bottom-line
growth. Meijer said it did this by im-
growth proving its loan offerings thus ex-
panding its client base without
impacting its return on equity.
By ROXANNE HENDERSON CEO Gerrie Fourie credits its suc- Capitec CEO Gerrie Fourie
cess to careful brand building. We
After African Bank collapsed un- always said it would take us be- It ranks seventh in the Top 100
der the weight of its nonperforming tween 10 and 15 years for people to companies and fifth in the JSE top
loans in 2014, many believed understand and trust the brand. 40 index for its performance over
Capitec would follow suit. But the Were [now] a brand for all people the past five years. It launched in
challenger bank has instead shown and not only lower-income people. 2001, listed in 2002, and is the only
its mettle, emerging as a trusted Unlike its rivals, Capitec does not bank to feature in the Top 100 com-
brand rivalling the household differentiate its products based on panies top 30.
names that have dominated the customer incomes. To appeal to the While Capitec remains focused
banking industry for decades. middle and upper-middle classes, it on South Africa, it is in training for
Jaap Meijer, a banking analyst at offers convenience with a large its international debut. We dont
Arqaam Capital, said that unlike branch network and longer working yet know where we will go, said
African Bank, Capitec was always hours, Sundays included. Fourie. He was referring to Capitecs
21-million investment
in Polish-based fintech
Cream Finance earlier
this year.
We made the acqui-
sition because that gives
Capitec was us the first step in un-
derstanding internation-
always adding al markets.
a substantial Whether Capitec ex-
tended its reach beyond
cushion on South Africas borders or
performing remained a home-
grown bank, its focus
loans would remain its clients
needs, Fourie said.
November 12 2017 9
Afrimat / Trustco
investors and top 10 spot In the past year the companys share price
has increased 42.45% while in the past five
years it has jumped 346.4%, propelled by
strong earnings growth despite political un-
labour uncertainty reduce the competitive-
ness of Southern Africa against the rest of the
world.
He said political uncertainties that could be
certainty. detrimental to growth had to be addressed for
Political uncertainty is not lethal to business if Van Rooyen said that although the compa- Southern Africa to remain an investment op-
ny had not had investors that wanted to take portunity.
companies have strong leadership and values their capital elsewhere, the political uncer- With a bit of sound political leadership
tainty had a negative impact on capital rais- and will, these issues can and will be re-
ing. solved, Van Rooyen said.
By LUTHO MTONGANA While this uncertainty has certainly im- While political uncertainty persisted, lead-
pacted the region, the group still firmly be- ership and values in a business would be what
Despite sliding from third place since last lieves that the opportunities presented far attracted investors.
year, Trustco, the investment and insurance outweigh the risks, he said. Trustco had a strong leadership base, in-
company based in Namibia, still secured a Our . . . investors have confidence that tegrity, transparency and a board and man-
spot in the top 10 of this years Top 100 compa- management will weather the current envi- agement team culture that was committed to
nies. ronment and continue to provide the growth not only maintaining the growth of the past
The company is in ninth place. expected of us. five years but was also committed to improv-
Trustco has been on an aggressive acquisi- Trustco said the risks were lower than re- ing it, he added.
tion drive, in line with its Africa expansion turns in Namibia, which still made the country The groups market capitalisation has
plans. investable. grown from R806-million five years ago to
After acquiring the Meya Mining green- Speaking of South Africa and the rest of the about R4-billion this year.
fields diamond miner in Sierra Leone last year,
the company said it was still looking for other
opportunities.
The group expects Meya Minings first rev-
enue contribution to be in the 2018 financial
year.
The acquisition of Meya Mining and Huso Investors have
a diamond-mining, -cutting and -polishing
company also based in Sierra Leone and ac-
confidence that
quired in 2015 is meant to help realise hard management
foreign currency earnings for the group.
While the group may have specific targets will weather
in mind, our experience has shown that with-
out a lucrative opportunity already identified,
the
any undue attempt to enter established mar- environment
kets are fraught with risk. Trustco CEO Quinton van Rooyen
10 November 12 2017
Business Times
Sunday Times Top 100 Companies
PSG
is PSGs gift
want to miss
the boat
Energy, retirement homes and higher education are they were driven by exceptional manage- green Lifestyle. The investment still needs to
ment. be approved by the Competition Commission.
next big bets for group that grew Curro and Capitec It is hard work to go through early-stage There are currently 500 units and PSG
investment you push revenue rather than wants to build 3 000 in the next three years,
returns in the early stages, he said. further increasing this to 10 000 units.
By PERICLES ANETOS When PSG invested in Curro it had three The groups investment approach was re- The other sector the group is hedging its bets
schools now it has 127 and the group is set to engineered between 2005 and 2010. Mouton on for the next five years is higher education
PSG, which has shown a considerable expand further. said the group had looked at what worked through its recently listed Stadio offering.
knack for backing fledgling businesses and Investments such as Curro and Capitec well in the past and built a new approach. The Mouton said the listing was just the starting
turning them into huge successes, isnt going have certainly paid off. PSGs net revenue groups latest move is into the energy sector block for Stadio, but it was another invest-
to stop using tried-and-tested methods. Ener- grew from R1.8-billion in 2012 to more than and the retirement-living business. This is in ment with promise.
gy, retirement homes and higher education R21-billion currently, according to the groups addition to a more focused approach in higher All these investments had the potential to
are its next big bets. financial results to end-February. Over the education. contribute significantly to the group. He said
Started by Jannie Mouton in 1998, the same period its share price has increased by Group subsidiary Energy Partners recently it was going to take a lot of effort to ensure
group has made investments that have pro- 50% to R588. changed from an energy consulting business these companies reached their full potential.
duced Curro and Capitec. to an energy-ownership business. The busi- We have dealt our cards now we have
Piet Mouton, PSG CEO, said the company Stellar growth ness would also be looking at opportunities in massive opportunity, so the scope is some-
his father built had done a couple of things The difficulties facing the economy have water desalination. The group has also made a what limited for new investments. If we can
right, but had also benefited from some luck not deterred the group from continuing to in- bet on the retirement living sector via a 50% just make our current new investments work,
over the past two decades, a period he de- vest in South Africa. Mouton said the economy stake in retirement-village developer Ever- the next five years should be great, he said.
scribed as exceptional. would turn at some stage and if people
The groups market capitalisation has in- stopped investing they would miss the boat.
creased from just under R10-billion in 2012 to The key was to be an early-stage investor in
more than R61-billion this year. industries with big growth potential and a big
It is perhaps the way our business model market, according to Mouton.
is set up and this is maybe where we differen- But those were not the only factors playing a
tiate ourselves from other investment holding role.
companies. We do early-stage investing, said Inefficiencies in the sector concerned of-
Mouton. fered a competitive advantage to businesses
Capitec was able to build on 300 mi- that could deliver quality products to cus-
crolending branches into a full-fledged retail tomers at a good price.
bank that has disrupted a sector dominated by He said such investments offered signifi-
grand old dames. cantly above-average returns in the long run if
I N C O M E F U N D L I M I T E D
This years leading companies are a varied In the past year most stocks in the min-
bunch, from software to construction, but no ing industry have weighed down the JSE,
sector seems to have established clear domi- Our economy, and the led by losses from mining services compa-
nance among the top 10 JSE-listed groups. ny eXtract Group, that saw investors lose
Patrice Rassou, head of equities at Sanlam
index return, were saved 97.69% over the past year.
Investment Management, said the best-per- from collapse by rising According to Top 100 company data,
forming companies were those that had se- eXtract is the worst-performing company
cured a place in niche sectors and dominated commodity prices on the JSE in the year to the end of August.
in such areas despite poor economic growth. Shareholders in eXtract received enX
Rassou pointed to companies like Finbond shares when the company unbundled in
and Adapt IT as successful examples of this Only 22% of shares made a return greater November last year.
strategy. than the index, making it clear that companies As part of the transaction, enX convert-
If you are very niche and you dominate operating on local soil were struggling. ed R2.1-billion of the debt owed by eXtract
your area, you can extract a lot of growth, he Total returns for the small- and mid-cap subsidiary MCC into 5.2 billion new shares
said. indexes are standing at -1.42% and -1.62% for in eXtract.
Finbond, for example, achieved compound the year to date. These shares along with the existing
annual growth over the past five years of These segments of the market have very eXtract shares held by enX were unbun-
110.34%, while Adapt IT posted an increase of little foreign earnings. Our economy, and the dled to enX shareholders. Each enX share
51.06%. index return, were saved from collapse by ris- was worth 29.5 eXtract shares.
Property fund Fortress led the way in its ing commodity prices, said Treurnicht Mark Hodgson of Avior Capital Markets
sector with growth of 47.53%, followed by Re- The resource index returned 16.93% with said: You got a certain number of shares in
silient Reit (26.21%) and Fairvest Property good performances by Kumba (67.65%) and the process which you would still have. So
Holdings (21.99%). Looking after the finer details is key. Exxaro (61.87%). youd need to take into account the num-
Among the two paper and pulp producers Anglo also proved to be a great investment, ber of enX shares as an eXtract shareholder
on the JSE, Mondi showed a strong return of with a return of 33.53%. and at least factor that in. It probably is still
39.77%, mainly due to the strength of its Euro- achieved growth of 13.25% and MMI yielded If commodity prices stay where they are pretty bad but not quite as bad as it looks
pean division, while Sappi grew by a less 7.34% we will not be surprised to see our economy on the numbers.
spectacular 30.43%. The JSE All Share index returned 17.44% for picking up second- and third-round effects He said the real faultlines at eXtract
Afrimat led the construction sector, show- the year to date. take a bit longer to filter through to the rest of were its debt finance and its exposure to
ing an annual return of 36.4%. Casparus Treurnicht, an analyst at the economy, he commented. the struggling mining sector. So its a tough
Among the six major banks, Capitec pro- Gryphon Asset Management, said the return Offshore heavyweights like Naspers and space and shareholders take on a lot of
duced a return of 37.42%, followed by on the All Share index might seem like a very Richemont were the real force behind the All risk.
FirstRand (19.48%), Investec (18.25%) and good number. Share index, with returns at 62.6% and 36.2% Another company in the doldrums is
Standard Bank (12.85%). However, only 40.85% of the JSEs counters respectively. Lonmin, with shareholders losing 64.51%
Insurance provider Trustco produced an had positive returns, which was less than en- Combined, the two heavyweights make up in the year to the end of August.
annual return of 34.65% while Clientle Life couraging, he suggested. 27.48% of the All Share index. Sibonginkosi Nyanga, an analyst at Mo-
mentum Securities, said part of the reason
Lonmin is at the bottom of the barrel is that
people believe the company is bankrupt.
Phoenixs surprise podium rise Even if you look at the recent share
price movement, it was due to the revision
of its bank covenants. Its got too much
debt and the platinum price at the moment
is working against whatever management
African Banks offspring gains over 30% in debut year despite analyst doubts is trying to do.
It doesnt have money and at some
point Lonmin was going to breach its debt
By PALESA VUYOLWETHU TSHANDU tion. Value Capital Partners has taken a sub- dex Top 100, in terms of market capitalisation covenant with the banks, Nyanga said.
stantial stake in African Phoenix and the growth, for the year ended June 30. Since last month Lonmins share price
The offspring of beleaguered African Bank, speculation is that they will play some role in Tawana Resources, which has a dual listing has gained 32.5%.
known as African Phoenix Investments, made terms of getting involved in the company. The on the JSE and the Australian Stock Exchange, But on whether the company will return
its debut as the third-best performing compa- market is waiting to see how they will get in- has increased its footprint in Western Aus- to profitability, Nyanga said: I think cur-
ny for 2017, following a listing on the JSE earli- volved in African Phoenix operations. tralia by acquiring the Lake Cowan lithium rently management is doing whatever pos-
er this year. But as African Phoenix Investments share project from fellow-listed Metalicity. sible for Lonmin to remain afloat.
The surprise entrant recorded a return of price gains momentum, many shareholders Earlier this month, MD Mark Calderwood A rise in the platinum price is key if
112.9% in the past year. Since listing in Febru- are playing a wait-and-see game. told shareholders the company would benefit Lonmin is to make a profit again.
ary, African Phoenix Investments share price In the year to end-August lithium develop- from the demand for electric vehicles, as the Nyanga said management had done ev-
has gained about 25%, compared with an er Tawana Resources took top spot, with an raw materials required for lithium-ion and erything it could, restructuring and re-
11.73% rise in the All Share index. annual return to the end of August of 214.1%. other next-generation batteries had been a trenching.
But some analysts have said it was not an According to Bloomberg data, over the past critical focus of the automotive industry. We have seen some small improve-
accurate analysis since the comparison was year Tawana Resources share price has Allied Electronics Corporation (Altron) ments, but the biggest driving factor will
based on African Banks share price of 31c gained about 184.14%. This is not the first time recorded an annual return of 125.3%, making it be the improvement in the platinum
when its listing was suspended. the resource firm has been recognised. It was the second-best performer over one year to price.
African Phoenix Investments is not the named a top performer by the Deloitte WA In- end-August. The electronics company recent- Lonmin CEO Ben Magara has done a
same as the prior entity, because the major op- ly restructured and appointed former MTN very good job, Nyanga said. It [Lonmin] is
erating entity of the listed company is not in CEO Mteto Nyati as its CEO. at the wrong side of the cost curve which is
the listed entity anymore, said an analyst, Matthew Zunckel, an analyst at Mvunonala the reason why they are trying by all
who did not want to be named. Asset Managers, said a few years ago the means to restructure their operations.
African Phoenixs share price, at 66c, has group had a number of underperforming busi- Like Lonmin and the eXtract Group,
been driven by speculation of what will hap- nesses: Its been an entire repositioning of the Sibanye Gold was also lagging: its share-
pen to it; at the moment it is effectively a cash As the share price portfolio in terms of selling off those poor as- holders lost 63.05% in the year to the end
shell, the analyst said. sets, getting the cash in, reducing the debt on of August.
He added that African Phoenix Investments
gains momentum, many the balance sheet and focusing on the core of Other mining companies that made
had a large amount of cash and a small operat- shareholders are playing the group. losses last year included Harmony Gold,
ing entity in terms of Stangen, the entity it Zunckel said they had repositioned the AngloGold Ashanti and DRDGOLD.
bought as a result of African Banks dissolu- a wait-and-see game group as a telecommunications company.
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