FM Top Companies 2014

Financial Mail Page 1 -12/06/14 08:31:11 AM

TOP COMPANIES

ANNUAL REPORT

WWW.FINANCIALMAIL.CO.ZA

The Winners pg 12 • SA Giants pg 20 • Top Performers pg 86

In association with Accenture

T P
COMPANIES

2014

A leading review
of SA’s listed
companies
JUNE 2014

Financial Mail Page 2 -13/06/14 03:01:09 PM

Financial Mail Page 3 -17/06/14 02:23:42 PM

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95

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EDITORIAL

Financial Mail Editor: Tim Cohen.
Top Companies editor: David Williams.
Projects editor: Luleka Mangquku.
Projects co-ordinator: Matshepo Gumede.
Writers: Joan Muller, Maarten Mittner, Ruan
Jooste, Stafford Thomas, Stephen Cranston,
Thabang Mokopanele, Thabiso Mochiko.
Proofreader: Dave Landau
Layout & cover: Colleen Wilson
Editor-in-chief: Peter Bruce.
Group managing editor: Steve Matthewson.

ADVERTISING

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MARSH AFRICA
AFRICA
S PRE-EMINENT
INSURANCE BROKER AND RISK ADVISOR

Publisher: Mike Robertson.
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Head office: 4 Biermann Avenue, Rosebank 2196.
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A PAN-AFRICAN LEADER
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s leading insurance broker and risk advisor
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FM Top Companies_June2014
13 June 2014 03:24:43 PM

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Financial Mail Page 4-5 -17/06/14 02:24:48 PM

ontents
FRONT OF THE BOOK
7
9
10

Foreword
Definitions
Methodology

WINNERS
12
16-19

A historic run and quite a feat
The Top 20

SA GIANTS
20
25
26
27-38

The rand hedge exposure
International view
Asset heavyweights
Table: SA Giants

Reason says:
take your
IP to new
markets.

SECTORS
40
42
44
48
50
52
54
56
58
61
64
66
70

Chemicals: A weaker rand a major boost
Industrial metals & mining: Negotiating a maze of
challenges
Mining: Facing a perfect storm
Gold: The glitter keeps on fading
Platinum: How things have changed
Construction: There are signs of recovery
General industrials: Foreign expansion an answer
Transport: Efficiency of logistics questionable
Food & beverages: Emerging markets drive growth
Household goods: Keeping the fire burning
Health & pharmaceuticals: Offshore prospects look
healthy
Retail: Priority is defending the market share
Media: Diversify, restructure to stay afloat

71
72
77
78
80
82
83

Telecoms: The effect of changing user patterns
Banks: The secret to success lies in diversification
Life assurance: There is scope for innovation
Short-term insurance: More harsh realities
Financial services: Eclectic, but some are exemplary
IT: No strategic plan, no survival
Property: Shares gather pace

INVESTING IN TOP COMPANIES
86
88-92
94
96
98
99

Top Performers: When success breeds success
Table: Top Performers
JSE: Managing risk is a priority
Unit trusts: Growth in numbers continues
Economy: In need of a confidence boost
Corporate governance: Make it about openness

Instinct says:
new markets
could take
your IP.

SERVICES
101
102
106
107
108
111
112
114
115
117
118

Legal advisers: A move in the right direction
Table: Legal advisers & corporate clients
Accountants: Regulatory landscape tightens further
Accountants: Net closes in for tax evaders
Table: Auditors & corporate clients
Medical aid: A stifling operating environment
Table: Medical aid schemes & corporate clients
Advertising: Digital takeover gains speed
Table: Advertising agencies & corporate clients
PR agencies: Capability is no longer a luxury
Table: PR agencies & corporate clients

Business decisions are rarely
black and white. Dynamic
organisations know they
need to apply both reason and
instinct to decision making.
We are Grant Thornton and
it’s what we do for our clients
every day. Contact us to help
unlock your potential for
growth.
www.gt.co.za

2014 Grant Thornton South Africa. All rights reserved. Grant Thornton South Africa is a member firm
of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership.
Services are delivered by the member firms. GTIl and its member firms are not agents of, and do not obligate,
one another and are not liable for one another’s acts or omissions. Please see www.gt.co.za for further details.

Financial_Mail_DPS_pencils.indd 1

2014/06/12 9:03 AM

Financial Mail Page 6 -13/06/14 02:51:06 PM

We believe that by investing
in our youth we are investing
in making a sustainable difference
in South Africa.
Meet Ntombi Mazubane. Almost
10 years ago, Anglo American’s
Thermal Coal business unit granted
her a full study bursary that enabled
her to obtain a BSc Honours in
Mining Engineering. Today, Ntombi
works as a Section Manager at the
Kromdraai opencast section of
Landau Colliery. The support of
Anglo American, her hard work
and dedication has made her the
successful woman she is today.
In 2012, 1 230 employees participated
in learnership programmes,
and 522 bursaries were awarded
to high performing young people
like Ntombi. They will not only
be successful contributors to
our country, but have the
potential to also be successful
Anglo American employees.

NTOMBI MAZUBANE
Bursary Recipient
Landau Colliery, Kromdraai

THROUGH OUR
BURSARY SCHEME WE
ENSURE THAT BETTER
TOMORROWS ARE
BUILT TODAY.

Where there is mining there is
an impact. We believe it should
be a positive one.
www.angloamerican.co.za

Financial Mail Page 7 -13/06/14 05:14:45 PM

✥

FOREWORD

And a future that
transcends boundaries will
be a reality

W

e commend all the top company
leaders who have had the temerity to challenge their status quo
and define for themselves, and
their companies, a future of
unprecedented opportunity.
This acknowledgment is given in the context
of your participation in this 2014 Financial Mail
Top Companies survey. You are part of the evolution of Africa which is being pitched against
the unique backdrop that a connected world has
brought to our continent.
Technology evolves at a rapid pace. And at
Accenture we believe that the digital evolution is
already beginning to influence business growth
in Africa. We believe that every business must
become digitally enabled and that technology
can transform every aspect of an enterprise.
Digital redefines industries and facilitates
market leadership; it brings to an increasingly
demanding customer, at a point of need, the
ability to aggregate transactions and payments.
And as trade has underpinned economies over
the centuries, it will now offer Africa and its
emerging youth a future that no other technological evolution could present. This is a future
that transcends traditional boundaries of business, cultures and geographies. Digital will
empower many who have been previously disintermediated by location, education or access.
Accenture has operated in Africa for as many
years as the Internet has been in existence. Yet,
even with our steeped history, the exciting refocusing of our 290 000-person organisation has
never been more acute than in our recent geographic and delivery restructuring.
We have acknowledged the importance of our
evolving African footprint and supplemented
that by growing the established African delivery

network that has enjoyed a spread across the
length and width of our continent. Digital has
become core to our company’s operation,
matching the strategic intersection of technology
and business.
For this reason, we have begun positioning
ourselves to ensure that our clients capitalise on
these digital opportunities. We have formed
Accenture Digital, a new growth platform that
brings together the company’s digital capabilities
— including industry-leading digital marketing,
mobility and analytics services — into one
powerful global capability that will help clients
unleash the power of digital to transform their
businesses.
Also, Accenture Digital brings together 23 000
professionals, with wide-ranging experience in
developing, delivering and managing digital
strategies and solutions — which we believe
creates the world’s largest digital capability.
Accenture Digital will enable us to quickly
assemble specialised skills and form integrated
teams that can best serve our clients’ specific
needs — at scale and anywhere in the world.
As we widely adopt digital, we will need to go
beyond in understanding the new opportunities
that exist for us all, and how those opportunities
will translate into Africa coming into its own.
This current “digital disruption” presents
opportunities for companies. It presents a
paradigm shift for business leaders. In fact,
history teaches us that in a fast-changing and
volatile market environment, business leaders
must ensure that they have the right scale, agility,
insight and flexibility built into their business
models in order to compete successfully. The
transformation has begun. The wise will harness
the potential of tomorrow, today.
I salute all the top firms
whose leadership is already
in play. To each of those
nominated, you are already
demonstrating the characteristics we need to
William
leapfrog our continent
Mzimba
towards greater sustainable
growth.
To those who have won,
you have shown the way
for others to follow. And as
we stand together, as
leaders of today, I challenge
you all to prepare to lead
tomorrow as we enable our
businesses to redefine
global industries of the
future, born on African soil.
William Mzimba,
Accenture SA CE

FINANCIAL MAIL • TOP COMPANIES • 2014

FOREWORD

Narrow
the digital
divide

✥

7

Financial Mail Page 8 -13/06/14 03:41:19 PM

www.pwc.co.za

Building
relationships,
creating value

So we’ll start by getting to know you. You do the talking,
we’ll do the listening. What you tell us will shape how we
use our network of 184,000 people around the world – and
their connections, contacts and expertise – to help you
create the value you’re looking for.
To see how we can help your business, visit www.pwc.co.za.

© 2014 PricewaterhouseCoopers (“PwC”). All rights reserved.

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(14-15231)

13/06/2014 02:09:21 PM

Financial Mail Page 9 -13/06/14 05:14:54 PM

STANDARDISATION OF FINANCIAL DATA
The figures used in this publication differ from those published
by the companies. INET BFA standardises all the published
financial statements because the accounting conventions used
by companies differ, making it practically impossible to
compare and rank companies using their published data. The
JSE-listed companies to be compared with each other are
diverse. There are also many financial items to be considered
in the process of standardisation. It is therefore impossible to
describe, in a few words, what is done with each item in the
process of standardisation to achieve the goal of
comparability. In interpreting and allocating specific items,
however, basic accounting principles are followed.
INTERNAL RATE OF RETURN
The internal rate of return is a market-related return taking
into account, by way of a discounted cash flow calculation,
both share price movements and dividends paid. The share
price five years ago (end-March 2009) is taken as a cash
outflow and all annual dividends for the next five years (both
cash dividends and dividends in specie) as well as the share
price at end-March 2014 are taken as cash inflows. The
internal rate of return is then quantified by finding the
discount rate that equates the present value of all dividends
and the share price at end-March 2014 with the share price
five years ago (end-March 2009). All data is adjusted for share
splits and share consolidations.
GOLD COMPANIES, FINANCIAL COMPANIES & THE REST
The structure of the financial statements in the database of
INET BFA differs between gold companies and all other
companies. The reason for this is basically the difference in
the nature of business of the two categories. The definitions
of the ratios of the two categories of companies therefore
differ, but the meaning and quantification are the same.
Financial companies — comprising the banking, short-term
insurance, long-term insurance and financial services sectors —
are also treated differently in defining the various ratios. Again
this is done because of the difference in the nature of the
business. In all cases care is taken to maintain the
comparability of the performance and other measures. For
example, all the ratios are calculated before taking
extraordinary and exceptional items in the income statement
into consideration. Naturally, these items include the profit or
loss on transactions in the financial markets. These
transactions have been treated as “in the normal course of
business” for financial companies, but as extraordinary for all
other companies. As no turnover in the normal sense of the
word exists for banks, the total of interest received,
commission earnings, currency exchange earnings and other
fee earnings have been used instead of turnover.
DEFINITIONS OF THE MOST IMPORTANT VARIABLES
❍ Turnover: Total turnover as published by the company (for
banks refer to the paragraph above).
❍ Total assets: Fixed assets and current assets are included.
Investments are at market value or directors' valuation at
latest Statement of Financial Position date. Other assets, such
as land and buildings, are at book value. Where revaluations
are not taken into the Statement of Financial Position, these
are ignored. Where cash balances are netted off against bank
overdrafts, the cash balances are added back. Tax paid in
advance is netted off against tax payable and only the net
amount included. Cost of control and intangible assets, such
as goodwill, patents and licences, are not included — mining
assets are, however, included. Where amounts invoiced on
contracts in progress exceed the value of the contracts in
progress, the difference is included with retained income; or, if
the amounts received consist of deposits received, the
difference is included with creditors. If inventories are valued
using last in first out (Lifo), it is adjusted to reflect the first in
first out (Fifo) or average value.
❍ Market capitalisation: Market capitalisation equals the
market value of all fully paid and issued ordinary shares

calculated at the closing price of the last trading day of
March 2014.
❍ Equity funds: Equity funds (ordinary shareholders’ funds)
consist of ordinary share capital, all capital reserves and
distributable reserves, adjusted for the same items as the
“total assets” above.
Provisions included with credit balances such as warranty
provisions, provisions for self-insurance and provisions for
maintenance are included with long-term loans or creditors in
the case of short-term provisions.
Deferred tax is regarded as retained profit.
❍ Net profit: Net profit is defined as taxed profit attributable
to ordinary shareholders, excluding extraordinary and
exceptional items. Deferred tax and amounts transferred to
reserves, is excluded from the calculation of net profit and
directly handled in retained profit, thus increasing taxed profit.
Provisions are treated as disclosed under the equity funds
definition above. Currency conversion gains and losses are
excluded in all cases as not all companies treat this item in
the same manner. Also excluded are items such as cost of
control written off and prospecting expenditure. The pre-tax
difference in profit between Lifo and Fifo or average inventory
values is added to net profit.
❍ Pre-tax profit: The effect of extraordinary and exceptional
items is excluded from pre-tax profit (profit after interest paid
but before taxation). Apart from this, pre-tax profit has been
adjusted with all the variables as described in “net profit”
above. Earnings per share: Headline earnings per share as
published by the companies are used in all instances. Where
historical EPS (as in the case of growth in EPS) is used, this is
adjusted for stock splits and consolidations.
❍ Dividend per share: Dividends per share consist of the total
of cash dividends and stock dividends (as a proxy for cash
dividends), declared in respect of the years under review.
❍ Debt: Total debt (the sum of long-term interest-bearing
debt and short-term interest-bearing debt) is used in all ratios.

DEFINITIONS

Figures in tables provided by INET BFA were calculated
according to the definitions below. Consolidated audited
financial statements received before the end of March 2014
were used. For certain companies with financial year-ends
towards the end of the calendar year, statistics may thus refer
to financial years ended during 2012.

DEFINITIONS OF SOME OF THE RATIOS
❍ Compound growth: In earnings per share and pre-tax profit.
The compound growth in the above variables is calculated
using the available data for the latest five years available.
Where a company has not been listed for five years, the
compound growth has been calculated for the shorter period.
Where either the beginning or ending figures or both are
negative, N/A is indicated because the calculation would result
in bias.
❍ Average dividend yield: The average dividend yield for the
five years ending March 2014 is calculated. If a firm is listed
for less than five years, the average dividend yield for the
shorter period is given.
❍ Return on assets: Profit before interest but after tax as
defined above, divided by total assets as defined above.
❍ Return on equity: Net profit as defined above, expressed as
a percentage of equity as defined above.
Interest and financial lease cover: Profit before interest,
operating financial lease charges, tax and extraordinary items
divided by the total of interest and operating financial lease
charges paid.
❍ Debt to equity: The total of long-term interest-bearing debt
plus the total of short-term interest-bearing debt (including
overdraft facilities utilised) divided by total equity as defined
above.
❍ Total serviced debt: The total of long-term interest-bearing
debt plus the total of short-term interest-bearing debt
(including overdraft facilities utilised).
Cash and cash equivalents: The total of cash, positive bank
balances and short-term loans advanced.
❍ Currency conversion: In cases where a company publishes
its financial statements in some foreign currency, all financial
figures are converted to rand before the ratios for such a
company is calculated. For figures in the Statement of
Financial Position the exchange rate at financial year-end is
used in the conversion calculation. For figures in the Income
Statement an average exchange rate is used in the conversion
calculation.
❍ Annualisation: Financial statements not covering 12 months
are annualised. If more than one financial period is reported
on in a calendar year, the results are consolidated and then
annualised.

FINANCIAL MAIL • TOP COMPANIES • 2014

9

METHODOLOGY

Financial Mail Page 10 -13/06/14 05:15:06 PM

Picking out the top

performers
Those that are likely to
perform well again and
offer investor value rise to
the top

F

or more than a decade, the Financial Mail
Top Companies report has supplemented
the traditional voluminous data with a
value-adding assessment. This aims to
identify not only those companies that
performed the best in the previous year by the
various measures, but which among them are
likely to perform well again and also appear to
offer investors value. The 20 Top Companies award
winners are accordingly chosen through a
combination of historic financial performance
and the analysis and judgment of the Financial
Mail’s team of investment writers.
The financial performance of all listed
companies was assessed by INET BFA. Using
their figures, we first eliminated all companies
below R1bn in market cap to focus the
assessment on large companies with significant
investment potential.
Over the years the INET BFA numbers have
been questioned because they do not always
match a company’s own financials, but their
approach is consistent and is explained in detail
elsewhere (see page 9). INET BFA aims to
eliminate inconsistencies by standardising the
treatment of the figures. For example, the ways
companies treat foreign exchange conversions
are brought into a common formula.
We then weighed various financial performance indicators: earnings-per-share growth
and internal rate of return were measured over
five years to ensure that the top companies were
long-term performers. These two factors counted
40% each. The remaining 20% represented the
most recent year’s return on equity to ensure
these companies were current performers.
We then took the top 40 companies that were
identified, based on financial performance, and
assessed each one. The Financial Mail team
examined a number of factors: corporate
governance, empowerment commitment,

10

strength of management, investability (value buy
and tradability), industry and company profit
prospects. Scores were given in each of these
areas, with overall weighting being 60% for these
qualitative factors and 40% for the historic
quantitative information.
Thus there is both an objective and a
subjective element to the assessment, and then
selection, of the companies that make the Top 20.
The point about the table is not that these
companies are outstanding performers — they all
are — but that they are expected to again do
much better than their peers.
The Financial Mail acknowledges that ranking
the JSE’s property companies on a net profit
basis, particularly property loan stock companies
(PLSs) including sector heavyweights such as
Growthpoint, Redefine and Hyprop, is not
necessarily the best way to compare the
performance of individual property stocks.
PLSs pay out profits in the form of an interest
distribution to shareholders, which can render
the net profit number meaningless. However,
most PLS companies have already (or are in the
process of) converting to the new real estate
investment trust (Reit) structure that was adopted
by the JSE last year.
Under the Reit dispensation, interest
distributions are effectively treated as dividends,
which makes it more viable to rank property
stocks in a similar way to general equities.
The Top 20 is not meant to be a list of
blue-chip companies. And as a glance will reveal,
many of the JSE traditional blue chips are not
there. Rather, it’s an attempt to identify those
companies that represent the best investment
opportunities.
To perform well in one year makes it even
tougher the next year. Investors will reward a top
performer, which means in time there will be
less value on offer in the share price. Even
outstanding companies can be too expensive. If
their price-to-projected-earnings ratio is too
high, it could take decades for the initial
premium to be repaid, if ever. The Top 20
companies, therefore, are those that have
unquestionably done well, but also have the
potential (in the view of the Financial Mail’s
analysts) to deliver yet again even if they look
expensive. ■

FINANCIAL MAIL • TOP COMPANIES • 2014

KINGJAMES 30387

Financial Mail Page 11 -13/06/14 03:41:49 PM

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But questions are being raised about whether Coronation
will be able to maintain its performance next year

C

oronation Fund Managers is the
Financial Mail’s Top Company for the
second year in succession. This is quite
a feat — in the history of Top Companies,
there has never been a back-to-back

winner.
So much has been written about this nimble,
entrepreneurial company it is difficult to find a
new angle. Scoring well on both quantitative and
qualitative metrics, the biggest single advantage
that Coronation had this year and last was its
extremely high return on equity (ROE). But it also
had one of the best five-year internal rates of
return (IRR) in its share price and one of the best
five-year growths in share price. The share has
undoubtedly become something of a darling of
the investment community in recent years,
which is not surprising considering the outstanding returns that it has delivered. Investors
also obviously like the fact that the company
pays out most of its earnings to its shareholders
in the form of dividends.
But without wishing in any way to rain on
Coronation’s parade, there are a couple of
warnings being sounded regarding its ability to
remain number one next year. The local equity
market has run hard in the past few years and
the chances of it repeating that this year seem
less than last year, for example. But over and
above that, investment history is against Coronation greatly outperforming the market for
much longer. This isn’t an opinion as such, rather
a statistical likelihood, borne out of many years
of research into fund manager performance.
Clientele has soared up the rankings from an
already impressive number 18 position to this
year’s number two spot. This is a diversified
financial services group, offering its products via
direct marketing and sales distribution channels.
The products offered range from hospital and

12

funeral plans through legal, life, loan and investment products. Clientele’s ROE has consistently
been above 50% for many years and this is one
of the features that has helped propel the
company into number two position this year.
Almost as impressive as Clientele’s meteoric
rise up the rankings was Clicks’ performance in
going from number 17 last year to number three
this year. Founded in the 1960s by the late Jack
Goldin (who incidentally also founded Pick n
Pay), Clicks was modelled on the American
drug-store concept. It took decades before
pharmaceutical retailing was deregulated in the
early part of past decade but Clicks has
undoubtedly been the biggest beneficiary of this
change. Most of its outlets now sell scheduled
pharmaceuticals, ably augmented by a wide
range of general merchandise products.
EOH’s historical earnings and share price
graphs look very similar, as they both rise
virtually exponentially. And even though each
year the graphs look like they must surely peak
out, EOH still manages to perform incredibly
strongly. This is arguably one of the best IT
stocks in the entire IT sector and is rated very
highly, on a p:e ratio of over 23 times. But it
wasn’t always like that. Back in the aftermath of
the global financial crisis of 2008, EOH’s p:e ratio
slumped to less than six times, even though its
earnings growth was still intact. That, of course,
was the time to buy this exceptionally
well-managed and visionary company’s shares,
led by the charismatic and deep-thinking CEO
Asher Bohbot.
Woolworths moves up from number eight to
number five in this year’s rankings. A firm
favourite with both local and foreign institutional
investors, Woolies has managed to convincingly
buck the downwards trend in share price that
has afflicted many of its peers in the retail sector.

FINANCIAL MAIL • TOP COMPANIES • 2014

20, Naspers moves up to number eight this year.
The main factor driving its greatly improved
performance this year has been the virtually
exponential rise in its share price.
Though a relatively small market capitalisation company, Mix Telematics has a surprisingly wide geographical reach. Its products
are fitted in almost half-a-million mobile assets
(trucks, vans, cars, motorcycles, buses and
trailers) in 112 countries on six continents. The
group has offices in SA, the US, the UK, UAE,
Australia, Brazil and Uganda.
Sanlam has generated much better growth
than its peers during the past 10 years, even
though, back in the middle of the past decade the
company didn’t have much with which to
differentiate itself. By transforming its local
offering and by buying its way into foreign
growth markets in countries such as Malaysia,
India, the UK and the rest of Africa, Sanlam is
now superbly positioned to capitalise on its
inherent strengths. Little wonder, then, that it is
rated so highly this year, coming in at number 10.
Shoprite comes in at number 11 in the
rankings this year, even though its share price
came off last year as earnings fell somewhat
short of analyst expectations. In terms of market
capitalisation, Shoprite is still the largest listed
retailer in SA by a big margin. And it retains the
best geographical footprint in the rest of the
continent, having gained a significant first-mover

Cape Town-based Coronation Fund Managers has had an extremely
high return on equity for the past two years

Getty Images

A historic run
and quite a feat

And it’s not just a favourite with investors, SA’s
emerging middle class obviously likes shopping
at Woolies in ever-increasing numbers. It’s
pitched very much at the middle and upper end
of the social spectrum, so Woolies’ customers
appear to be less vulnerable to the effects of
economic slowdown and are thus managing to
maintain their spending patterns.
Mr Price wasn’t in last year’s Top 20 but
manages an extremely respectable number six
position this year. Hugely iconic, the Mr Price
brand now straddles not just apparel but also
homeware and sport. In the 28 years to endMarch 2014, its compound annual growth rate
(CAGR) in earnings per share has exceeded 23%,
while its CAGR in share price is over 27%. There
are precious few JSE-listed companies that come
anywhere near that kind of superlative performance. Targeting mainly younger customers in
the mid to upper living standards measure (LSM)
categories, Mr Price retails mainly its own
branded merchandise and more than 80% of
sales are for cash.
Originally conceived more than 20 years ago
and run as a private equity group, Brait — at
number seven — transformed itself into an
investment holding company in 2011.
The Naspers share price has defied gravity in
the past couple of years, the main reason being
its significant shareholding in Chinese Internet
company Tencent. Number 14 in last year’s Top

THE WINNERS

THE WINNERS

Financial Mail Page 12-13 -13/06/14 05:15:37 PM

FINANCIAL MAIL • TOP COMPANIES • 2014

13

advantage by opening up shop in Mozambique
almost 20 years ago.
Consolidated Infrastructure Group (CIG) is a
firm favourite among small capitalisation
specialist analysts. Not only is CIG operating in a
sweet spot in the establishment of much-needed
electrical infrastructure both in SA and the rest of
Africa, but it also operates highly efficiently. Just
outside the top 10 this year, it seems likely that
CIG will advance even further in years to come.
Supergroup had a torrid time a few years ago,
but has mounted a spirited return to profitability
in recent years — much to the relief of anchor
shareholder Allan Gray. A broadly based logistics
and supply-chain management company,
Supergroup listed on the JSE back in the mid1990s and enjoyed a number of years of strong
earnings growth before getting into trouble.
Cullinan is a travel-orientated company that
operates in a variety of segments, including
inbound and outbound travel, travel agencies,
coaches and touring, marine and boating as well
as the recently added financial services.
Pinnacle Technology Holdings has enjoyed an
outstanding run on the JSE in recent years as a
direct consequence of its very strong earnings
growth. Unfortunately, its otherwise exemplary
share price track record was badly marred in
March when it was announced that a director of
the company, Takalani Tshivhase, had been
arrested on charges relating to bribing a police
officer to win a contract. At the time of writing,

the Financial Services Board was also conducting
a probe into possible insider trading by company
officials prior to the announcement of Tshivhase’s arrest.
Founded by financial services doyen Jannie
Mouton, PSG has gone from strength to strength
and now holds a broad spectrum of interests,
including financial services, banking, private
equity, agriculture and education.
Operating in an out-of-favour sector —
construction — Afrimat has succeeded in turning
earnings around, mainly by astute earningsaccretive acquisitions.
Capitec has made regular appearances in both
Top Performers and in the final Top 20 rankings
of Top Companies in recent years. In a year in
which sentiment was against the smaller
banking institutions, as a result of the reduction
in unsecured credit, it scrapes in at number 18.
SA’s largest drug company, Aspen, comes in at
number 19 and will surely keep rising up the
rankings in future. Supplying branded and
generic pharmaceuticals in over 150 countries
globally, as well as consumer and nutritional
products in selected territories, it is unquestionably one of the greatest success stories on the
JSE in the past decade or so.
Kumba Iron falls from six last year to 20 this
year. The share price has been in secular decline
since the beginning of 2013 and is not materially
higher than it was five years ago, hence its fall
down the rankings.
Staff writer
Russell Roberts

THE WINNERS

Financial Mail Page 14 -13/06/14 05:15:46 PM

The iconic Mr Price, which didn’t make last year’s
Top 20, also offers homeware and sports brands
14

FINANCIAL MAIL • TOP COMPANIES • 2014

KINGJAMES 30281

Financial Mail Page 15 -13/06/14 02:24:43 PM

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Financial Mail Page 16-17 -17/06/14 02:26:21 PM

Mix Telematics,
which offers
vehicle tracking,
lost some of its
share price value

Naspers’s share
price reached a
record high earlier
this year

Clicks managed to
turn in another
solid performance

Woolworths’ acquisition plans in
Australia will be a major boost

2

1

CORONATION
Total score: 76,1

CLIENTELE
Total score: 59,3

Historic score: 15,5 FM’s score: 43,8

Not only is Clientele writing quality business in
its traditional markets, it has also expanded its
interests. Earnings growth has been strong, but
the real attraction for investors lies in its
exceptionally high ROE of almost 60%. These
factors have resulted in the share price almost
quadrupling over the past five years. Provided it
maintains or improves its current momentum,
it’s possible that Clientele could be a contender
for the top position next year.

4

EOH

Total score: 58
Historic score: 19 FM’s score: 39

EOH has demonstrated an exquisite ability to
identify emerging trends in the IT space, capitalise on them and, in the process, provide
sustainable high-quality solutions for its quality
client base. As long as these macro and micro
factors remain intact, it should continue to defy
the sceptics and maintain a high profile in the
rankings. But EOH’s shareholder base needs no
convincing; in the five years to March 2014, the
share price rose by a factor of almost 15 times.

8

MR PRICE
Total score: 57,6

Historic score: 16,8 FM’s score: 40,8

Mr Price has further consolidated its position as
arguably SA’s best clothing retailer. Defying the
odds, it once again managed to turn in a strong
performance in the year to end-March 2014. Its
innovation, especially in online shopping, is
paying off. Apparel was launched online in 2013
and is shipped to over 130 countries. Growth in
the rest of Africa is also increasing apace;
double digit operating margins are being
achieved in West Africa.

NASPERS

Total score: 55,4
Historic score: 11 FM’s score: 44,4

The Naspers share price doubled during 2013,
and in March 2014 it reached a record high of
over R1 354/share. This was driven by the performance of Tencent in China, in which Naspers
holds over 30% of the equity. But no sooner had
the share price peaked, it fell precipitously,
dropping around 30% by early May and giving
rise to speculation that Tencent, and by extension Naspers, was in bubble territory. But it has
since clawed back about two-thirds of its losses.

Historic score: 33,5 FM’s score: 42,6

To win the Top Company title is an outstanding
achievement — to win it back-to-back in
consecutive years almost defies description. But
the opposition is closing in and Coronation may
find it virtually impossible to repeat this
performance next year. Performance fees for
beating the market will be more difficult to
attain this year; Coronation’s metrics in the
calculation will be coming off an already high
base and the market itself is unlikely to repeat
the outstanding performances of recent years.
But this shouldn’t detract from what is a
reflection of an incredible success story,
achieved in a remarkably short time.

3

CLICKS

Total score: 59,1
Historic score: 14,7 FM’s score: 44,4

Despite a relatively poor economy, Clicks
managed to turn in another solid performance
last year. But its fortunes rely almost exclusively
on trading conditions in the local economy,
which means the outlook for the remainder of
2014 is going to be tough. Unlike many of its
retail sector peers, Clicks has no meaningful
footprint in the rest of Africa as yet, which could
affect it negatively. Its pharmaceutical wholesaling arm, UPD, was the star performer.

5

WOOLWORTHS
Total score: 57,6

Historic score: 17,4 FM’s score: 40,2

During 2014, Woolworths announced its intention
to acquire David Jones, Australia’s largest
department store chain. Provided this R20bn
deal is completed successfully, it will change the
outlook for Woolies in a meaningful way. About
40% of its profits would emanate from Australia,
providing a useful rand hedge element to this
well-managed firm’s portfolio. It would also
become one of the largest department store
chains in the southern hemisphere.

More than 130 channel partners…
www.mixtelematics.com

16

6

FINANCIAL MAIL • TOP COMPANIES • 2014

7

9

BRAIT

Total score: 56,7
Historic score: 11,7 FM’s score: 45

Perhaps because of its relatively low profile,
Brait’s outstanding share price performance
during the past five years has gone largely
unnoticed by a lot of investors. Between March
2009 and March 2014, the share price grew by
more than 400% and the market cap ballooned
from around R1bn to over R30bn. Brait trades on
a healthy premium to net asset value, and this
factor may be primarily responsible for its
explosive share price growth.

MIX TELEMATICS
Total score: 54,4

Historic score: 14,2 FM’s score: 40,2

Between late August 2013 and early June 2014,
the Mix Telematics share price gave up over a
third of its value. This was perhaps in anticipation of the drop in operating profit margin that
materialised in the full-year results to end-March
2014. HEPS increased only marginally in the 2014
financial year. Mix Telematics will merit close
attention to see how its growth plans work out.
Provided strong earnings growth resumes, a
return to a higher price trajectory seems likely.

10

SANLAM

Total score: 54,1

Historic score: 9,7 FM’s score: 44,4

Sanlam’s share price movement in the year to
early June 2014 has been about twice as strong
as the JSE all share index generally, recording
almost 16% growth in that period. The company
also released a four-month trading update in
early June, showing that operating earnings
were about 40% up, compared with the same
period in 2013. Notwithstanding its traditionally
cautious outlook on prospects, it seems reasonable to expect strong earnings growth for 2014.

450,000 subscribers, and growing…
www.mixtelematics.com

FINANCIAL MAIL • TOP COMPANIES • 2014

17

Financial Mail Page 18-19 -17/06/14 02:30:22 PM

Afrimat’s earnings have come under fire

Pinnacle, which offers
hardware and software
products, has a good
financial track record

12

CONSLD INFRA GRP
Total score: 52,7

Historic score: 16,7 FM’s score: 36

Shoprite’s intrinsic qualities
remain intact despite challenges

11

SHOPRITE
Total score: 53,9

Historic score: 9,5 FM’s score: 44,4

Since peaking at just over R206/share in early
2013, Shoprite had lost over 20% of its value by
early June 2014. Even so, with a market cap of
over R90bn in early June 2014, it was still the
largest listed retailer on the JSE. Sentiment
towards it remains negative, given its large
exposure to the lower end of the market consumer, hardest hit by SA’s economic slowdown.
But its intrinsic qualities remain intact, keeping it
in good stead in future.

Consolidated Infrastructure Group’s share price
has risen three-fold — from R10-R30 — in the
past 2,5 years and its market cap has risen from
about R1,2bn in early 2012 to R4bn. This performance reflects not only the strong historic
earnings growth of the company but also the
expectation that this growth will continue well
into the future. The demand for energy in the
rest of Africa is forecast to rise exponentially in
the next decade.

13

SUPERGROUP
Total score: 52,7

Historic score: 19,7 FM’s score: 33

Supergroup had all but been given up for dead
by most investors, following the precipitous fall
in its share price in 2008/2009 as a result of its
disastrous trading and subsequent bailout. But
the new management team has worked wonders.
The company is once again properly capitalised
and the share price has more than tripled since
the turnaround began in late 2010. Whether it
will ever regain its premium rating on the
market will only be known in a few years’ time.

14

CULLINAN HLDNGS
Total score: 52,1

Historic score: 19,7 FM’s score: 32,4

Cullinan’s eight-fold increase in its share price
during the past five years warrants its inclusion.
It’s a small market cap company, but its main
impediment as far as potential investors are
concerned is the poor liquidity of the share. In
the year to end-May 2014, only 4m out of 800m
shares changed hands. The weak rand is a mixed
blessing for tourism-orientated companies such
as Cullinan, as it enhances incoming travel but
deters potential outbound travel.

15

PINNACLE
Total score: 51,9

Historic score: 15,3 FM’s score: 36,6

Pinnacle Holdings is one of Africa’s largest providers of information & communication technology products and services. It has an outstanding financial track record, even if interim
results to end-December 2013 were relatively
pedestrian. But much of its historic performance
will be ignored by potential investors. The share
price took a beating recently, and was over 50%
down from its peak, at the time of writing. Still,
it was four times higher than five years ago.

16

PSG GROUP
Total score: 51,3

Historic score: 10,5 FM’s score: 40,8

PSG Group holds an enviable stable of interests,
including 28,3% of Capitec, 57,1% of
fast-growing education group Curro, 42,4% of
Zeder and 64,8% of soon-to-be listed PSG
Konsult, whose CEO is Francois Gouws, former
banking analysis wunderkind. In early June, PSG
completed a successful bookbuild, raising almost
R1bn for future expansion, though at the time of
writing it was not known into which areas of the
business the new capital would be deployed.

17

AFRIMAT

Total score: 51,1

Historic score: 10,3 FM’s score: 40,8

Like other construction firms, Afrimat’s earnings
have come under pressure as margins have been
squeezed in SA. During the year ended February
2014, revenues rose by over 42%, with HEPS
rising by a similar percentage. The balance sheet
is strong, with a net gearing ratio of only 15,5%.
It acquired just under 80% of Infrasors, a mining
resources firm. And its strategy of diversifying
its base of operations has worked well and
management is confident of further growth.

18

CAPITEC

Total score: 51

Historic score: 16,2 FM’s score: 34,8

Kumba Iron Ore has
fallen out of favour
with investors

Capitec has attracted a lot of negative attention
in the past year or so from the troubles affecting African Bank. Though the two operate quite
differently, they are perceived to be competitors
in the same space. But while African Bank’s woes
continue, Capitec managed to put in a decent
performance in the year to February 2014, with
HEPS rising by 15%. The number of active clients
is now 5,4m. From July, it will enter the home
loan market in partnership with SA Home Loans.

19

ASPEN

Total score: 50,8

Historic score: 13 FM’s score: 37,8

Aspen has been growing revenue and profits
sustainably for some time now, in SA and in
offshore jurisdictions. In the six months to Dec
31 2013, revenues rose by 33% to R12bn, while
HEPS increased by 14% to 424,2c. SA accounts
for only 30% of its revenue and operating
profits. Asia Pacific accounts for 33% of revenue
and 31% of profits. Given the group’s global
expansion, it seems likely that the SA component
of revenue and profits will continue to decline.

20

KUMBA IRON ORE
Total score: 50,3

Historic score: 16,7 FM’s score: 33,6

Kumba Iron Ore, as a single commodity producer,
has recently fallen out of favour with investors.
Also, it has caught all the negatives because its
main focus is iron ore — a commodity whose
price has fallen — and a number of new iron ore
producers have come onstream globally in the
past few years. Unless iron ore prices start
moving upwards again, its share price appears
destined to languish. And it’s hard to see how
Kumba can maintain a Top 20 finish next year.

And this is only the beginning.

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18

FINANCIAL MAIL • TOP COMPANIES • 2014

Partner with the leading global
provider of fleet management,
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solutions.

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FINANCIAL MAIL • TOP COMPANIES • 2014

19

SA GIANTS

Financial Mail Page 20 -13/06/14 05:17:09 PM

The rand hedge
exposure
Looking at the numbers and positions, the advantages of
being active outside SA are evident

20

Gallo Images/AFP

T

his section is well named; these are the
giant companies listed on the JSE — the
blue-chip companies that tend to
dominate most of the weightings in the
portfolios of financial institutions.
Most of these companies have been in
existence for decades and these days many of
them have significant income emanating from
offshore. They straddle the entire spectrum, from
industrial, through financial and mining. They
are well covered by the investment research
departments of stockbroking firms and
investment banks.
As one might intuitively expect, there is a
fairly close correlation between most companies’
turnover, net profit and their market
capitalisations. More precisely, the relationship
between these three parameters tends to be
relatively stable over time, unless a company’s
earnings fall sharply and their market
capitalisation reacts negatively. This type of
behaviour would result in turnover tending to
continue rising, but market capitalisation falling.
It is interesting to note the breakdown in this
type of relationship at both Murray & Roberts
and Telkom. Turnover at Murray & Roberts rose
by just under 10% between 2012 and 2013, its
market capitalisation rose by 5%, while its net
profit improved from a loss of R1,2bn to a
marginal loss of R158m. During the same period,
Telkom’s turnover fell by 2%, its market
capitalisation more than doubled and yet its net
profit almost disappeared, going from R2,4bn to
R522m.
In recent years, large SA corporates have
tended to derive an increasing proportion of their
turnover and profits from outside the country.
This has imparted a type of “rand hedge” quality
to these companies, a factor that has aided them
noticeably during periods when the rand has

Ivan Glasenberg

been weak. This was especially noticeable during
2013, when the rand was one of the world’s
worst performing currencies. It is important to
recognise the degree of rand hedge exposure in
these companies when examining their relative
rankings in the SA Giants table. A weak rand
obviously improves turnover, net profit and
market capitalisation as well as many other
metrics.
There is a new leader in the SA Giants ranking
this year — Glencore Xstrata, renamed Glencore
towards the end of May 2014. Formed by the
amalgamation of Glencore and Xstrata in 2013,
the merged company was listed in Johannesburg
late last year. There are no comparative figures
for the previous year as 2013 was the group’s
maiden appearance on the JSE.
Glencore is a diversified mining behemoth, its
genesis going back to the days of the late Marc
Rich. Today its CEO is SA-born Ivan Glasenberg,

FINANCIAL MAIL • TOP COMPANIES • 2014

Financial Mail Page 21 -13/06/14 02:25:35 PM
11158_Altron_Advert_210x273_v1_ART-PRINT-2014.pdf

1

2014/06/12

4:12 PM

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who owns a measurable
chunk of the equity of the
firm. This imparts a large
degree of entrepreneurial flair
to the group. Its recently
appointed chairman is Tony
Hayward, who was BP’s CEO
for a number of years.
Glencore is undoubtedly
the most diversified of all the
large global mining giants and
it is the only one that doesn’t
have an exposure to iron ore.
Its other main point of
difference from the likes of
BHP Billiton and Anglo
American is that it has a
meaningful commodities
trading arm, something that
may well be a big plus in years
to come. Following the recent sale of its Las
Bambas copper mining assets, it seems likely that
the group will pay a special dividend to
shareholders later in 2014.
Like Glencore, the next three companies all
have their primary listings outside SA. BHP
Billiton has its main listing in Australia and is
triple listed in that country, London and
Johannesburg. Ousted from this year’s number
one position by Glencore, BHP Billiton remains a
firm favourite of fund managers not only in SA
but in many other countries. It has a superb
diversification of assets, mainly in the base
metals and minerals space but also including a
decent exposure to petroleum.
Anglo American falls from second to third
position in the ranking, with net profit falling by
22%, very similar to BHP Billiton’s 21% profit
decline.
In 2013 former AngloGold Ashanti CEO Mark
Cutifani assumed the
SA GIANTS
top position at Anglo
BHP Billiton
American, following
BAT Plc
the departure of
Sanlam
Cynthia Carroll.
Anglo American Plc
Cutifani is a firm
Glencore Plc
140
(listed on Nov 13 2013)
favourite among
130
fund managers and
120
his straight-talking
style has won him
110
many friends and
100
admirers, both in SA
90
and in the rest of the
financial world. But
80
he knows that the
70
next few years will
65
be tough as he
J FMAM J J A S ON D J FMAM
2013
2014
transforms Anglo
Source: INET BFA
Share prices based to 100
American into a
Russell Roberts

SA GIANTS

Financial Mail Page 22 -13/06/14 05:17:26 PM

22

leaner, more profitable entity.
British American Tobacco
(BAT) is a stalwart of many
institutional and private client
portfolios in SA and around
the globe, as its revenue and
profits are perceived to be
Mark Cutifani almost of an annuity nature.
Though it may be an
inconvenient truth, cigarette
smoking still has an extremely
large following around the
world, and in the developing
world it is actually growing.
The one country that BAT
and other Western tobacco
companies cannot break into,
of course, is China, where the
tobacco industry is
state-controlled and foreign
entrants are prohibited. But there are many other
developing countries where BAT does
exceptionally well, especially with its so-called
“global drive brands” comprising Pall Mall,
Rothmans, Kent, Lucky Strike and Dunhill.
From an SA investor’s perspective, this is one
of the ultimate nonresource rand hedges, as its
primary listing is in London and it derives its
revenue and profits from all over the world. It is
also one of the best examples of a trinity
encompassing turnover, market capitalisation
and net profit all largely moving in the same
direction and by similar quanta. Between 2012
and 2013, BAT’s turnover grew by 18%, market
capitalisation grew by 19% and net profit rose by
22%.
Sanlam stays at number five in the rankings,
with turnover increasing by 32% and market
capitalisation rising by 26%, but net profit
(according to BFA) declined by 43%. Sanlam is
arguably SA’s most successful large insurance
company and its highly conservative approach
has paid off handsomely in recent years.
SABMiller remains at number six, with all
three metrics of turnover, market capitalisation
and net profit improving noticeably.
Like BAT, SABMiller is a firm favourite among
fund managers, even though it trades at a rarefied p:e ratio. Given its high exposure to
emerging economies (and thus emerging
economy currencies) SABMiller’s US$-based
metrics took some strain from foreign exchange
headwinds last year, but this was hardly
apparent at an SA level due to the exceptionally
weak rand.
SABMiller’s good performance was, of course,
marred by the tragic death of former CEO
Graham MacKay in December 2013. This highly

FINANCIAL MAIL • TOP COMPANIES • 2014

continued on PAGE 26

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Financial Mail Page 24 -13/06/14 03:42:27 PM

Financial Mail Page 25 -13/06/14 05:17:38 PM

THE INTERNATIONAL VIEW

THE FORBES GLOBAL 2000 is a comprehensive list of the world’s largest, most powerful
public companies, as measured by revenues,
profits, assets and market value. These are
weighted equally to arrive at a composite score,
which is the basis of the Global 2000 ranking.
Last year, Chinese companies took first and
second places in the ranking, displacing US
companies for the first time. This year, that
trend has been extended, with Chinese firms
taking the top three slots. In the 11 years since
the Global 2000 ranking has been calculated,
the number of countries incorporated in the
ranking has risen from 46 to 62. The superlatives make interesting reading: total revenues
of these 2 000 companies as at May 2014 was
US$38 trillion; profits were $3 trillion; assets
were worth $161 trillion; and total market

SA GIANTS

Chinese firms outshine
the rest

capitalisation was $44 trillion.
Industrial & Commercial Bank of China,
which holds 20% of SA’s Standard Bank, is in
first spot, as last year. China Construction Bank
is in second place, with the Agricultural Bank of
China in third spot. The next five are American
companies — JPMorgan Chase (4), Warren
Buffett’s Berkshire Hathaway (5), Exxon Mobil
(6), General Electric (7) and Wells Fargo (8). Two
more Chinese companies — Bank of China (9)
and Petro China (10) — complete the top 10.
Apple is still the world’s most valuable firm,
with a market cap of $483bn, followed by Exxon
Mobil ($422bn), Google ($382bn), Microsoft
($344bn) and Berkshire Hathaway ($309bn).
SA or SA-related companies in the Global
2000 are: SABMiller (212), Standard Bank
(287), Old Mutual (295), Sasol (321), Compagnie
Financière Richemont (371), MTN (378), FirstRand (475), Anglo American Plc (551), Steinhoff
(672), Sanlam (688), Naspers (857), Bidvest
(1 006), Shoprite (1280), Remgro (1 440), MMI
(1 574), Aspen (1 608), Imperial (1 687), RMB
(1 801) and Hyprop (1 833).
Staff writer

Financial Mail Page 26-27 -17/06/14 02:30:54 PM

SA GIANTS

continued from PAGE 22

cerebral and strategic thinker had guided the
group through its most successful period in its
long and illustrious history.
Sasol fell from number four to number seven.
Its 46% rise in market capitalisation made it one
of the best performers on the JSE last year and
net profit didn’t disappoint either, rising by 25%
on a modest 7% increase in turnover.

ASSET HEAVYWEIGHTS

Financial services firms
the best performers
THE ASSET HEAVYWEIGHT listing is
dominated by the large financial services
companies, such as the banks and insurance
companies, as well as the large diversified
mining companies. In the top 10 of this ranking,
seven are in financial services and three are
mining companies.
It is perhaps not surprising that this is the
case, as the ranking is based on total assets,
rather than turnover or market capitalisation.
Banks and insurance companies naturally
attract financial assets in the form of pension
funds and discretionary savings, while the large
diversified miners have substantial and
immovable assets in varying geographical
jurisdictions.
As has been the case for a number of years,
Old Mutual leads the ranking by a wide margin,
even though its total asset base has declined
slightly in the past year, from R1 975 trillion to
R1 931 trillion. Having languished for a number
of years after listing in the late 1990s, the
business has been streamlined significantly in
recent years.
It has demonstrated a fair degree of
innovation, with respect to its investment
products and services, and in 2013 entered the
high net-worth individual investor space for the
first time. Old Mutual should also benefit from
the change in UK pension rules announced in
the 2014 UK budget. The change will allow
retirees a greater choice of how to deploy their
pension fund payouts, rather than being
compelled to buy retirement annuities.
More than R400bn behind, Standard Bank
retains its second place ranking, with total
assets of R1 528 trillion. During 2013,
long-serving CEO Jacko Maree stepped down,
having presided over a number of momentous
events in the bank’s history. One notable event
was the successful rebuff of Nedbank’s hostile

Bidvest, one of SA’s largest industrial companies, dropped one notch from seventh to
eighth spot, as did MTN, going from eighth to
ninth position.
The really big winner in this year’s Top 10 is
Steinhoff, which rose from 13th to 10th position,
thanks to a combination of strong fundamentals
and a major benefit from the weak rand.
Staff writer

takeover bid in the late 1990s and more
recently the Chinese bank ICBC’s acquisition of
a 20% stake in the group.
Glencore Xstrata (now Glencore) comes
straight into the rankings at number three,
having been listed on the JSE only in late 2013.
The most diversified of all the large mining
groups, Glencore is differentiated from its peers
by not having an exposure to iron ore and also
by having an extensive commodities trading
arm. Total assets were R1 508 trillion, only
slightly behind Standard Bank.
BHP Billiton comes in at number three, its
total asset base having risen sharply to
R1 249 trillion. It should be remembered,
however, that BHP Billiton’s assets are largely
located outside of SA and so the weak rand will
have contributed to the sharp increase in the
company’s asset base.
FirstRand, at number five, also experienced a
large increase in its asset base, from R770bn to
R871bn and in the process leapfrogged Absa
Group (now renamed Barclays Africa Group),
which fell back to number six.
Investec Plc benefited from the weak rand as
it has a substantial offshore asset base. Total
assets rose from R622bn to R704bn, placing it
just behind Barclays Africa Group in seventh
position. Investec Ltd had an identical total
asset base.
Anglo American fell back to ninth position,
even though its asset base rose from R616bn to
R687bn. Of all the large diversified miners,
Anglo American has the greatest exposure to
SA, unsurprising considering its heritage. At the
time of writing, the long-lasting strike on the
platinum belt continued to weigh on the group’s
Anglo Platinum subsidiary.
Nedbank fell back to 10th position from sixth
the previous year, total assets having moved
marginally from R640bn to R675bn.
It is interesting to note that the JSE’s two
largest companies by market capitalisation —
British American Tobacco and SABMiller — didn’t
make it into the top 10 of Asset Heavyweights,
only managing to make 12th and 15th positions
respectively.
Staff writer

NO. 4 BAT The tobacco firm
has recently called for world
governments to adopt a policy
of tobacco harm reduction as a
more progressive approach to
tobacco regulation

SA GIANTS
Ranked by
turnover

Company

Turnover
Rm

Total assets
Rm

2 442 048, 4
NA

1 508 861,0
NA

Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

726 992, 7
NA

779 502, 6
NA

22 406 1
NA

Dec 13
Dec 12

1
NA

Glencore Xstrata Plc

2
1

BHP Billiton Plc

590 335, 9
586 351, 4

1 249 193,0
976 980,0

694 837,0
576 748, 7

923 616 8
755 039, 9

111 394, 9
141 688, 5

Jun 13
Jun 12

3
2

Anglo American Plc

275 362, 6
238 098, 5

687 317,0
616 876,0

377 522, 7
336 397, 4

517 198, 7
503 628, 1

26 868, 1
34281, 3

Dec 13
Dec 12

4
3

British American Tobacco Plc

234 841, 7
199 614, 7

479 466,0
368 571,0

1 190 907, 9
1 004 420 9,

300 812 3
239 537 2

65 035, 4
53 379, 5

Dec 13
Dec 12

5
5

Sanlam

206 951,0
157 174,0

555 450,0
437 962,0

124 658, 8
99 078,0

38 884,0
33 269,0

2 592,0
4 556,0

Dec 13
Dec 12

6
6

SABMiller Plc

194 525, 3
156 486, 2

263 337,0
201 334,0

879 557, 5
810 376, 8

282 087, 3
222 638, 6

32 330, 1
25 033, 5

Mar 13
Mar 12

7
4

Sasol

181 269,0
169 446,0

244 608,0
202 675,0

383 206, 7
263 260, 7

180 691,0
153 548,0

31 715,0
25 354,0

Jun 13
Jun 12

8
7

The Bidvest Group

153 404, 5
133 533, 6

56 519,0
47 293,0

91 306, 1
79 429, 8

25 457,0
20 826, 6

4 575, 5
3 909,0

Jun 13
Jun 12

9
8

MTN Group

135 112,0
121 884,0

145 456,0
145 169,0

403 555, 7
304 145,0

86 989,0
86 709,0

24 911,0
22 814,0

Dec 12
Dec 11

10
13

Steinhoff International Holdings

115 486,0
80 434,0

103 211,0
82 559,0

108 364, 8
45 922, 2

64 266,0
47 828,0

7 036,0
5 657,0

Jun 13
Jun 12

11
10

Compagnie Fin Richemont

111 444, 2
87 861, 4

155 194,0
107 605,0

527 115, 6
378 345, 6

110 841, 5
81 837, 4

24 396, 9
17 063,0

Mar 13
Mar 12

12
9

Standard Bank Group

109 117,0
95 610,0

1 528 019,0
1 477 950,0

224 600, 6
190 230, 8

108 829,0
96 821,0

14 279,0
15 039,0

Dec 12
Dec 11

13
11

Shoprite Holdings

92 747, 3
82 730, 6

31 850,0
29 516,0

90 836, 3
104 301, 9

13 805, 3
11 111, 4

3 818, 7
3 077, 4

Jun 13
Jun 12

14
12

Imperial Holdings

92 382,0
80 830,0

45 417,0
40 585,0

39 576, 7
44 161, 8

16 420,0
14 317,0

3 736,0
3 084,0

Jun 13
Jun 12

15
15

Vodacom Group

69 917,0
66 929,0

49 972,0
42 622,0

193 419, 1
163 526, 1

15 142,0
12 538,0

13 892,0
11 963,0

Mar 13
Mar 12

16
14

Barclays Africa Group

68 587,0
66 961,0

804 953,0
784 048,0

126 314, 9
111 322, 6

65 466,0
60 424,0

8 833,0
9 285,0

Dec 12
Dec 11

17
16

FirstRand

67 031,0
62 287,0

870 986,0
770 228,0

203 529, 7
181 541, 7

71 254,0
63 570,0

14 307,0
11 957,0

Jun 13
Jun 12

18
19

Barloworld

65 102,0
58 554,0

36 774,0
32 428,0

25 484, 1
22 140, 2

14 673,0
12 364,0

2 099,0
1 912,0

Sep 13
Sep 12

19
23

Massmart Holdings

64 887, 8
52 950, 1

19 659,0
14 628,0

29 852, 6
41 267,0

3 783, 6
3 436, 5

1 669, 5
1 502, 4

Dec 12
Jun 11
Source: INET BFA

26

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

27

Financial Mail Page 28-29 -17/06/14 02:31:58 PM

NO. 23 PICK N PAY With a
new CEO, the group is carefully
considering its expansion
strategy into the rest of the
continent to ensure that it’s not
just about “planting flags”

NO. 39 TELKOM An
overhaul of its product offering
and an eye on acquisitions and
partnerships are on the cards
as the company looks at
repositioning itself

SA GIANTS
Ranked by
turnover

28

Company

Turnover
Rm

Total assets
Rm

SA GIANTS
Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

Ranked by
turnover

Company

Turnover
Rm

Total assets
Rm

Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

20
20

Mondi

62 822, 7
57 889, 3

66 007,0
56 501,0

21 877, 3
14 730,0

31 487, 7
29 371, 3

3 115, 7
2 340, 5

Dec 12
Dec 11

39
36

Telkom SA Soc

32 501,0
33 237,0

38 990,0
48 934,0

17 524, 4
7 811, 8

17 827,0
30 401,0

522,0
2 434,0

Mar 13
Mar 12

21
21

Mondi Plc

62 822, 7
57 889, 3

66 007,0
56 501,0

67 851, 4
45 721, 5

31 487, 7
29 371, 3

3 115, 7
2 340, 5

Dec 12
Dec 11

40
37

ArcelorMittal SA

32 291,0
31 453,0

30 740,0
32 620,0

14 937, 2
12 677, 2

24 361,0
25 334,0

-766,0
30,0

Dec 12
Dec 11

22
17

Pick n Pay Stores

59 271, 3
58 984, 2

11 898,0
10 905,0

24 788, 5
20 450, 5

1 910, 3
1 772, 3

652, 7
733, 7

Feb 13
Feb 12

41
42

Liberty Holdings

30 720,0
27 302,0

291 745,0
252 112,0

35 589, 3
34344 3

17 574,0
15 625,0

3 475,0
2 111,0

Dec 12
Dec 11

23
18

Pick n Pay Holdings

59 271, 3
58 984, 2

11 899,0
10 905,0

1 1847, 3
9 759, 4

905, 5
867, 8

396, 6
218, 8

Feb 13
Feb 12

42
40

Impala Platinum Holdings

30 032,0
27 593,0

80 156,0
71 433,0

75 865, 7
85 728, 3

107 583,0
99 277,0

5 660,0
4 489,0

Jun 13
Jun 12

24
22

Nedbank Group

57 268,0
54 215,0

675 559,0
640 766,0

115 094,0
97 190,0

53 580,0
49 315,0

7 474,0
6 359,0

Dec 12
Dec 11

43
46

Tiger Brands

28 091 3
22 677,0

22 539,0
15 865,0

52 152, 6
56 300, 7

15 166 3
12 744 8

2563 2
2 705,0

Sep 13
Sep 12

25
25

AngloGold Ashanti

55 665, 4
50 023,0

168 133,0
136 219,0

73 716, 1
82 512, 7

61 419, 5
54 638,0

8 105,0
8 764,0

Dec 12
Dec 11

44
44

Netcare

27 801,0
25 731,0

20 042,0
36 323,0

34 458, 3
29 096, 7

7 767,0
1 636,0

2 024,0
3 868,0

Sep 13
Sep 12

26
24

Sappi

53 899, 7
51 815, 3

56 294,0
49 799,0

20 033, 5
15 550, 3

13 262, 3
14 045, 6

1 064 3
449,0

Sep 13
Sep 12

45
38

JDGroup

27 401,0
28 656,0

19 200,0
16 268,0

6 215, 1
7 983, 3

9 096,0
8 762,0

862,0
1 122,0

Jun 13
Jun 12

27
28

Anglo American Platinum

52 822,0
43 148,0

89 027,0
87 800,0

127 734, 8
103 061, 6

80 113,0
76 598,0

4 317,0
-4 114,0

Dec 13
Dec 12

46
35

Grindrod

27 156 6
35 690 4

21 248,0
19 659,0

15 319, 5
11 993, 3

10 044,0
9 203, 5

596 1
705,0

Dec 12
Dec 11

28
30

Aveng

51 704,0
40 885, 5

27 457,0
25 027,0

8 833, 7
12 580, 1

12 265,0
11 977, 3

85,0
41 7

Jun 13
Jun 12

47
45

Allied Electronics Corp

25 049,0
23 563,0

11 244,0
10 396,0

8 427, 8
7 250, 5

4 577,0
4 671,0

1 368,0
1 284,0

Feb 13
Feb 12

29
32

Naspers

50 249,0
39 487,0

76 350,0
58 397,0

483 049, 8
238 042, 2

52 813,0
46 955,0

9 923,0
6 517,0

Mar 13
Mar 12

48
47

Mediclinic International

24 562,0
21 986,0

49 207,0
43 629,0

61 881, 2
53 090 7

22 862,0
14 848,0

1 780,0
1 303,0

Mar 13
Mar 12

30
31

Old Mutual Plc

48 950, 9
40 496, 2

1 931 835,0
1 975 395,0

173 402, 5
137 658, 5

96 289, 6
98 238, 6

12 628, 7
8 982, 8

Dec 12
Dec 11

49
52

Wilson Bayly Holmes-Ovcon

23 773 5
17893 4

11 426,0
10 474,0

9 094, 8
10 181 2

4 105, 2
3 614, 6

606 9
524 2

Jun 13
Jun 12

31
27

The Spar Group

47 387, 3
43 166,0

9 370,0
9 493,0

21 050, 2
19 641, 4

2 624, 3
2 356, 7

1 195, 2
1 078 8

Sep 13
Sep 12

50
49

Santam

20 631,0
19 386,0

21 341,0
18 625,0

23 190 2
22 936,0

5 764,0
5 226,0

1 239,0
1 279,0

Dec 13
Dec 12

32
29

Gold Fields

45 469, 3
41 876, 8

143 996,0
141 575,0

31 229, 1
52 008, 5

63 910, 7
57 276 5

6 610, 6
7 365, 9

Dec 12
Dec 11

51
51

Pioneer Food Group

20 551 1
18 609 8

11 093,0
9 863,0

19 313 9
16 521 3

7 028, 6
6 680, 7

697 1
690 1

Sep 13
Sep 12

33
26

Kumba Iron Ore

45 446,0
48 553,0

35 618,0
33 723,0

121 748, 5
158 456, 6

16 302,0
13 330,0

13 618,0
18 987,0

Dec 12
Dec 11

52
54

African Rainbow Minerals

19 844,0
17 530,0

37 593,0
35 096,0

45 185 3
40 811 4

35 557,0
33 614,0

3 155,0
3 707,0

Jun 13
Jun 12

34
33

Datatec

42 773, 5
36 377, 6

18 794,0
14 247,0

9 621, 8
9 847, 6

7 669, 9
6 028, 8

775, 9
761, 8

Feb 13
Feb 12

53
53

Nampak

19 361 8
17 639 1

18 826,0
14 466,0

25 188 1
22 389 2

6 909 3
6 327 3

1 111, 1
1 274, 7

Sep 13
Sep 12

35
34

Murray & Roberts Holdings

39 310, 8
35 789,0

23 124,0
21 366,0

10 936, 1
10 446, 9

6 537, 1
5 744, 8

-158, 3
-1 230, 7

Jun 13
Jun 12

54
56

Aspen Pharmacare Holdings

19 308,0
15 541 4

20 035,0
14 232,0

128 363,0
87 018 9

22 310 3
16 977 9

3 952, 6
3 373, 1

Jun 13
Jun 12

36
41

Oando Plc

36 587, 9
27 396, 7

25 812,0
19 102,0

9 908, 1
1 933,0

13 257, 4
9 391, 7

656, 9
-72, 2

Dec 12
Dec 11

55
50

Blue Label Telecoms

18984 2
18722 1

4 992,0
4 410,0

5 868, 2
5 321, 9

3 083, 4
2 778, 3

485, 8
451, 8

May 13
May 12

37
39

Woolworths Holdings

35 227,0
28 604,0

9 025,0
8 182,0

62 152 3
59 417 4

4 012,0
3 265,0

2 703,0
1 973,0

Jun 13
Jun 12

56
58

Discovery

17 893,0
14 691,0

50 844,0
37 146,0

49 936, 3
46 308, 1

15 959,0
13 381,0

2 899,0
2 804,0

Jun 13
Jun 12

38
43

MMI Holdings

32 670,0
26 692,0

332 267,0
290 430,0

38 617, 2
36 466, 5

26 843,0
25 240,0

3 011,0
3 029,0

Jun 13
Jun 12

57
57

Clicks Group

17 543, 3
15 436, 9

4 936,0
4 308,0

16 134, 3
15 560, 1

1 031, 1
1 057, 6

729, 8
708, 2

Aug 13
Aug 12

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

29

Financial Mail Page 30-31 -17/06/14 02:32:43 PM

NO. 72 GROUP FIVE

NO. 86 CAPITEC The bank
is branching into the home
loans market — through a
partnership with SA Home
Loans — to attract middle- to
upper-income customers

Despite challenges in the SA
market, the company managed
to deliver improved results,
with increased revenue in the
six months to December 2013

SA GIANTS
Ranked by
turnover

30

Company

Turnover
Rm

Total assets
Rm

SA GIANTS
Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

Ranked by
turnover

Company

58
55

Harmony Gold Mining Company

16 776,0
16 573,0

66 905,0
67 126,0

14 247, 7
25 728, 1

36 948,0
38 382,0

321,0
2 433,0

Jun 13
Jun 12

77
74

Afgri

59
60

Remgro

16 446,0
13 532,0

97 725,0
72 544,0

98 597, 9
88 114, 6

90 889,0
68 109,0

4 592,0
5 040,0

Jun 13
Jun 12

78
78

60
48

Exxaro Resources

16 122,0
21 305,0

62 114,0
54 157,0

50 136, 2
58 435, 1

54 349,0
47 778,0

6 022,0
8 325,0

Dec 12
Dec 11

61
59

Distell Group

158 58 2
14 176,0

12 658,0
9 544,0

28 441, 1
22 535, 6

7 291, 7
6 038, 6

1075 3
834 1

62
68

KAP Industrial Hldgs

15 386,0
11 018,0

13 724,0
13 061,0

8 704, 4
7 742, 4

6 763,0
6 071,0

63
63

AECI

14 516,0
12 920,0

11 294,0
10 895,0

16 286, 6
13 085, 7

64
64

Tongaat Hulett

14 373,0
12 081,0

20 923,0
17 458,0

65
61

Lonmin Plc

13 827, 4
13 200,0

66
69

Omnia Holdings

67
62

Turnover
Rm

Total assets
Rm

Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

10 220,0
9 226,0

6 987,0
6 626,0

2 658, 6
2 008, 9

2 181,0
1 776,0

106,0
222,0

Jun 13
Jun 12

Tsogo Sun Holdings

9 910,0
9 031,0

10 882,0
10 858,0

29 947, 6
29 273, 5

9 015,0
8 684,0

1 567,0
1 351,0

Mar 13
Mar 12

79
79

Truworths International

9 765,0
8 830,0

6 989,0
6 675,0

32 535, 3
41 738, 7

5 470,0
5 208,0

2 341,0
2 202,0

Jun 13
Jun 12

Jun 13
Jun 12

80
77

Palabora Mining Company

9 741,0
9 092,0

7 119,0
7 202,0

5 486, 3
5 075, 4

6 946,0
6 421,0

810,0
1 072,0

Dec 12
Dec 11

792,0
605,0

Jun 13
Jun 12

81
83

Stefanutti Stocks Holdings

9329 7
7990 7

4 904,0
4 772,0

1 720, 9
1 705, 9

2072 8
2145 2

156 9
262 5

Feb 13
Feb 12

5 301,0
4 565,0

746,0
649,0

Dec 12
Dec 11

82
80

AVI

9251 9
8433 3

5 360,0
4 711,0

19 499, 4
18 473, 7

3344 7
2742 3

1093 4
1020 9

Jun 13
Jun 12

125 01 1
15 585, 5

10 128,0
8 193,0

1 262,0
1 179,0

Mar 13
Mar 12

83
73

Eqstra Holdings

9 154,0
9 263,0

13 163,0
12 496,0

2 920, 7
2 788, 7

3 834,0
3 633,0

443,0
431,0

Jun 13
Jun 12

45 975,0
38 006,0

28 541, 4
23 413, 1

71 998, 1
52 168, 1

245 6
-5 495 9

Sep 13
Sep 12

84
81

Combined Motor Holdings

8971 8
8293 7

2 613,0
2 343,0

1 170, 9
1 360, 3

698 7
582 6

207 3
136 1

Feb 13
Feb 12

13 543,0
10 945,0

8 535,0
6 991,0

14 193, 1
10 625, 5

5 064,0
4 158,0

944,0
827,0

Mar 13
Mar 12

85
91

Adcorp Holdings

8616 8
6423 2

2 378,0
1 502,0

3 152, 9
2 800, 3

1821 5
1397 5

225 5
173 4

Feb 13
Feb 12

Assore

13 500, 9
12 947, 8

20 222,0
17 434,0

56 959, 7
43 355,0

26 365, 8
22 531, 9

3 272, 1
3 493, 8

Jun 13
Jun 12

86
95

Capitec Bank Holdings

8580 8
6003 9

37 939,0
23 317,0

22 425, 5
24 511, 1

7519 5
4394 3

1568 8
920 5

Feb 13
Feb 12

68
65

Mr Price Group

13 266,0
11 766, 8

4 658,0
4 116,0

39 538, 9
29 386,0

2 486,0
2121 3

1 527,0
1 191, 7

Mar 13
Mar 12

87
82

Astral Foods

8 524,0
8160 1

3 790,0
3 403,0

3 626, 9
3 970, 8

2046 9
1864 8

185 5
318 5

Sep 13
Sep 12

69
66

The Foschini Group

12 896, 4
11 630, 5

14 961,0
12 492,0

23 787, 8
25 774, 6

6 237,0
5 501, 6

1715 5
1530 4

Mar 13
Mar 12

88
86

Rand Merchant Insurance Holdings

8 442,0
7 384,0

34 151,0
26 802,0

42 787, 8
34 601, 7

23 341,0
16 456,0

2 079,0
2 092,0

Jun 13
Jun 12

70
70

Life Healthcare Group Holdings

11 843,0
10 937,0

8 792,0
7 946,0

40 135, 5
36 060, 5

5 072,0
4 539,0

1 845,0
1 547,0

Sep 13
Sep 12

89
87

PPC

8 316,0
7 346,0

8 575,0
6 837,0

17 701, 3
19 402, 4

2 040,0
1 591,0

1 235,0
1 110,0

Sep 13
Sep 12

71
71

Super Group

11 718,0
10204 8

8 262,0
6 079,0

9 065, 9
7 662, 6

3472 2
2 855,0

629 1
517 3

Jun 13
Jun 12

90
85

Hosken Consolidated Investments

8214 1
7661 6

21 423,0
16 127,0

17 920, 5
14 510, 1

15 316, 3
11 662, 1

1 297, 3
1 244, 7

Mar 13
Mar 12

72
76

Group Five

11 199, 1
9 093, 1

8 745,0
7 533,0

4 945, 8
3 988, 1

2 069 5
1 755,0

253 4
90 1

Jun 13
Jun 12

91
89

Intu Properties Plc

8205 6
6908 3

142 655,0
104 702,0

48 448, 8
44 363, 9

57 243, 7
37 914, 2

3 898, 1
1 417, 9

Dec 13
Dec 12

73
75

Illovo Sugar

11 128, 9
9 173, 2

12 226,0
11 130,0

12 902,0
14 642, 2

6 564, 4
6 192 1

1 147 1
713,0

Mar 13
Mar 12

92
88

Clover Industries

7996 5
7223 9

3 975,0
3 499,0

3 525, 5
3 044, 9

2 202, 8
1 986, 2

251, 3
310, 6

Jun 13
Jun 12

74
67

Reunert

11 100, 2
11 454, 6

6 490,0
5 750,0

12 077, 7
15 412,0

4 512,0
4 088, 6

946, 5
1116 4

Sep 13
Sep 12

93
98

Invicta Holdings

7557 9
5599 5

11 251,0
7 856,0

8 711, 1
7 636,0

1 672, 8
1 744, 4

418, 3
485, 5

Mar 13
Mar 12

75
72

Sun International

10 267,0
9 754,0

12 316,0
11 037,0

10 775,0
11 462, 2

2 357,0
1 627,0

705,0
556,0

Jun 13
Jun 12

94
94

Basil Read Holdings

6834 1
6230 5

4 451,0
3 983,0

1 178, 7
1 567, 2

1 435, 2
1 799, 2

-96, 6
148, 6

Dec 12
Dec 11

76
84

RCL Foods

10 230, 9
7 855, 1

11 309,0
4 877,0

13 827,0
10 202, 4

8 149, 8
3 244, 6

52, 5
261, 6

Jun 13
Jun 12

95
93

Mpact

6820 8
6 281,0

4 771,0
4 525,0

4 444, 4
3 826,0

2 626, 4
2 248, 6

438, 2
131, 2

Dec 12
Dec 11

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

31

Financial Mail Page 32 -17/06/14 02:33:04 PM

NO. 104 ADCOCK INGRAM
For the six months to
end-March, the prescription
business showed a turnover
increase of 14% from the
introduction of new products

SA GIANTS
Ranked by
turnover

32

Company

Turnover
Rm

Total assets
Rm

Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

96
96

Pinnacle Holdings

6 596, 2
5 844, 6

2 929,0
2 109,0

2 432, 5
3 741, 4

1 003, 2
732, 6

320, 9
274, 6

Jun 13
Jun 12

97
92

Cashbuild

6 376, 9
6 310, 1

2 015,0
1 873,0

3 425, 8
3 153, 8

1 051, 6
902, 6

270, 3
289, 3

Jun 13
Jun 12

98
97

Business Connexion Group

6 173, 3
5 829, 6

2 847,0
2 621,0

2 348, 8
2 352, 9

2 157, 2
2 013, 2

268, 8
201, 3

Aug 13
Aug 12

99
NA

Times Media Group

6 013,0
NA

2 606,0
NA

2 732, 2
2 096, 8

1 046,0
NA

194,0
NA

Jun 13
Jun 12

100
100

Growthpoint Prop

5 782,0
5 290,0

62 800,0
54 339,0

51 754, 8
49 146 1

1 462,0
1 708,0

-4 196,0
-1 858,0

Jun 13
Jun 12

101
103

Bell Equipment

5 670, 2
5 070, 8

3 278,0
3 670,0

1 806, 8
2 079,0

1 896,0
1630 8

278,0
306, 4

Dec 12
Dec 11

102
104

Raubex Group

5 635, 5
5 032, 6

4 074,0
3 607,0

4 125 1
3 598, 5

3 089, 3
2870, 8

352, 4
350, 5

Feb 13
Feb 12

103
102

African Oxygen

5 558,0
5 246,0

5 236,0
5 194,0

6 788, 5
7 820, 5

3 261,0
3 274,0

374,0
358,0

Dec 12
Dec 11

104
109

Adcock Ingram Holdings

5 445, 6
4 599, 2

5 368,0
4 566,0

10 363,0
10 610, 7

3 760, 5
3 325, 8

642 3
748 9

Sep 13
Sep 12

105
112

Comair

5 386, 6
4 162, 9

3 560,0
2 150,0

1 783, 1
1 051, 7

1 108, 5
913, 5

296,0
11 7

Jun 13
Jun 12

106
101

Metair Investments

5 227, 4
5 273, 4

6 173,0
3 308,0

8 516, 6
5 704, 7

3 919, 3
1 891, 1

421 2
471 4

Dec 13
Dec 12

107
105

Caxton CTP Publishers & Printers

5 156, 9
4 819, 1

6 675,0
6 069,0

6 674, 7
8 174, 7

5 580, 2
5 086, 9

514 1
458, 6

Jun 13
Jun 12

108
118

EOH Holdings

5 071, 5
3 636, 1

2 294,0
1 582,0

9 355 3
5 267 3

1 302, 5
907, 6

384, 5
253, 6

Jul 13
Jul 12

109
108

Oceana Group

4 997, 4
4 648,0

2 747,0
2 456,0

10 823, 1
9 312, 3

1 515, 1
1 346, 6

448, 5
475, 4

Sep 13
Sep 12

110
113

Mustek

4 737 3
4 143,0

2 156,0
2 027,0

699 4
665 8

787, 7
716, 3

129, 9
174, 3

Jun 13
Jun 12

111
116

Uranium One Inc

4 655, 4
3 846, 3

26 361,0
25 424,0

23 827, 9
NA

32 387, 6
33 657, 3

-196 8
546 8

Dec 12
Dec 11

112
111

Distribution & Warehousing Network

4 588, 3
4 228, 3

2 749,0
2 364,0

2 321, 7
2 173,0

1 388, 8
1 238, 1

137,0
82,0

Jun 13
Jun 12

113
107

Trencor

4 553,0
4 649,0

30 605,0
19 914,0

11 527, 1
12 748, 9

5 709,0
4 775,0

676,0
873,0

Dec 12
Dec 11

114
110

Iliad Africa

4 493, 1
4 229, 5

1 591,0
1 678,0

988, 3
691, 1

718, 4
715, 5

66,0
51 9

Dec 12
Dec 11

FINANCIAL MAIL • TOP COMPANIES • 2014

Financial Mail Page 33 -13/06/14 05:49:04 PM
FINAL ADVERT.pdf

C

M

Y

CM

MY

CY

CMY

K

1

13/06/2014

17:39

Financial Mail Page 34-35 -17/06/14 02:33:52 PM

NO. 121 REDEFINE
PROPERTIES An offer to

NO. 140 DRDGOLD The
miner recently announced
measures to address challenges
it faces in the commissioning
of the new high grade section
of its Brakpan plant

acquire 100% of the Annuity
Property Fund has been
approved by the competition
commission

SA GIANTS
Ranked by
turnover

34

Company

Turnover
Rm

Total assets
Rm

SA GIANTS
Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

Ranked by
turnover

Company

Turnover
Rm

Total assets
Rm

Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

115
117

Northam Platinum

4 421,0
3 684,0

14 348,0
12 230,0

15 478,0
15 188 7

23 202, 4
21 217, 8

461 4
358 3

Jun 13
Jun 12

134
135

Famous Brands

2 499 5
2145 1

695,0
516,0

9850 8
8403 4

891 8
759 5

329 1
268 6

Feb 13
Feb 12

116
99

Evraz Highveld Steel & Vanadium

4 346,0
5 587,0

3 588,0
4 291,0

879 5
1 983,0

1 659,0
2 453,0

-922,0
-52,0

Dec 12
Dec 11

135
146

Esor

2 326,0
1 771 7

1 824,0
1 388,0

158 1
505 8

1 179 4
1 053 7

86 2
35 1

Feb 13
Feb 12

117
114

Lewis Group

4 105,0
3949 1

7 249,0
6 114,0

5 687, 4
6 337, 5

4 716, 3
4 126, 4

897 9
785 4

Mar 13
Mar 12

136
138

Hyprop Investments

2 199,0
2 025 4

22 969,0
21 523,0

18 669 9
17 783 7

10 844 4
9 344 9

633 7
638 2

Jun 13
Dec 12

118
106

African Bank Investments

4 034,0
4 792,0

64 815,0
56 738,0

16 136, 8
24 541, 9

7 820,0
12 872,0

5,0
2 602,0

Sep 13
Sep 12

137
141

Capital Property Fund

2 169 4
1 946 2

20 690,0
18 381,0

16841 2
17 917 9

15 050 7
13 242 4

1 846 5
1 056 1

Dec 12
Dec 11

119
125

Net 1 UEPS Technologies Inc

3 989,0
2 825, 3

10 073,0
5 508,0

6 079, 4
3 855,0

3 466, 9
2 918, 5

235, 3
374, 7

Jun 13
Jun 12

138
142

Italtile

2 141,0
1 845,0

2 628,0
2 603,0

7 853 3
5 972 7

2 167,0
1 864,0

425,0
379,0

Jun 13
Jun 12

120
120

Hudaco Industries

3 942, 2
3 492, 4

2 154,0
4 064,0

3 570, 4
3 224, 1

1 707, 5
1 561, 2

315, 6
358, 6

Nov 13
Nov 12

139
132

Sentula Mining

2 085,0
2 512 4

2 659,0
3 401,0

123 2
967 8

2 358 3
3 229,0

-192 2
132 6

Mar 13
Mar 12

121
121

Redefine Properties

3 771,0
3 289, 2

42 999,0
42 096,0

29 327, 8
27 653, 3

20 422, 8
17 331,0

631, 6
1 953, 1

Aug 13
Aug 12

140
123

DRDGold

2 076 5
3 004 3

4 419,0
4 088,0

1 526 1
2 759 3

1 995 6
2 017 2

265 1
386 2

Jun 13
Jun 12

122
115

Zurich Insurance Company SA

3 766 5
3 890,0

5 001,0
4 843,0

3 227, 6
3 020, 5

2 003, 5
2 022, 2

-13, 7
181, 2

Dec 12
Dec 11

141
157

Consolidated Infrastructure Group

2 037 4
1 553 5

2 295,0
1 496,0

3 324 8
2 258 9

1 619 9
1 200,0

108 2
123 2

Aug 13
Aug 12

123
139

Coronation Fund Managers

3 635,0
1 975 3

71 734,0
54 574,0

34 630, 1
16 790, 4

1 085,0
1 149, 6

1 405,0
705, 2

Sep 13
Sep 12

142
127

Metmar

2024 5
2 644 5

1 468,0
1 661,0

387 6
489 2

652 7
680 9

-77 3
27 8

Feb 13
Feb 12

124
119

Aquarius Platinum

3 259,0
3 526, 5

6 971,0
9 103,0

3 049, 9
3 314, 7

4 212, 1
9 331, 7

-2 566, 4
-1 484, 8

Jun 13
Jun 12

143
354

PSG Group

2 001 8
0,0

27 426,0
23 609,0

19 264 3
13 067 5

9 332 2
8 569,0

1 338 4
764 4

Feb 13
Feb 12

125
124

Royal Bafokeng Platinum

3 251, 1
2 865, 3

18 517,0
17 801,0

11 573, 6
8 939, 6

30 995, 3
29 852, 5

433,, 3
235, 7

Dec 13
Dec 12

144
154

Ellies Holdings

1 996 1
1 711 3

1 455,0
1 112,0

1 299,0
2 868 1

949 6
725 1

211 7
165,0

Apr 13
Apr 12

126
122

Country Bird Holdings

3 236, 6
3 094, 5

1 831,0
1 537,0

556, 7
797, 6

676, 2
601 2

17, 1
48 7

Jun 13
Jun 12

145
152

ELB Group

1 984 6
1 725 5

1 601,0
1 346,0

1 422 1
1 151 2

593 8
437 6

120 4
88,0

Jun 13
Jun 12

127
131

Village Main Reef

3 020, 5
2 519, 5

3 713,0
5 654,0

447, 5
1 129, 7

1 234, 7
2 438, 8

228, 4
381, 2

Jun 13
Jun 12

146
144

Value Group

1 945 4
1 798,0

1 367,0
1 338,0

1 032 8
1 152,0

779 1
690 3

134 8
136 5

Feb 13
Feb 12

128
136

BSI Steel

2 804, 9
2 130, 1

1 514,0
1 298,0

402, 8
424, 7

532, 5
484,0

18, 3
49, 1

Mar 13
Mar 12

147
156

ARB Holdings

1 944 5
1 565 3

1 049,0
899,0

1 339 5
1 269,0

620 7
584 4

97 4
81 7

Jun 13
Jun 12

129
147

Lonrho Plc

2713, 7
1 767, 5

4 032,0
3 640,0

1 015, 3
NA

2 094, 7
1 724, 7

141, 9
-84, 3

Dec 12
Dec 11

148
137

Nu-World Holdings

1 943,0
2 123 4

822,0
879,0

396 3
452 9

654 9
632 6

83,0
31 1

Aug 13
Aug 12

130
128

Santova

2 640,0
2 605, 9

444,0
356,0

232,0
141, 9

138,0
117, 4

21, 7
22, 1

Feb 13
Feb 12

149
151

Datacentrix Holdings

1 915 2
1 755 1

805,0
710,0

841 6
718 4

441 6
409,0

82 4
94 6

Feb 13
Feb 12

131
126

Astrapak

2 635, 9
2 705, 6

2 243,0
2 021,0

966, 2
979, 7

1 213 5
954 2

264, 6
45, 5

Feb 13
Feb 12

150
140

Kelly Group

1 909 6
1 974 3

412,0
401,0

215,0
181,0

204 2
181 8

92
-7 1

Sep 13
Sep 12

132
133

Merafe Resources

2 542,0
2 426 8

4 301,0
3 922,0

2 668, 8
1 820, 1

6 025, 3
5 487, 8

74,0
199, 2

Dec 12
Dec 11

151
153

Marshall Monteagle Plc

1 908 2
1 720 5

1 306,0
1 177,0

325 2
247 4

705 1
574 2

23 5
24 1

Sep 13
Sep 12

133
129

Seardel Investment Corp

2 513, 5
2 556, 7

2 469,0
2 385,0

1 215, 5
771,0

1 426, 9
1 388, 1

19,0
-59,0

Mar 13
Mar 12

152
145

Argent Industrial

1 850 4
1 797 2

1 760,0
1 691,0

482 5
564 5

1411 4
1357 4

95 6
85 6

Mar 13
Mar 12

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

35

Financial Mail Page 36-37 -17/06/14 02:34:27 PM

NO. 166 HOLDSPORT This
retailer of specialist sports &
outdoor apparel and equipment has 54 stores, including
Sportsmans Warehouse, in SA
and one in Namibia

NO. 190 CITY LODGE
HOTELS The group’s
expansion plans into the rest
of Africa have received a boost
with recent full ownership of
Fairview Hotel in Kenya

SA GIANTS
Ranked by
turnover

36

Company

Turnover
Rm

Total assets
Rm

SA GIANTS
Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

Ranked by
turnover

Company

Turnover
Rm

Total assets
Rm

Market cap
Rm

Equity funds
Rm

Net profit
Rm

Financial
year-end

153
130

Gijima Group

1 848, 4
2 530, 1

682,0
804,0

132 9
145, 3

36, 7
125,0

-291, 9
-51, 4

Jun 13
Jun 12

172
173

Erbacon Investment Holdings

1 255 5
1 156 1

275,0
395,0

73 2
117 1

38,0
79 6

-90 2
-134 6

Feb 13
Feb 12

154
158

Capital & Counties Prop Plc

1 843, 6
1 515, 4

39 701,0
26 570,0

46 990,0
28 618, 9

31 559, 7
20 288, 7

581, 7
301,0

Dec 13
Dec 12

173
171

Resilient Property Income Fund

1 251 3
1 191 3

18 061,0
15 872,0

16 673 4
15 780 2

11 249 1
9 072 4

1 533 7
908 7

Jun 13
Dec 12

155
150

Brimstone Investment Corp

1 795,0
1 759, 8

5 558,0
4 430,0

631, 5
608, 1

3 307, 4
2 281, 6

1 118, 1
576, 9

Dec 12
Dec 11

174
204

Great Basin Gold

1 227 9
680 6

11 956,0
10 079,0

386 7
386 7

3 325 8
3499 2

172 7
-161 1

Dec 11
Dec 10

156
160

AfroCentric Investment Corp

1 770, 3
1 448, 3

818,0
661,0

2 053, 9
1 292, 7

764, 9
655, 2

138, 5
166, 3

Jun 13
Jun 12

175
170

Clientele

1224 5
1 194 9

2 909,0
2 905,0

4 935 2
3 890,0

291 8
230 6

300 8
288 6

Jun 13
Jun 12

157
172

Pan African Resources Plc

1 715, 8
1 189, 1

5 076,0
2 197,0

4 536, 3
4 061, 6

2 899, 4
1 486 7

450, 3
334,0

Jun 13
Jun 12

176
175

Fountainhead Property Trust

1 188 3
1074 5

11 598,0
11 249,0

8743 6
10 417 9

8249 1
8 062 9

679 5
681 4

Aug 13
Sep 12

158
155

AdvTech

1 687, 2
1 605, 6

1 133,0
992,0

3 201, 7
2 949,0

711, 5
720, 2

156, 5
166, 7

Dec 12
Dec 11

177
166

Buildmax

1 186 4
1 272 1

1 197,0
1 076,0

487 7
409 7

695 2
655 9

64,0
19 4

Feb 13
Feb 12

159
159

Workforce Holdings

1 618, 8
1 461, 2

444,0
447,0

108,0
115, 2

191, 7
211, 5

3, 4
26, 5

Dec 13
Dec 12

178
186

Vukile Property Fund

1 171, 8
979 3

9 228,0
6 432,0

8 525 2
8 181 1

2 632 5
2 509,0

47
-15 6

Mar 13
Mar 12

160
162

JSE

1 577, 6
1 384, 9

21 074,0
16 952,0

8 278, 6
6 194, 4

1 759,0
1 848, 2

605, 6
468, 2

Dec 13
Dec 12

179
182

Mix Telematics

1 171, 5
1 018, 5

488,0
412,0

3 607 1
2 441 9

823,0
732 1

178,0
155,0

Mar 13
Mar 12

161
134

Sanyati Holdings

1 533, 1
2 191, 2

725,0
972,0

94, 7
94, 7

682, 8
757, 6

41, 4
76, 5

Feb 11
Feb 10

180
176

Conduit Capital

1 168 2
1 071, 9

961,0
844,0

364 1
461 5

310, 9
271, 9

36, 5
32, 2

Aug 13
Aug 12

162
161

Peregrine Holdings

1 523, 8
1 390, 8

18 037,0
12 977,0

3 995, 9
2 336, 7

1 446, 1
1 988, 7

441, 8
372, 2

Mar 13
Mar 12

181
185

Jasco Electronics Holdings

1 146,0
983 7

757,0
657,0

196, 6
197, 6

205,0
326 2

-7, 9
19, 5

Jun 13
Jun 12

163
216

Andulela Investment Holdings

1 472,0
542 8

601,0
687,0

248,0
788 8

429, 9
578, 2

-14 3
24,0

Dec 12
Dec 11

182
174

York Timber Holdings

1 132,0
1 112, 8

3 090,0
2 935,0

1 291, 8
1 328, 3

2827 9
2689 5

141, 9
222, 7

Jun 13
Jun 12

164
149

Litha Healthcare Group

1 459,0
1 760, 2

883,0
1 104,0

1 147, 3
1 990, 2

1164, 5
436, 8

28 6
110,0

Dec 12
Dec 11

183
178

Transpaco

1123 2
1054 2

587,0
557,0

588 9
570 7

360 3
323 4

64, 5
70, 4

Jun 13
Jun 12

165
167

South Ocean Holdings

1 406 3
1 261,0

867,0
743,0

156, 4
244,0

698, 3
816, 8

56, 1
59, 2

Dec 12
Dec 11

184
148

Blackstar Group SE

1 073, 3
1 764,0

1 436,0
1 321,0

1 005, 6
985, 1

1 144, 5
1 067,0

284, 4
4, 4

Dec 12
Dec 11

166
169

Holdsport

1 374, 5
1 243, 5

503,0
445,0

1 768, 7
1 960, 7

806, 6
737, 5

174, 4
161, 2

Feb 13
Feb 12

185
191

Onelogix Group

1 050 5
895 3

705,0
571,0

727 5
706 4

360 9
290 2

65, 1
55, 8

May 13
May 12

167
184

Afrimat

1 332, 3
989, 2

1 053,0
890,0

2 034, 3
1 217, 7

825, 1
728, 6

111, 1
92,0

Feb 13
Feb 12

186
183

Winhold

1 043 3
1 001 7

532,0
623,0

82,0
108, 5

244, 1
235, 4

5, 6
-8, 9

Sep 13
Sep 12

168
177

Wilderness Holdings

1 300, 2
1 059, 3

793,0
712,0

808, 5
577, 5

365, 5
339, 4

47, 1
9, 2

Feb 13
Feb 12

187
187

Protech Khuthele Holdings

1 027, 2
965, 8

819,0
769,0

130, 5
199, 4

381, 9
369, 6

8, 5
-20 1

Feb 13
Feb 12

169
164

1time Holdings

1 285, 4
1 308, 2

606,0
623,0

8, 4
8, 4

155, 1
185, 5

-101, 3
87, 4

Dec 11
Dec 10

188
181

ConvergeNet Holdings

1 017, 4
1 029, 4

539,0
525,0

119, 1
202, 7

467, 2
508, 5

-19, 3
27, 2

Aug 12
Aug 11

170
168

Sovereign Food Investments

1 268,0
1 258 7

1 031,0
1 116,0

434, 5
386, 9

739,0
813,0

88, 1
60, 7

Feb 13
Feb 12

189
188

Emira Property Fund

1 007, 6
941, 6

10 114,0
9 362,0

6 903, 8
7 260, 6

6 608, 9
5 989, 2

769, 2
421, 0

Jun 13
Jun 12

171
143

Coal of Africa

1 256, 7
1 804, 3

3 689,0
4 347,0

807, 2
2 170, 1

5 909, 1
6 370, 5

-1 057, 7
-651, 7

Jun 13
Jun 12

190
192

City Lodge Hotels

975, 9
875, 8

1 452,0
1 350,0

5 048, 2
4 955, 1

516, 5
382,0

206, 3
136, 4

Jun 13
Jun 12

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

37

Financial Mail Page 38 -13/06/14 05:58:58 PM

NO. 194 PHUMELELA
GAMING & LEISURE
Despite challenging local
trading conditions, some
divisions, including racing
operations, performed well

SA GIANTS
Ranked by
turnover

Company

Turnover
Rm

Total assets
Rm

Market cap
Rm

Equity funds
Rm

Net profit
Rm

191
180

Atlatsa Resources Corp

964, 2
1 041, 1

6 836,0
6 962,0

2 799, 2
443, 9

5 230, 0
5 304, 8

-816, 4
-800, 4

Dec 12
Dec 11

192
193

Morvest Bus Group

956, 2
868, 6

457,0
360,0

193, 6
129,0

174, 4
185, 7

62, 9
31, 5

May 13
May 12

193
225

Keaton Energy Holdings

918, 8
474, 4

1 377,0
1 099,0

565, 3
364, 2

1 710, 8
1 530, 7

-68, 4
26,0

Mar 13
Mar 12

194
189

Phumelela Gaming & Leisure

875, 8
933, 9

576,0
536,0

1 418, 7
805, 7

379, 5
364, 1

77, 4
63, 7

Jul 13
Jul 12

195
197

Digicore Holdings

862, 6
796,0

649,0
603,0

549, 8
594, 4

652, 3
601, 3

19,0
25, 5

Jun 13
Jun 12

196
190

SA Corporate Real Estate Fund

853, 7
902, 1

9 442,0
8 744,0

7 920, 4
8 808, 4

7 280, 2
7 120, 1

636, 1
561, 9

Dec 13
Dec 12

197
194

Insimbi Refractory & Alloy Supplies

839, 5
844, 7

273,0
264,0

156,0
156,0

110, 7
81, 3

5, 4
19,0

Feb 13
Feb 12

198
202

Petmin

833, 5
691, 1

2 140,0
2 036,0

1 401, 9
1 240, 4

2 206, 4
2 107, 6

465, 3
141, 6

Jun 13
Jun 12

199
NA

Redefine International Plc

818, 8
NA

16 926,0
NA

11 941, 1
NA

4 357, 2
NA

1 006,0
NA

Aug 13
Aug 12

200
210

Rolfes Holdings

801, 7
636, 2

484,0
372,0

477, 9
720, 1

268, 1
197, 7

40, 0
36, 5

Jun 13
Jun 12

WIN

March 21

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Financial Mail Page 39 -13/06/14 02:27:22 PM

Financial Mail Page 40-41 -13/06/14 05:30:37 PM

✥

CHEMICALS

✥

SECTORS

As both positives and negatives contribute to Sasol’s strong
operational growth figures

G

lobal integrated energy and chemicals
company Sasol expects stable crude oil
prices in the near term, slightly
improved natural gas prices, slow
recovery of chemical product prices
and softer refining margins. It also believes the
rand will strengthen slightly in the next few
months.
For the six months to December 2013, however, the company’s numbers were supported by
a 19% depreciation in the rand, as well as a
relatively flat average Brent crude oil price and
improved chemical prices. A strong operational
performance added to revenue coming in 23%
higher at R98bn, compared to the same period
last year, while adjusted operating profit grew by
19% to R24bn. The operating margin came in
lower at 24,5% (2012: 25,3%).
Sasol grew headline EPS by 26% to R30/share
in the interim because of a good performance
from several divisions, boosted by an organisational restructuring process. HEPS excluded a
net R5,7bn one-off charge, largely reflecting the
impairment of Sasol’s Canadian shale gas assets
as well as some smaller extraordinary items.
The interim dividend was raised by 40% to R8
in line with the group’s dividend policy. Sasol’s
cash flow from operations rose 50% to R28,1bn.

Ranked by
net profit
1
2
3
4
5

40

Sasol CE David Constable said at the half-year
results presentation that a weaker rand and a
slight improvement in chemical product prices
supported the company’s earnings growth. But
on the flip side, crude oil prices had a slight
negative effect. “However, being a consistently
successful business is all about leveraging the
positives and limiting the negatives, whatever the
macroeconomics are.”
He said Sasol management focused on factors
that they could control, including optimising
volumes, enhancing organisational structures
and systems, executing on capital projects and
driving business performance. Since launching
its cost-optimising programme in 2013, Sasol has
made significant progress in right-sizing and
repositioning the company.
It has finalised the design of its new groupwide operating model, including top management structures. And the company says it is on
track to implement its new platform on July 1.
“By the end of June, we will have reorganised
the majority of our senior management structures and refined our financial reporting
processes,” he said at the presentation. “This will
significantly reduce the company’s top management decision-making layers.” For example,
Sasol has reduced the number of group executive
subcommittees from 57 to nine.
TOP 5 CHEMICALS, OIL & GAS
It says the financial year to June savings
Name
Net profit Total assets Market cap Equity funds are trending above R200m and the overall
programme charges are about R1,2bn for this
Rm
Rm
June ’13
Rm
Rm
financial year. This includes project costs,
charges associated with the reconfiguration
Sasol
31 715,0
244 608,0
383 206,7
180 691,0
of its ERP systems and restructuring
Omnia Holdings
944,0
8 535,0
14 193,1
5 064,0
expenses. “Last year, we confirmed that we
AECI
746,0
11 294,0
16 286,6
5 301,0
expect to generate annual savings of at least
Oando Plc
656,9
25 812,0
9 908,1
13 257,4
R3bn. Based on our current analyses, we are
African Oxygen
374,0
5 236,0
6 788,5
3 261,0
confident that we will exceed this target, with
Source: INET BFA
30%-40% of the savings realised by the end
FINANCIAL MAIL • TOP COMPANIES • 2014

CHEMICALS

✥

— is on track for the middle of 2014.
of financial year 2015,” said Constable.
The group’s mining R14bn replacement
From an operational viewpoint the group has
programme is still in progress as well as the FT
a couple of growth projects in the pipeline. Prowax expansion in Sasolburg, at a cost of R13,6bn.
gress is continuing on the group’s front-end
Looking at upstream activities closer to home,
engineering & design (Feed) phases of an inteSasol recently converted an offshore technical
grated, world-scale ethane cracker and downco-operation permit to an exploration right for
stream derivatives complex and a gas-to-liquid
the Durban and Zululand Basin. The exploration
(GTL) facility in Westlake, Louisiana, in the US.
right covers an area of 82 117 km², in water
An investment decision is expected to be
depths ranging from 50 m-3 200 m.
reached by the 2014 financial year-end with
The company, according to Constable, is
regards to the latter and management expects a
committed to enhancing its existing asset base in
final decision on the facility at Westlake to be
Southern Africa, and evaluating other growth
made 18-24 months thereafter.
opportunities. “Here, securing our mining rights
Most of the Feed analysis at the Uzbekistan
up to 2040 provides us with key feedstocks,
GTL plant, which commenced in October 2011,
ensuring supply of liquid fuels, chemicals and
has been completed. The group expects to reach
electricity to the SA market for several decades to
financial closure during the second half of 2014.
come. Our US growth programme is advancing
Management, however, says the investment
well and our GTL ambitions are gaining traction
decision will be dependent on securing project
in Nigeria, Uzbekistan and the US.”
funding and signing up a new partner to take a
Management remains confident of the long19% stake in the project.
term opportunities created by these investments
The long-delayed Escravos GTL project in
as they form an integral part
Nigeria is expected to start up
CHEMICALS, OIL & GAS
of its global growth strategy
soon. Constable said
and provide a natural hedge
construction has been
162
Chemicals index
for downstream plans in the
completed and the plant is in
Oil & gas index
US.
the commissioning phase. The
All share index
150
The group remains on track
project has been severely
140
to maintain improved operdelayed and capital
ational performance, with a
expenditure on it is approa130
normalised fixed cost slightly
ching US$10bn, according to
120
above the SA PPI inflation, as
Chevron, one of the shareit remains focused on factors
holders. This compares with
110
within its control.
the $1,2bn that was spent on
100
It also expects an overall
the Oryx GTL project in Qatar,
95
solid production performance
a similar project in terms of
J FM AMJ J A S OND J F MAM
2013
2014
for the 2014 financial year,
technology and capacity,
Source: INET BFA
Share prices based to 100
with Synfuels volumes
which was inaugurated in
expected to be between 7,3 Mt
2006.
and 7,5 Mt. The average utilisation rate at Oryx
Offshore in Gabon, the group is maturing and
GTL in Qatar is expected to remain above 90% of
developing additional proven oil reserves to
nameplate capacity while the shale gas venture
maintain and potentially boost production in the
in Canada should show marginally decreased
nonoperated Etame Marin Permit for $168,2m.
production due to reduced drilling activities and
In SA, the Sasol Synfuels growth programme
less new wells coming on stream.
is also nearing completion, with the beneficial
Sasol has managed to contain costs and
operation expected to be reached at the end of
successfully deleverage its balance sheet, giving it
2014. The brownfields volatile organic compound
ample room for growth and to return cash to
abatement project, however, as well as the
shareholders. Also, the group remains at the
replacement of tar tanks and separators and the
mercy of a number of external factors, which
coal tar filtration project are experiencing
have a significant effect on profitability, such as
schedule and cost pressure. The total approved
the oil price and exchange rate movements.
cost of these projects is estimated at R7,5bn.
That being said, analysts predict that earnings
Construction of the R1,98bn loop line from
in the medium term should be supported by
Mozambique to Secunda is also expected to be
Sasol’s new operating model. They feel that the
completed during the second half of the 2014
group remains a sound investment, with its
calendar year. Meanwhile, the development of
long-term drivers intact given its diverse portthe $246m 140 MW gas-fired power plant at
folio of operations and the potential inherent to
Ressano Garcia, Mozambique — in partnership
its GTL ventures.
with the country’s state-owned utility company
Ruan Jooste
FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

A weaker rand a
major boost

✥

41

Financial Mail Page 42-43 -13/06/14 05:31:10 PM

INDUSTRIAL METALS & MINING

Negotiating
a maze of
challenges
With steel consumption
expected to moderate,
steelmakers must learn
to survive in the tough
times

S

teelmakers are addressing myriad
challenges such as volatility, shifting
demand centres, complex supply chains,
productivity and cost efficiency. And as
they increase their ability to survive in
tough times, E&Y’s 2014 global steel report foresees increased market competition in nearly all
products, especially as there is a focus shift to
high-value, higher-margin steel products.
In 2014, global demand is forecast to grow at
about 3,3%, with greater demand expected to
come from outside China as the Chinese government pushes through economic restructuring
with a focus on private consumption.
“With the exception of China, global supply
and demand for steel will largely follow economic growth recovery around the world. In
China, national mandates to rationalise capacity
will have an effect on supply and as the Chinese
economy moves to a more consumer-driven
model, steel consumption is expected to
moderate,” the report states.
Short-term estimates by the World Steel
Association for global steel demand are similar,
with some more positive views for growth in the
US, the EU, Brazil and Russia but a relatively
lower expectation for Asian countries. Though
there are signs that the outlook for demand is
slowly improving, the sector is still straining
under the pressure caused by years of excess
steelmaking capacity and low margins.
To counteract the investment in new
steelmaking capacity, E&Y estimates that about
300 Mt of steelmaking capacity needs to be
closed. That is for the industry’s profit margin to

42

✥

reach a sustainable level and raise the capacity
utilisation rate for the sector globally, from below
80% to more than 85%. The overall net effect,
however, has been an increase in steel-making
capacity, despite the Chinese government mandating 80 Mt of capacity to be removed by 2018.
The global steel market continues to face
challenging trading conditions, with China’s
economic growth slowing. With softening steel
demand, this is leading to lower international
steel prices and the ever-increasing oversupply
of steel.
Locally, economic growth is below expectations, affected by weak fixed investment expenditure and subdued global demand for locally
produced goods. Key steel consuming sectors
remain weak, which together with higher-thanusual steel imports are leading to increased
stocks in the SA market and intense local
competition.
ArcelorMittal SA (Amsa), the largest steel
producer on the continent, has been severely
affected by subdued conditions. The group
delivered another poor set of results for the year
to December 2013. Revenue remained largely
unchanged at R32bn, with a 9% increase in
average steel prices offsetting an 8% drop in total
steel sales. Domestic steel prices rose 7%, while
export steel prices jumped 13% due to an 18%
average depreciation in the rand. This helped
offset a 9% drop in steel shipments, which
consisted of exports being 14% lower and
domestic sales dropping 6% during the period.
Adjusted earnings before interest, tax, depreciation & amortisation grew 55% to R1,7bn,
driven by an 18% drop in import coal prices in
rand terms and the depreciation of the rand
exchange rate. This increase was contained by a
23% increase in Sishen iron ore prices and a 49%
increase in Thabazimbi ore prices to R1 317/t
(2012: R883/t). Cash cost of hot rolled coil
increased by 4%, while the cost of billets rose 1%.
With a couple of extraordinary events coming
into play — including an impairment charge of
R1,87bn relating to the Thabazimbi mine and a
R72m impairment to the investments in Coal of
Africa and Microsteel — the headline loss per
share came to 56c/share from a loss of 129c the
previous year.
SA’s second-largest steel producer, Evraz
Highveld Steel & Vanadium, posted a loss of
R105m for the first quarter of the year, compared
to a net profit of R30m in the corresponding
quarter last year. It remains adamant that it is a
going concern despite “matters that may cast
doubt on its capacity to realise its assets and
discharge its liabilities.”
The SA operation’s shares have been taking a
beating after it announced that its Russian-based

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

INDUSTRIAL METALS & MINING

✥

growth of its overall business. However, CEO
parent, Evraz, was talking to more than one
Andrew Mackenzie says despite the iron ore
potential buyer of its stake in the local steel
market facing temporary overcapacity, there is
company. Evraz had been discussing selling its
enough demand coming back from China and
85,11% stake to Nemascore, a BEE consortium,
elsewhere to justify the firm’s capacity increase.
since March last year. Market talk is that nego“We don’t quite see the case for the scale of
tiations have taken so long because Evraz has set
investment we saw in the past 10 years . . . But
the price too high.
the base business we built is going to be a strong
Last year Evraz Highveld’s cash flow was
bedrock for decades to come,” he says.
strained because of subdued demand and
Kumba Iron Ore reported a strong set of
above-inflation cost increases. Credit lines were
results for the year to December, driven by a
withdrawn because of uncertainty over the sale
weaker rand and marginally improved average
of the Evraz stake, it says. Most analysts who
export iron ore prices. Market conditions were
used to cover the company no longer do so.
better than expected as a 3% increase in global
Recently Alert Steel, a small steel group, said it
steel production sustained government infrahad been forced into business rescue after its
structure spend in China, and a steel mill remain backers withdrew their financial support.
stocking prior to the winter season supported
The slow recovery of the steel industry and
demand for iron ore.
modest global economic growth is not expected
Seaborne iron ore supplies grew 10% as
to result in significant improvement in interincreased output from Australia more than offset
national steel demand during 2014, which doesn’t
the decline in supplies from India and flat
bode well for local companies. Also, the strained
exports from Brazil. The average iron ore index
economic conditions in SA, together with delays
price increased marginally by 4% to $135/t. This
in government’s planned infrastructure spend,
combined with a 17% decline in the average
weigh heavily on local steel demand, which is
rand/US dollar exchange rate, which more than
highly dependent on the construction sector.
compensated for a 2% decline in mine
Similarly, downstream industries such as iron
production to 42,4 Mt, resulting in revenue
ore producers are dependent on the steel
growing 20% to R54,5bn. Export sales decreased
industry. Prices for iron ore fell below US$100/t
by 2% to 39,1 Mt, with sales volumes to China
at the beginning of June for the first time in
accounting for 68% of that.
nearly two years, amid growing concerns over a
Analyst consensus is that global crude steel
slowing Chinese economy. But given the deteriodemand will grow by 3% in 2014, with China’s
rating global supply and demand fundamentals
production increasing by 4%. Production growth
for the commodity, maybe the worst is still to
in other developing countries is expected to be
come. According to estimates by Goldman Sachs,
offset by reduced output in some developed
the price of iron ore could plunge to $80/t by
markets. This is, however, expected to shift in the
next year. That could have potentially grave
second half due to increased supply from
consequences for a number of large producers.
Australia and Brazil, as well as slowing demand
But up to now iron ore suppliers have been
growth, which should result in price pressure in
coining it. Iron ore contributed 32% to BHP’s
the second half of the year.
total revenue for the six months to December. It
Ruan Jooste
grew 31% to $11bn as production grew 19% to
TOP 11 INDUSTRIAL METALS & MINING
a record 98 Mt due to a strong showing from
Western Australia Iron Ore and early delivery
Ranked by
Name
Net profit Total assets Market cap Equity funds
from Jimblebar — also in Western Australia —
net profit
Rm
Rm
June ’13
Rm
Rm
as well as a 10% increase in the average
realised price of iron ore to $112/t. Underlying
1
Kumba Iron Ore
13 618,0
35 618,0
121 748,5
16 302,0
Ebit jumped 36% to $6,5bn supported by
2
Palabora Mining Company
810,0
7 119,0
5 486,3
6 946,0
volume growth. Underlying Ebit was further
3
BSI Steel
18,3
1 514,0
402,8
532,5
supported by productivity-led volume
4
ZCI
12,6
961,0
245,0
1 525,5
efficiencies, as several debottlenecking
5
Insimbi Refractory & Alloy 5,4
273,0
156,0
110,7
initiatives increased the overall capacity of
Supplies
6
Ferrum Crescent
-20,6
19,0
258,8
16,8
critical components within the supply chain.
7
Metmar
-77,3
1 468,0
387,6
652,7
As a result, the unit reported an improved
8
First Uranium Corp
-141,7
42,0
54,8
-464,3
underlying Ebit margin of 59,1% (2012: 57,2%).
9
African
Eagle
Resources
Plc
-3
2
9,9
5
3,0
3
4,7
2
3,1
Total iron ore production guidance for 2014
10
ArcelorMittal SA
-766,0
30 740,0
14 937,2
24 361,0
remains unchanged at 192 Mt.
11
Evraz Highveld Steel
& -922,0
3 588,0
879,5
1 659,0
BHP Billiton has, however, admitted that it
Vanadium
expanded its iron ore production too rapidly,
Source: INET BFA
causing the miner to overlook the underlying
FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

✥

43

Financial Mail Page 44-45 -13/06/14 05:31:37 PM

MINING

storm

Challenges include volatility
in commodity prices and
uncertain regulatory
environments

T

he mining industry faces a confidence
crisis. Low confidence in cost controls,
return on capital and commodity prices
are keeping industry leaders awake at
night. To add to these concerns, the
mining industry has recently stopped outperforming the broader equity markets.
“In response, miners are trying to rebuild the
market’s confidence. Capital expenditure has
been scaled back, hurdle rates are being increased
and noncore assets are being disposed of. There’s
a shift from maximising value by increasing production volumes to maximising returns from
existing operations from improved productivity
and efficiencies.
“Regaining investor confidence depends on
how the industry responds to its rising costs,
increasingly volatile commodity prices and other
challenges such as resource nationalism. Now is
the time to show that the industry can deliver in
good times and bad, and remain a good industry
to operate in for many years to come.”
This was the broad comment on global
mining in Mine 2014: Realigning Expectations, the
latest in a series of annual reports by PwC
mining specialists on the Top 40 global mining
companies. It was a timely reminder that SA
mining companies are certainly not alone in the
challenges they face (though they do have some
issues peculiar to them). It’s also a reminder that
SA miners are less prominent than they may
think on the investor landscape.
Only four companies listed on the JSE are
ranked in the global Top 40 by market
capitalisation — Anglo American, BHP Billiton,
Glencore and Impala Platinum (Anglo American
Platinum is counted as part of Anglo American).

44

✥

Investors have many options.
The PwC report notes that after “record
impairments of US$40bn during 2012, a further
$57bn of assets were wiped off balance sheets
during 2013. Gold companies suffered the lion’s
share, impairing $27bn of assets. The Top 40’s
aggregate net profit sank $52bn (72%) to a decade
low $20bn; gold companies were responsible for
$20bn of net losses”. Only seven of the Top 40
companies increased profits year-on-year. But
companies also adapted — “underlying performance as represented by adjusted earnings
withstood the tough conditions, only down 8%”.
Mining companies have faced a perfect storm,
continues PwC. “After investing in projects that
require a long time to generate targeted returns,
challenges have arisen due to increasing volatility in commodity prices and uncertain regulatory environments in some emerging markets.
As a result, net profits during the year were
$20bn, down a staggering 72% from the prior
year, setting the largest single year-on-year
decrease in net profit margin for the second year
in a row, reaching its lowest level in the past
decade.”
There are some sectors — mining, construction
and airlines — that are intrinsically cyclical and
investors need to be reminded in hard times that
a long-term view can be advantageous. In no
industry, however, is the long term longer than in
mining. The industry is also unique in that its
assets, by definition, have a finite life. The
demand for immediate or even medium-term
Jeremy Glyn

Facing a
perfect

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Cyril Ramaphosa

FINANCIAL MAIL • TOP COMPANIES • 2014

MINING

(say two to five years) returns is understandable,
but has to be balanced against the danger of a
lack of capacity and exploitable resources in
future when demand threatens to outstrip supply.
Of course, the market will work in such circumstances, but it is the companies that get the
calculation right that will have the edge operationally and with investors.
In the mid-2000s there was much talk of a
supercycle in commodities. CEOs such as Tony
Trahar at Anglo American were regarded as
having been too cautious. His successor, Cynthia
Carroll, was therefore under immediate and
specific pressure to expand, develop and acquire
— an approach that later came to be regarded as
overambitious and wasteful. New CEO Mark
Cutifani has duly pushed the pendulum the other
way, with much talk of fixing the business and
extracting value from present operations.
SA’s mining industry executives have been
speaking the language of extracting more value
from what they have, instead of finding and
developing new projects. There has also been a
new emphasis on cutting head office costs and
even in-the-field skills in geology, engineering
and exploration.
However, as former Anglo head the late Harry
Oppenheimer once remarked, it is only big
companies that can do big, difficult things. And
implicit in that is the need to hold your nerve in
tough times and spot the investments that need
to be made in order to make a return in 20, 30 or
100 years’ time. Given that kind of time scale,
there is an argument that only family dynasties
have a genuine incentive
to take a responsible long view. Professional
managers, however brilliant, will generally no
longer be around to live with the consequences
of the decisions they make.
PwC says “measuring success of the
short-term responses to cost-cutting initiatives is
difficult as there is little consistency in what is
reported as ‘cost savings’ and operating costs
have not yet slowed, increasing 4% during 2013.
The full extent of reported cash-saving initiatives
across the top 40 will become apparent only
during the remainder of 2014 and beyond”.
So, how much of mining companies’
expenditure is discretionary at this punishing
stage of the cycle? “In addition to cutting back on
merger & acquisition activity,” says PwC,
“companies responded to cost pressures by
cutting exploration activities for another year,
with exploration costs dropping by more than
20% during 2013. Miners should be rewarded by
investors for a focus on strictly managing their
costs. However, the long-term impact may not be
seen for years; if demand returns quickly,
creating a supply imbalance, only the most

✥

nimble with strong project portfolios will be able
to respond.”
Says Glencor CEO Ivan Glasenberg: “We are
afraid of greenfields, and it’s been proven we
were correct. Greenfields are risky. They do have
capital overruns. They do have delays that kill
the net present value on those projects.” Glasenberg is not wrong, of course, unless you are more
concerned with the long term — without greenfields development, mining companies will die
sooner rather than later.
But then Glencore is unique among the big
resources companies because it combines
mining with trading, and its merger with Xstrata
was the major story in the sector’s corporate
activity. That, in turn, created other possibilities.
As the Financial Mail pointed out in September
last year, ever since Xstrata’s rejected “merger of
equals” offer for Anglo American in 2009, speculation persisted that another offer may be made.
However, Anglo’s platinum and diamond businesses wouldn’t fit into the new Glencore, where
the focus is on base metals, energy and agricultural products.
Glencore executed its secondary listing on the
JSE in November 2013. Since then it has had a
share-price high of nearly R63 and a low of
around R50. In early June its market cap was
R767bn, placing it third behind BAT and SABMiller, and R50bn ahead of fourth-placed BHP
Billiton — which in global terms is the biggest
miner. Glencore is more than double the size of
Anglo (R365bn), and the only other resources
company in the JSE Top 20 by market cap is
Amplats (17th, R126bn).
Asked whether there might be merit in a
merger with Glencore, Cutifani says: “We have to
look at all pathways to value and that is where
we are focused. If there were an approach, we
would have to take it seriously. That is our duty.”
He says Anglo has not had approaches from
Glencore about a merger. But if he were elsewhere in the industry, “I would look at Anglo
and say, there is an undervalued group”.
Cutifani has explicitly set about changing that
perception. He says Anglo is targeting overhead
savings of $500m/year to 2016 by focusing
activities, eliminating duplication, streamlining
processes, adopting best practice and embedding
a cost-conscious culture. In total, he is targeting
$1,3bn/year of improved cash flow from 2016
from a range of initiatives, including more
disciplined capital allocation and a more efficient
organisation.
Anglo is, of course, no longer really an SA
company, though it retains the greatest exposure
in the country of all the big miners, mainly
through platinum, iron ore and diamonds.
In November 2013 PwC published a special

FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

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45

Financial Mail Page 46-47 -13/06/14 05:31:56 PM

MINING

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local mining industry are due mainly to the
industry’s inability to deal with the economic and
social needs of its workers and their dependants.
“The migrant labour issue therefore has
become synonymous with community issues,”
says PwC, following on Ramaphosa’s comment.
“Migrant labourers, mostly from the Eastern Cape
and Lesotho, are not fully resident in the areas
where they work and tend to migrate home on
an annual basis. The impact of displacement has
become an issue for mining companies as
migrant workers are not fully invested in the
local community. Living-out allowances created
informal settlements as migrant workers often
preferred to use the cash benefit for other
purposes. In many cases, workers are supporting
families in rural areas as well as second families
in local communities around the mines. In turn,
these communities have become dependent on
migrant workers.”
But is it the responsibility of the mining
industry alone to see to the needs of its workers
beyond its operations? As PwC says: “There’s no
other industry where expectations of an
employer to meaningfully contribute to the
greater good, over and above providing much
needed jobs, are as high.”
This is partly because mining is the only
industry where operational geography is not
determined by broader economic trends and
concentrations, but by arbitrary and often highly
inconvenient geological allocation of resources.
In a sense, all mining communities are migrant
ones, and they will disappear when mining is
exhausted unless there has been sufficient
Robbie Tshabalala

report on the SA mining industry. It included
companies with a market cap of more than
R200m at the end of June 2013 — 37 companies
met these criteria. PwC noted the continued
decrease in the market cap of SA companies —
down by 28% from R833bn to R597bn in the 12
months to June 2013. Gold mining companies
were the hardest hit, losing 48%, following the
largest annual decline in the gold price for many
years. Platinum companies lost R75bn of their
market cap — and that was long before the start
of the months-long strike on mines in the
Rustenburg area.
Though SA executives and analysts sometimes
seem inclined to blame all their woes on a
difficult operating and regulatory environment,
PwC takes a more level-headed view. “Though
the challenging local mining environment,
particularly relating to labour, played a role in the
decrease in market capitalisation, a significant
contributor was the global economic
environment,” it says. “The impact of the global
economic environment on the mining industry is
apparent when one compares the movements of
the HSBC global mining index to the JSE mining
index in US$ terms. There is an almost perfect
correlation between these indices, with variances
almost exclusively explained by price movements in the different baskets of commodities.
The only exception is the period from August to
October 2012, when the tragic Marikana violence
and its aftermath resulted in the JSE mining
index dipping below the global mining index.”
The new deputy president of SA, Cyril Ramaphosa, is on record as saying that problems in the

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Gold mining companies have
been hardest hit
46

FINANCIAL MAIL • TOP COMPANIES • 2014

MINING

development of secondary industries and
services. This is also why mines are expected to
rehabilitate, as closely as possible to its original
condition, land that has been worked out.
In SA there is an additional and extremely
emotional legacy: migrant labour was an integral
part of the apartheid economic system and it led
to the destruction of many rural communities,
both in terms of undermining family life and
reducing the capacity of those communities to
farm on a subsistence basis and even
commercially. That is why modern mining
companies are expected to compensate for the
omissions of their predecessors — a
compensation that is as much social and political
as it is economic. This is in addition to taxes,
royalties, corporate social responsibility
programmes and sponsorships.
The PwC report argues, however, that “the
mining industry adds significant value to our
country and its people”. It has examined the
“value added statements” offered by many
mining companies and has calculated that
collectively the monetary value created by them
goes mostly to reinvestment in the business
(37%), employees (36%) and taxes and royalties
(21%).
That employee number presumably includes
executive remuneration, and much has been
made of the contrasting multimillion packages
for a handful of people and the low wages of
ordinary and even relatively skilled
mineworkers. Boards point to the fierce
competition globally for skilled executives, as
well as the unfortunate reality that an executive
in demand globally can be paid in dollars if he
works somewhere else. That means to keep such
a person in SA will entail a much inflated
package in rand terms because of exchange rates.
Be that as it may, there is little public
sympathy and none in government for that line
of reasoning. As a result, remuneration
committees are said to be acutely aware that
reward cannot be regarded simply as a factor of
supply and demand; apparently exorbitant
packages could even be regarded as a risk to the
business.
All of these factors can influence the granting
of a company’s “licence to operate”. This concept
is both literal, in the sense that government
grants actual licences to companies, and
figurative, in that a company needs to enjoy
legitimacy in the broader society. Increasingly,
the concept of resource nationalism, as opposed
to nationalisation, is being used by governments
globally to insist on a fair distribution of the
benefits from mining.
“The growing need by stakeholders for
short-term benefits from the wealth created by

✥

mineral resources has seen populist measures
introduced in a number of countries in an
attempt to maximise income from mining.
Unfortunately unintended consequences often
result, significantly jeopardising employment
opportunities and in many cases actually
decreasing the community benefits derived from
mining projects,” says the report.
An example cited is the decision of Indonesia
to ban the export of unprocessed mineral ore,
effective from January 2014. A consequence has
been that global miner Newmont announced in
May 2014 that it would scale back production,
potentially reducing its 8 000-strong workforce
and affecting the communities where it operates.
Another instance is the Philippines issuing a ban
on all new mineral extraction contracts, and, says
PwC, it is exploring an increase in excise tax on
mining companies from 2%-7%. In China, to curb
production output, government has increased
taxes on iron ore and other metals. In Latin
America, Mexico has also introduced additional
taxes on resource companies.
“Resource nationalism, in one form or
another,” says PwC, “is a key risk and a reality
that every organisation in the resource extractive
industry has to manage and factor into its risk
management.”
One of the obvious fallacies of the mid-2000s
was that China would continue growing its GDP
at around 10% indefinitely. Such an assumption
was readily accepted by many companies and
investors. However, it ignored the structural
rigidities in China’s economy; its lack of
democratic processes, and therefore the creation
of long-term social stress; and the reckless and
increasing pollution caused by an industrial
approach that recalls the Satanic mills of
Victorian Britain rather than the 21st century.
“With northern Chinese steel mills struggling
to limit carbon emissions from blast furnaces,”
PwC argues, “a push for ‘green’ iron ore is
gaining momentum as a means to address
pollution concerns currently choking major
cities. The use of low-quality iron ore has been
prevalent in China; however, with reforms
focused on turning poor environmental readings
around, suppliers of iron ore are being
encouraged to deliver a blend of ore that will
reduce emissions.”
However, “China’s continuing path of
urbanisation westward will still see demand for
iron ore remain strong for many years to come.
Delivering on urbanisation objectives, without
adding to China’s pollution woes, will therefore
be a key focus for the Chinese government. This
will present both challenges and opportunities
for the mining industry to meet this changing
appetite for minerals”.
David Williams

FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

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47

Financial Mail Page 48-49 -13/06/14 05:32:18 PM

GOLD

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The

not make this happen. But if we continue to
work together as partners pursuing a common
goal . . . then this dream of greater things will also
come true.”
He reminded investors that though gold
supply from SA has continued to decline, Africa
still accounts for 20% of global gold output.
“Considering the continent’s vast mineral wealth,
however, it still has a long way to go to deliver on
its full potential,” Bristow said.
Referring to Tongon, another successful Randgold project in West Africa, Bristow said “investors are deterred by the political and infrastructural risks associated with Africa, but in
Côte d’Ivoire we have shown how these challenges can be overcome by a true partnership
between a mining company, the government and
the people”.
This spirit of co-operation was evident in the
process of formulating a new mining code, said
Bristow, and he was sure that the country’s
mining companies would also be involved in the
finalisation of the rules for the code’s implementation. “It’s now all about delivery by the
government as well as the industry, but the
principle has already been established that this
ere we have shown what can be
country needs business partners, not barriers.
achieved in Africa when we all work
That applies to the rest of the continent as well,”
together: a government that underhe said. “Partnership implies a long-term comstands the importance of attracting
mitment to mutual goals between the partners.”
and retaining the investments that are
Bristow, an SA geologist educated at the Uninecessary to build a modern economy; mining
versity of Natal, is arguably
companies that believe in
the star among African mining
sharing the value they create
GOLD
CEOs at the moment. Unforwith all their stakeholders,
R/kg
US$/oz
tunately, his firm is not listed
especially the local commGold price
490 000
1 700 on the JSE, but its counterunity; a labour force that is
Gold spot
480 000
1 650 parts in SA have had a less
eager to grasp the opportunity
470 000
1 600
happy time. All producers
of working and learning; and
460 000
1 550
have battled a relatively low
a people who have welcomed 450 000
1 500
gold price, cost increases and
us and supported our en440 000
1 450
430 000
a regulatory environment that
deavours.”
1 400
420 000
is perceived as being hostile to
Such words seem like a
1 350
410 000
investors.
fantasy in the SA mining
1 300
400 000
Kibali will rank as one of
context, and of course they
1 250
390 000
the
largest gold mines in
are. The speaker was then
1 200
380 000
Africa when it is in full
Randgold Resources chairman
J FMAM J J A S O N D J FM AM
2013
2014
production, says Randgold.
Philippe Liétard, at the openSource: INET BFA
“While still a work in progress
ing of the Kibali mine in the
— it is both an operating mine
DRC. On the same occasion,
and a development project — Kibali produced
Randgold CEO Mark Bristow said the company
88 200 ounces of gold and made a profit from
needed “to ensure that we deliver the returns
mining — before interest, tax and depreciation —
expected by the investors who entrusted us with
of US$68,3m in the three months to December,
their money. We have to run a profitable mine,
its first production quarter. Current production is
focused on long-term viability that pays taxes
from its open pit mine and an oxide circuit.
and employs and develops citizens from this
Commissioning of the sulphide circuit started
region and this country.
during the past quarter and development of the
“Kibali must become the catalyst that triggers
underground mine remains on track with the
the additional investment required to grow a
vertical shaft reaching the halfway mark and the
strong regional economy. Wishful thinking will

glitter

keeps on
fading

Though Africa, in general,
might present challenges,
these are not
insurmountable

H

48

FINANCIAL MAIL • TOP COMPANIES • 2014

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GOLD

✥

Hidden Valley open-pit gold and silver mine.
first underground ore accessed.
In SA the surprise performer has been SibaThere is an SA corporate connection:
nye. Formed from Gold Fields’ discarded assets
AngloGold Ashanti is a nonoperating partner
in SA and listed in 2013, it is perceived under the
with Randgold Resources, and they have each
circumstances to have performed better than
invested about $2,5bn. Each has a 45% stake,
Gold Fields. Sibanye CEO Neal Froneman made it
with the balance held by the DRC state gold
clear from the start that Sibanye’s appeal for
mining company. AngloGold Ashanti CE Sriniinvestors would have to be in regular dividend
vasan Venkatakrishnan (who took over from
flows rather than long-term value.
Mark Cutifani) has said that for Kibali’s full
The Sibanye share has been volatile. After
potential to be realised, it is of the utmost imporlisting at around R13, it went as low as R6, but by
tance that the DRC’s mining code remains
May 2014 it was at R26. This was just R3 off its
supportive of the gold mining sector.
12-month high and it was producing a market
“The government now has an important
cap of R23bn (compared to Gold Fields’ R28bn
opportunity to show the world that it is weland Harmony’s R12bn). As measured by ARDR, if
coming of gold mining by helping to create what
you had invested R1 000 in Sibanye a year ago
can in a short time become one of the largest
you would now have R3 443 — a return of 244%.
gold producers in the world and an engine of
Froneman’s reputation as a can-do, hands-on
growth for this region and this country.”
miner who makes the most out of declining
Under CEO Venkat (as he is happy to be
assets has stood him in good stead. Also, his
known), AngloGold Ashanti has cut costs, not
experience in the uranium sector must have
least through chopping a range of head office
influenced Sibanye’s recent emphasis on that
jobs. For the most recent quarter to end-March
mineral: uranium oxide production from the
2014, the company posted “a strong set” of
Ezulwini plant is forecast to build up to
results, “beating first-quarter production and cost
600 000 lb/annum. There has also been talk of
guidance, as operating performance and cost
Sibanye getting into platinum, and this cannot be
initiatives continue to reposition the business.
seen as far-fetched, given the uncertainty that
Adjusted headline earnings were $119m, or
has been hanging over the platinum sector
US29c/share. Our operators have delivered
because of the crippling strike.
another strong performance and we continue to
The experience of Bristow and Randgold
manage costs aggressively.”
Resources suggests that difficulties in the African
Gold Fields CEO Nick Holland has also been
mining environment are not insurmountable,
costcutting, and has initiated major strategic
with goodwill and pragmatism on the part of
shifts in the business model. The emphasis is less
both government and business. In SA, it is
on developing new projects and more on getting
accepted that gold mining is a sunset industry —
better value from existing assets and operations.
but one gets the impression that mining comSouth Deep, the company’s remaining asset in
panies’ mindsets may linger too often in the past,
SA, is pushing to mechanise more of its working.
while government is doing little to retard the
But it came under pressure when mining was
descent of that sun towards the horizon.
halted at the end of May, pending an investigation into two separate fatalities. Holland has
David Williams
also been under pressure for his R50m-plus
TOP 10 GOLD
annual package, though he declined a bonus
last year due, in part, to the controversy over
Ranked by
Name
Net profit Total assets Market cap Equity funds
the company’s black empowerment dealings.
net profit
Rm
Rm
June ’13
Rm
Rm
At the end of May 2014 Gold Fields was
trading at around R37, a far cry from the
1
AngloGold Ashanti
8 105,0
168 133,0
73 716,1
61 419,5
12-month high of R66. In terms of annualised
2
Gold Fields
6 610,6
143 996,0
31 229,1
63 910,7
returns with dividends reinvested (ARDR) as
3
Pan African Resources Plc
450,3
5 076,0
4 536,3
2 899,4
calculated by Profile Sharedata, investors
4
Harmony Gold Mining
321,0
66 905,0
14 247,7
36 948,0
have seen no gains, whether invested for any
Company
period between one and 10 years. The same
5
DRDGold
265,1
4 419,0
1 526,1
1 995,6
applies to AngloGold Ashanti and Harmony.
6
Village Main Reef
228,4
3 713,0
447,5
1 234,7
Harmony CEO Graham Briggs has
7
Great Basin Gold
172,7
11 956,0
386,7
3 325,8
impressed with his clear strategy and
8
Randgold & Exploration
-7,3
218,0
142,5
175,9
no-nonsense approach to cost containment.
Company
Exploration growth for the company will
9
Witwatersrand Consolidated -18,8
1 053,0
393,2
534,8
Gold Resources
come mainly from its Papua New Guinea
10
Central Rand Gold
-29,3
278,0
175,6
112,2
presence, where it has a 50% joint venture
Source: INET BFA
with Newcrest Mining. That includes the
FINANCIAL MAIL • TOP COMPANIES • 2014

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49

Financial Mail Page 50-51 -13/06/14 05:32:41 PM

PLATINUM

✥

How
things
have

and higher operating costs. Our focus remains on
achieving a step change improvement in
employee safety and improving operating
efficiencies at the group’s mines”.
He assured investors that the company was
committed to increasing production in line with
growth in global demand. In light of continuing
growth in autocatalyst and industrial demand,
and the resilience of the jewellery market at
higher prices, average growth in production of
around 5%/year was expected.
That now all seems like a long time ago — in a
galaxy far, far away. Havenstein resigned when
he felt unable to give new Anglo CEO Cynthia
Carroll cast-iron assurances on safety. The global
financial crisis blasted demand for commodities.
Pressure on the big platinum miners culminated
in sporadic industrial action, and then the
Marikana shootings at Lonmin’s operation in
mid-2012. Amplats’ market cap dropped from
R187bn in December 2009 to R105bn four years
later, and has since recovered to R121bn (May
2014).
Also in May, on the basis of investor returns —
share price performance with dividends
reinvested — a R1 000 investment in Amplats a
year before would have produced R1 409, and
everal years ago, it seemed that nothing
over 10 years R2 362. But those invested for any
could go wrong for the platinum sector.
other period in the decade would have lost
The share price of the biggest player,
money.
Anglo American Platinum (Amplats), was
Miners affiliated to the Association of
the most expensive on the JSE. In 2007
Mineworkers & Construction Union (Amcu) went
and 2008 the company paid out more than
on strike in January 2014 for a minimum
R29bn in dividends. The only cloud on the
underground starting wage of R12 500, and by
horizon was that government was eyeing the
early June their action had
huge profits and making
PLATINUM & PRECIOUS METALS
lasted nearly five months with
noises about windfall taxes.
no sign of an end. This was
Now Naspers is the most
Platinum & precious
125
despite several mediation
pricey share on the exchange
metals index
120
attempts and the intervention
and Amplats is trading at less
All share index
115
of new labour minister
than a third of its value seven
110
105
Ngoako Ramathlodi — who
years ago.
100
withdrew after about a week
The good days seemed set
95
of orchestrating talks, clearly
to last forever. In July 2007
90
shaken by the gap and the
Amplats said it was pleased to
85
bitterness between the two
announce a “substantial
80
75
sides.
improvement” in headline
70
In May Amplats CEO Chris
earnings per share, up by 47%
65
Griffith reacted angrily to
to R29 and an interim
J F MAMJ J A S OND J F MAM
accusations that he was
dividend of R29/share was
2013
2014
Source: INET BFA
Share prices based to 100
receiving an excessive pay
declared. CEO Ralph
package, especially in relation
Havenstein noted that the
to his lower-paid workers: “Am I getting paid on
“record half-year earnings reflect continued
a fair basis for what I have to deal with in this
strong demand and record metal prices”.
company? Must I run this company and deal
It could have been even better because
with all this nonsense for nothing? I’m at work.
Havenstein said “increasing competition for
I’m not on strike. I’m not demanding to be paid
labour in SA and a deterioration in safety
what I’m not worth,” he fired at critics. He later
performance at our Rustenburg mine reduced
backtracked and apologised for his choice of
our operating efficiency, resulting in lower than
words, saying they were inappropriate,
expected growth in production from operations

changed

The new gold is now facing
the possibility of being
downgraded
to just another commodity

S

50

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

PLATINUM

✥

was due “to an anaemic European economy,
insensitive and a result of intense frustration.
which saw auto sales continue to decline, the
With autocatalytic demand from Europe and
ever-present threat of the softening of
the US still flat and fairly substantial mine ore
quantitative easing in the US and to the
reserves, the platinum price failed to react to the
abundance of above-ground metal inventories.
strike, which has become the longest in SA’s
“The quantity of available metal continues to
history. There was also ominous talk of the auto
surprise despite the removal of metal from the
industry finding alternatives to platinum in its
market due to industrial action . . . and the rapid
manufacturing, raising the possibility that the
uptake of the recently launched SA-based
metal would decline from being the new gold to
platinum exchange traded fund (ETF), which by
being just another commodity. By June there
year-end had become the largest in the world
were reports that the platinum companies were
with more than 900 000 ounces taken up in just
considering closing shafts and even whole mines.
over seven months. This combination of mixed
Widespread job losses were seen as inevitable,
fundamental news was sufficient to see a
making the proposed retrenchment of 14 000
significant sell-off in the futures markets, where
workers by Amplats in 2013 seem reasonable and
some 1,8m oz of platinum and just over 1m oz of
modest by comparison. The hardship endured by
palladium were liquidated from their respective
about 70 000 miners and their families after four
peak levels.”
months without wages was severe.
But the platinum price — down 1,8% at
That hardship had not extended to refiners
$1 432/oz since the 2014 strike began — was not
and manufacturers who use the metal. Johnson
expected to remain static for much longer. JM
Matthey (JM), a major refiner and authoritative
predicted that demand would exceed supply by
commentator on the platinum market, said in
1,22m oz this year, the biggest gap in more than
early June “supplies of platinum held by
three decades, given the strike and growing
jewellers and exchange-traded investments are
consumption by carmakers. SA was expected to
helping prevent shortages of the metal and
supply a quarter of a million fewer ounces of
curbing price gains”, despite the strike in SA.
metal in 2014 than in 2013 — 3,95m ounces
“Our access to platinum and palladium is still
against 4,2m. With Russian output expected to
reasonably good. There’s plenty of metal around
drop by 15 000 oz, total mined supply was
for industrial users. The miners are more affected
expected to fall 267 000 ounces to 5,56m.
than we are.”
However, that would be offset by a 190 000 oz
The three major companies operating in the
rise in recycling of the metal.
Rustenburg area — Amplats, Impala Platinum
In summary, said Impala Platinum, “the
and Lonmin — have maintained a united front
supply and demand balance for both platinum
throughout the strike. Their position is probably
and palladium remained in fundamental deficit
best expressed in an Amplats statement in early
for the year, but have both been bedevilled by an
March: “We have been diligent and transparent
accumulation of above-ground inventory, which
in engaging all our stakeholders on the financial
may take a little while longer to be eroded. The
position of the company . . . We are hopeful that
industry-wide strike, depending on its duration,
Amcu will come to recognise and appreciate the
is likely to have a significant impact on these
realities of the company’s position and will work
stock levels.”
towards a solution that will benefit its members.
David Williams
We remain open to further engagements to
TOP 12 PLATINUM & PRECIOUS METALS
help bring the strike to an end.”
One of the defining characteristics of the
Ranked by
Name
Net profit Total assets Market cap Equity funds
strike was that, for the first time in 30 years,
net profit
Rm
Rm
Dec ’13
Rm
Rm
a major strike was undertaken by a union
not affiliated to the ANC through its
1
Impala Platinum Holdings
5 660,0
80 156,0
75 865,7
107 583,0
tripartite alliance. This created uncharted
2
Anglo American Plat
4 317,0
89 027,0
127 734,8
80 113,0
territory, with government unsure on how
3
Northam Platinum
461,4
14 348,0
15 478,0
23 202,4
to proceed. The acceptance in December
4
Royal Bafokeng Platinum
433,3
18 517,0
11 573,6
30 995,3
2013 of the companies’ offer by the
5
Lonmin Plc
245,6
45 975,0
28 541,4
71 998,1
Cosatu-affiliated National Union of
6
Wesizwe Platinum
11,5
4 858,0
1 269,7
5 716,6
7
Bauba Platinum
-9,2
36,0
88,9
67,5
Metalworkers of SA and National Union of
8
Platfields
-11,3
64,0
15,8
85,2
Mineworkers threw the extreme position of
9
Sable
Metals
&
Min
-27,
6
9,
0
1
45,7
9,1
Amcu into sharp relief.
10
Jubilee Platinum Plc
-105,6
1 249,0
170,9
2 278,7
The platinum price had started 2013 at
11
Eastern Platinum
-670,9
6 319,0
742,6
8 072,9
near highs, but by the end of the year it was
12
Atlatsa Resources Corp
-816,4
6 836,0
2 799,2
5 230,0
about US$400 off its peak of US$1 735.
Source: INET BFA
Impala Platinum noted in February that this
FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

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51

Financial Mail Page 52-53 -13/06/14 05:32:58 PM

CONSTRUCTION

There are
signs of
recovery
But the slow pace at
which big projects are
coming on line is a major
hindrance

D

espite the roll-out of big projects in
government’s R4 trillion infrastructure
plan having largely stalled, the construction sector is slowly and steadily
making a recovery. But it is not yet out
of the woods.
The industry has criticised the slow pace of
the roll-out of major projects in the country. It
complains that development of municipal
infrastructure, which would provide the construction industry with low-cost, consistent work,
has been especially slow to get off the ground.
Red tape, lack of skills and project management
capacity and corruption are to blame. Government processes can be cumbersome for construction companies, in a sector where tendering
has come under suspicion and has therefore
created extra bureaucracy to ensure compliance.
The downside is complicated paperwork that can
take months to wade through.
Complications can be experienced even in the
building of basic housing as
CONSTRUCTION
well as water reticulation and
sewerage works. As a further
deterrent, small-scale
Construction &
municipal work offers low
materials index
All share index
margins.
The SA Federation of Civil
Engineering Contractors
(Safcec) has recently started its
Adopt-a-Municipality
initiative. Safcec’s aim is to get
experts in multiple sectors to
look at individual needs of
municipalities. But its
J FMAMJ J A S
2013
initiative has faltered amid red
Source: INET BFA
tape. “Because tenders for

52

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basic projects needed by many municipalities —
especially those in poor areas — are so political,
or just slow to get going, the construction
industry loses out,” says Fred Platt, CEO of
AltX-listed Accentuate.
Former finance minister Pravin Gordhan
during his budget speech in February warned
that delays to the introduction of new infrastructure projects, particularly electricity generation plans, could be detrimental to the
economy. He highlighted slow infrastructure
roll-out, as well as higher inflation, electricity
cuts and protracted labour disputes as potential
risks to SA’s economic outlook.
Eskom has scaled down its medium-term
capital spending plans because of its lower
revenue forecast. But there are still plans to build
a third coal-fired power station and to develop
nuclear energy. Over the medium term, Gordhan
said, government will still “add to the electricity
supply to improve the balance between available
energy and the amounts required by businesses
and households to thrive”.
The passing in parliament in May of the
department of economic development’s
Infrastructure Development Bill could alleviate
some concerns. The bill aims to fast-track
regulatory decision-making time on infrastructure programmes to 57 days and to extend
the state’s powers for expropriation of land.
Government has budgeted to spend R847bn
on investment over the next three years. About
R1 trillion has been invested over the past five
years. Government also hopes to leverage private
finance. Successful bidders for the third round of
the Independent Power Producer Procurement
Programme were announced last year.
Seventeen projects, with an investment value of
R33bn, were awarded during the third round.
Spending on social infrastructure, which
includes education, health and community
facilities, is set to rise from R30bn in the previous
financial year to R43bn by 2017. Gordhan said
priority would be given to
eradicating school infrastructure backlogs and
125
refurbishing clinics and
120
hospitals. Health and
115
education account for more
than 65% of the social
110
infrastructure budget.
105
A total of R40bn in
100
infrastructure grants will be
95
transferred to local
government for water,
90
sanitation, energy and
85
environment functions. SA’s
OND J FMAM
2014
water investment
Share prices based to 100
requirements have spiralled.

FINANCIAL MAIL • TOP COMPANIES • 2014

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CONSTRUCTION

✥

TOP 10 CONSTRUCTION
Gordhan said a programme to
rehabilitate 35 dams has been
Ranked by
Name
Net profit Total assets Market cap Equity funds
completed and work is in
net profit
Rm
Rm
Sep ’13
Rm
Rm
progress on the country’s five
large water transfer schemes.
Special economic zones have
1
PPC
1 235,0
8 575,0
17 701,3
2 040,0
been allocated R3,6bn to promote
2
Wilson Bayly Holmes-Ovcon
606,9
11 426,0
9 094,8
4 105,2
value-added exports. Govern3
Raubex Group
352,4
4 074,0
4 125,1
3 089,3
ment wants the zones, located
4
Group Five
253,4
8 745,0
4 945,8
2 069,5
principally in economically
5
Stefanutti Stocks Holdings
156,9
4 904,0
1 720,9
2 072,8
disadvantaged parts of the
6
Distribution & Warehousing 137,0
2 749,0
2 321,7
1 388,8
Network
country, to be a creator of jobs.
7
Afrimat
111,1
1 053,0
2 034,3
825,1
Economic indicators continue
8
Calgro M3 Holdings
98,0
762,0
875,7
340,3
to disappoint, while conditions
9
Esor
86,2
1 824,0
158,1
1 179,4
are slowly turning less favourable
10
Aveng
85,0
27 457,0
8 833,7
12 265,0
for both the building and the
Source: INET BFA
civils industry. Fewer commercial
projects are in the pipeline, while
came in at a respectable 6,12%.
higher interest rates are likely to dampen the
Group Five, fourth in the construction sector,
limited recovery in recent months in residential
only came in at 192 in the overall rankings, with
project approvals.
12,19% in IRR, but a poor -8,71 in EPS growth
The project postponement rate has started to
over a five-year period. Fifth-ranked Stefanutti
accelerate, affecting the building industry. Tender
Stocks’s IRR was 12,11% and its latest ROE came
activity has contracted in the civil industry while
in at 7,57%.
awards are also slow.
Raubex did well to bring in 8,67% in IRR, but a
But despite tough trading conditions, some
disappointing -2,50% in EPS growth over a
construction companies fared well in this year’s
five-year period to March and 11,41% in its latest
Financial Mail Top Companies survey.
ROE.
Market darling Calgro M3 came in at number
PPC, which came in at 239 in the overall
eight in the construction sector, and at number
rankings, gave investors a measly 3,62% in IRR, a
22 in the overall rankings, out of 322 companies
-8,75% in EPS growth, but an impressive 60,44%
ranked. Calgro put a smile on investors’ faces by
in its latest ROE.
giving them a 50,24% internal rate of return (IRR)
Also disappointing was SA’s largest construcin the five years to March. It delivered 18,77%
tion group Aveng, which was ranked seventh in
growth on earnings per share (EPS) over a
the construction sector but a lowly 233 in the
five-year period. And its latest return on equity
overall rankings. Its IRR came in at a dis(ROE) came in at 28,8%.
appointing 2,50%, its growth in EPS was -0,69
The affordable-housing developer said in May
and, worse, its latest ROE was also -0,87%.
it had secured a pipeline of projects worth more
But the biggest loser of them all was Murray &
than R10bn in the year to February — from R8bn
Roberts, which claimed the 26th spot in the
the previous year — and created more than 5 000
construction sector rankings. Murray was ranked
direct new sustainable jobs. Calgro’s headline
272 in overall rankings. And the numbers don’t
EPS grew almost 40% to R71,84 in the year to
lie. It managed to give investors -7,80% in IRR
February from R51,44 in the previous year.
over a five-year period to March, also -19,70% in
Revenue rose by 55% to R798,4m. Operating
EPS growth over a five-year period and -2,48%
profit more than doubled to R89,4m from
in the latest ROE.
R43,2m. A dividend was not declared, with
Though the balance sheets of most construcCalgro’s board opting to retain cash to fund
tion companies are slowly showing some imgrowth in the absence of readily available
provement, especially the ones operating offdevelopment finance.
shore, locally there are still challenges. These are
Wilson Bayly Holmes-Ovcon (WBHO) was the
in the form of slow project implementation and
second-rated construction company, with
issues such as bid-rigging investigations by the
Raubex Group taking the third spot followed by
competition commission, which are yet to be
Group Five and Stefanutti Stocks.
completed and have tainted the construction
But WHBO, though second in the construction
sector, potraying it as a corrupt industry. The
sector, only came in at 183 in the overall
sector will have to work hard to repair the
rankings, giving investors 13,24% in IRR in the
damage caused by the bid-rigging allegations.
five years to March. It delivered a -1,84 growth
on EPS over a five-year period, but its latest ROE
Thabang Mokoanele
FINANCIAL MAIL • TOP COMPANIES • 2014

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53

Financial Mail Page 54-55 -17/06/14 02:34:55 PM

Foreign

✥

special dividend may not be far off.
But while past performance is great, it is a
company’s future potential that really counts.
Here Howden remains a standout company. As a
subsidiary of US engineering equipment
heavyweight Colfax, Howden has the ability to
manufacture in SA or source state-of-the art
equipment. The group’s key focus is on air and
gas handling solutions and environmental
control solutions.
“Howden is a major engineering force,” says
its CE, Thomas Bärwald. “Its equipment
underpins economic development on the African
continent. We play a significant role in
large-scale power generation, mining,
construction, petrochemical and infrastructure
projects.”
Highlighting the growing importance of
Africa, Howden reported a 44% rise in orders
from the rest of Africa at its 2013 year-end.
Another standout company on past
performance and potential is Invicta. To its credit
over the past five years is revenue growth of
nvestors who backed the general industrial
125%, a 112% increase in HEPS and a 460% share
and industrial engineering sectors have been
price rise. It has been under the able leadership
rewarded with some spectacular
of CE Arnold Goldstone since 2000, and the big
performances in recent years. But for
drivers of growth have been engineering spares
exceptional overall performance, Howden
and agricultural equipment, supplemented by
Africa has been the company to beat.
numerous successful acquisitions and
No heavyweight, Howden tips the market cap
diversification into building material supplies.
scales at R3,3bn. But it punches way above its
Invicta is now in the early stages of a new
weight in the performance arena. If one metric
growth phase in which international expansion
alone tells the story of Howden’s performance, it
will be the big driver. It’s a strategy Goldstone
is return on equity (ROE). At 76,8% in Howden’s
says is vital given SA’s dismal growth rate.
year to December 2013, it is in a class of its own.
“Our focus is now on offshore expansion,”
More pertinently, ROE has been rising steadily
says Goldstone. “It will protect our business in
for many years, and this was achieved without
future.” The biggest step yet was Invicta’s
the help of a geared balance sheet.
acquisition in October 2012 of Kian Ann, a
This specialist engineering equipment
Singapore-based distributor of earthmoving
company’s other performance metrics are as
equipment parts and diesel engine spares. At
impressive, including revenue which jumped
R1,75bn it was Invicta’s biggest acquisition yet.
72% over the past five years. Profit margins have
More foreign acquisitions will certainly follow.
been on an even steeper rising curve, driving a
For Invicta this may spell a period of indigestion
211% increase in headline EPS (HEPS) over the
before the next phase of its
five years — with the biggest
GENERAL INDUSTRIALS
growth story kicks in in
increase, 94,5%, coming in
earnest.
2013.
130
Also looming large when it
From a share-price
General industrials index
125
comes to acquisitive and
perspective, Howden
All share index
organic growth is Bidvest. Led
shareholders also have reason
120
by a master capital allocator,
to smile. Over five years its
115
CE Brian Joffe, Bidvest has
share price has increased
grown from an R8m cash shell
almost seven-fold — and with
110
in 1988 into a group generating
dividends added, including
105
annual revenue of R180bn and
two hefty special dividends in
100
spanning five continents.
2010 and 2012, total return
Focus has remained
was over 800%. Howden’s
95
steadfastly on trading, services
cash position at almost
J FMAMJ J A S OND J F MAM
2013
2014
and distribution businesses.
two-thirds of shareholders’
Source: INET BFA
Share prices based to 100
Over the past five years
funds indicates another

expansion

✥

GENERAL INDUSTRIALS

Trevor Samson

GENERAL INDUSTRIALS

an answer

As the local economy’s
stagnation and challenges
continue to affect growth
prospects

I

54

FINANCIAL MAIL • TOP COMPANIES • 2014

Arnold Goldstone

Bidvest’s growth pace has reflected extreme
economic conditions in many regions, limiting its
revenue and HEPS growth to an average of about
10%/year over the period. Summing up the
situation in the group’s 2013 annual report, Joffe
noted: “We operate in highly competitive
markets all over the world [where] there are no
easy wins and there’s no low-hanging fruit.” But
the global economic recovery is gaining traction,
a trend very much in Bidvest’s favour. This
reality has helped its share price double over the
past three years and boost its HEPS growth back
into the higher mid-teens.
Joffe’s acquisitive appetite also remains as
strong as ever. Since 2009 Bidvest has closed
nine material and numerous smaller bolt-on
acquisitions. The latest major buy, a controlling
stake in Adcock-Ingram in January, followed a
bitter battle with Chilean group CFR
Pharmaceuticals and reaffirmed Joffe as a
formidable dealmaker. Expect Africa to play a
growing role in Bidvest’s acquisition strategy. “In
the months ahead, expansion into Africa will
receive increased attention at Bidvest,” Joffe
emphasised in the 2013 annual report.
Remgro has also made a strong showing in
recent years, transitioning from a dull investment
holding company into one pursuing a far more
dynamic approach. The transition was set in
motion by Remgro’s former CE, the late Thys
Visser, following Remgro’s unbundling of its
stake in British American Tobacco (BAT) in 2008
and ably sustained by successor Jannie Durand

✥

since his appointment in May 2012.
As a mark of Remgro’s more dynamic
approach, about R7,4bn was pumped into
investments in the year to June 2013. These
included R1,4bn through Mediclinic’s rights issue
and R3,1bn through RCL Foods’ (formerly
Rainbow Chickens) rights issue.
The RCL rights issue also signalled Remgro’s
big ambitions in the sub-Saharan food industry.
Proceeds of the rights issue were used primarily
by RCL to acquire an 88% stake (now 100%) in
Foodcorp, which brought with it much-needed
diversification and annual revenue of over R7bn.
Further strengthening RCL as its food industry
kingpin, Remgro sold its 100% stake in one of
SA’s largest sugar producers, TSB Sugar to RCL in
late-2013 for R4bn. The deal added more than
R5bn to RCL’s revenue, taking its total revenue to
about R22bn.
Remgro’s new dynamism has been warmly
received by investors. Reflecting this, Remgro’s
share price’s discount to its intrinsic value has
narrowed markedly from 28% at the time of
BAT’s unbundling to well below 10%. The group’s
intrinsic value is also growing apace, rising by
34,2% in its year to June 2013 and by 13% in the
six months to December 2013. Shareholders have
been well rewarded by a doubling in its share
price over the past three years.
But for many general industrial and industrial
engineering companies, tough conditions, in
great measure instigated by SA’s economic
growth woes, are taking a toll.
As a sign of tough times, Barloworld’s strong
recovery from the depths it reached in 2010
slowed markedly in the six months to March
2014, with year-on-year revenue growth at only
5% and HEPS from continuing operations edging
up 9%. It was a far cry from the 175% HEPS rise
in the two years to August 2013.
Hudaco, which proved resilient even during
the great recession, has also faltered, its HEPS
falling 13% in its year to November 2013. Hitting
Hudaco hard were turmoil in SA’s mining sector
and stalling growth in the manufacturing sector,
which remains highly dependent on mining. The
two sectors combined account for two-thirds of
Hudaco’s revenue. Also under pressure was
Eqstra, which had its HEPS slump 25,4% in its
half-year to December 2013. Causing the damage
were strikes affecting its contract mining and
related plant rental business units.
Though Hudaco and Eqstra reflect the worst
of SA’s economic woes, they serve as a warning
of the increasing pressures that companies face
in extracting growth from the domestic
economy. It makes foreign expansion strategies
into Africa and elsewhere all the more important.
Stafford Thomas

FINANCIAL MAIL • TOP COMPANIES • 2014

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55

Financial Mail Page 56-57 -17/06/14 02:35:53 PM

Efficiency of logistics
questionable
Strong supply chains
will make SA
more competitive regionally
and globally

T

here was a time when manufacturing
companies used to develop a product
range, plan their distribution channels,
schedule marketing campaigns and
deliver the final packaged items to their
retailers themselves. It was a simple suppliermanaged supply chain, requiring little more from
logistics service providers than movement of
products from factory to distribution centre to
retail outlet. But over time, the scope of customer
needs has broadened significantly.
Today, logistics operations have become more
complex and producers are increasingly outsourcing the function to specialised operators to
improve the performance of a company’s warehousing, inventory management and distribution
network — and subsequently their competitive
advantage.
Logistics will play a pivotal role in making SA
more globally and regionally competitive. The
private sector appreciates the role supply chain
management (of which logistics is a major
constituent) plays as a creator of competitive
advantage.
In the latest supply chain foresight survey by
Barloworld Logistics, 55% of respondents ranked
“using supply chain as more of a competitive
advantage” as one of their top three strategic
business objectives.
Furthermore, 83% and 54% of respondents
ranked “growth and expansion into new
markets” and “introduce new products and
services into my business”, respectively, as
business objectives — indicating a keen drive
from SA freight industries to expand their
business.
However, the question of how competitive
and efficient the SA logistics industry really is
remains. In the most recent biennial report of the
World Bank where the logistics performance of
countries is determined through surveys and

56

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compared, the point is made very strongly that
“if service delivery is poor, good physical
connectivity is not enough”.
The logistics performance index (LPI) of SA
has decreased to 34 out of 160 countries (LPI
3,43) from 23 out of 155 countries (LPI 3,67) two
years ago. Not only is it the first time SA is not
positioned within the first 30 countries, it is also
the lowest position since 2007 when the World
Bank started these surveys.
“Both good service delivery in the logistics
environment and good infrastructure are under
pressure in the country. Attaining 34th position
out of 160 is still reasonably good, but the
indicators are all going in the wrong direction
and this should be a matter of concern,” says the
10th State of Logistics Survey by the Council for
Scientific & Industrial Research (CSIR).
The CSIR further says the performance and
growth of the SA logistics industry are both
inputs to and outflows from the performance
and growth of the local economy. The exchange
rate, inflation rate and interest rate directly affect
the cost performance of the industry. Other
macroeconomic issues such as the structure of
the SA economy, balance of payments, budget
deficits and the human resource problem affect
the economy as a whole, which influences the
demand for logistics services, it says.
Simultaneously, the performance of the
logistics industry, specifically the cost of logistics,
affects the global competitiveness of SA
industries. Logistics costs as a percentage of
transportable GDP have grown significantly over
the past four years, according to the CSIR. “A
deeper investigation of individual cost
components and cost drivers shows that the
increase in logistics costs is perhaps not so much
the result of deteriorating efficiency in the
industry but the disproportionate growth in cost
drivers — especially fuel.
“To change the trends in underlying cost
drivers or significantly mitigate their impact
requires more than just operational efficiency
enhancements; it requires bold steps in
addressing the ingrained issues that stifle the
economy as well as new directions in how
supply chains operate,” says the CSIR report.
Super Group’s outlook for the local economy
remains subdued given the negative GDP growth

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

TRANSPORT

reported for the first quarter of the year. This is
in addition to the bleak operating and trading
prospects in both the industrial and mining
industries, following a contraction in
manufacturing and production over the same
period. The implementation of Sanral’s e-toll
system is also expected to negatively affect all
areas of group operations and remains a concern
in terms of distribution costs and the knock-on
effect on GDP.
However, Super Group delivered solid results
for the six months to December. Headline
earnings and diluted HEPS grew 27% to R351m
and 117,1c respectively,
Super Group CE Peter Mountford argues that
the group’s earnings growth is commendable,
given the highly competitive trading environment and strenuous economic conditions
experienced by all industries in both SA and
Australia. “We believe that there are opportunities to expand our core businesses, and with
the Domestic Medium Term Note Programme
listed at the end of October 2013, it will allow the
group to diversify its sources of funding, optimise
its borrowing costs and facilitate its growth
strategy,” he says. “SG Fleet is in the process of
listing on the Australian Securities Exchange, we
will marginally increase our controlling interest
to approximately 50,7% in the listed entity.”
Fellow logistics giant Imperial believes the
group is well positioned to take advantage of
organic growth, which will be aided by acquisitions when opportunities arise. In the six months
to December, the company acquired a further
11% in Renault SA, thereby increasing its shareholding from 49%-60%. Imperial also entered
into an agreement to acquire a 53% interest in
Ecohealth, for a cash consideration of US$74m.
Ecohealth is a leading distributor of pharmaRobbie Tshabalala

TRANSPORT

Peter Mountford

✥

ceutical products in Nigeria with a meaningful
market share of the ethicals (branded products)
market. It has an excellent distribution network,
supplying pharmaceutical products to 4 200
hospitals, 8 000 pharmacies and 2 000 clinics.
Based in Lagos, Nigeria, the company also has
operations in Ghana and Dubai. Also in the
period under review, the group sold its tourism
division to Cullinan Holdings.
Imperial says the company’s balance sheet
remains strong despite significant organic and
acquisitive growth and share buy-backs in the
recent past. As a result, the group is well
positioned to take advantage of organic growth
and acquisition opportunities as they arise. “In
SA, we expect trading conditions in the logistics
industry to remain challenging, driven by a
sluggish economy. The division recently underwent a strategic consolidation process, which
positions it well to be more competitive and
cost-effective in a tough market,” it says.
“Further benefits from this process will be
realised in the second half of the 2014 financial
year. The fundamentals of the logistics industry
are good and given Imperial’s infrastructure,
network and expertise, it is ideally positioned to
capitalise on these growth opportunities and gain
more business in SA.”
Imperial also remains positive on prospects in
the rest of Africa and says that international
activity has normalised from a slowdown in
December. “We will continue to follow our
customers who are entering new markets.
Acquisitions will also be a growth driver.”
The company expects that trading conditions
in its other divisions will be tougher. “Overall,
given current market conditions, it will be
difficult to achieve growth in the 2014 financial
year as we expect our vehicle distribution
activities to be under continued pressure in the
second half of the financial year, while the
remainder of our Automotive value chain
together with Financial Services is expected to be
robust and our Logistics pillar is expected to
perform well.”
Similarly, smaller logistics player — the Value
Group — expects the difficult operating environment to persist in 2015 due to e-tolls, increased
fuel and labour costs, inflationary pressure and
rising interest rates. However, management has
said it remains committed to organic and
acquisitive growth strategies by leveraging off its
intellectual property, infrastructure, low gearing
and strong positive cash flows.
“Opportunities are being evaluated and
pursued actively in segments that will complement existing divisions and diversify and grow
new revenue streams both in SA and neighbouring countries.”
Ruan Jooste

FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

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57

Financial Mail Page 58 -13/06/14 05:33:54 PM

FOOD & BEVERAGES

SECTORS

✥

Emerging

Poland, Romania, China and India. In association
with French brewer Castel, it is represented in 44
out of the 54 countries in Africa.
According to the Bernstein Global Beer Guide 3rd
Edition from October 2013, the global beer market
in 2012 comprised 1,93bn hectolitres (hl) — 1 hl
equals 100l) — US$177bn of net revenue and
$35,2bn of earnings before interest and taxation
(Ebit). This implies an Ebit margin of 20%.
Bernstein analysts perceive global beer growth
to continue to be driven by emerging economies,
especially Latin America, Asia and Africa. The
“big four” global brewers — ABI, SABMiller,
Heineken and Carlsberg — account for 47% of
global beer volume, 49% of revenue and 60% of
Ebit. ABI accounts for 18% of global volume and
32% of Ebit, with SABMiller at 12% of volume and
14% of Ebit. Heineken is estimated to control 10%
of volume and 9% of Ebit, while Carlsberg has
6% of volume and 4% of Ebit.
These statistics illustrate how concentrated
the global beer industry has become in the past
couple of decades, the inevitable consequence of
the major acquisition drives that the big four and
other global brewers have been
involved in during this time.
his is a hybrid sector,
The African continent is served
comprising the brewers,
mainly by SABMiller/Castel,
distillers & vintners sector as
Heineken and Diageo (Guinness),
well as a couple of food
with ABI being conspicuous by its
subsectors. The sector is
absence. And because of its
dominated by SABMiller, the
oligopoly nature, African beer profit
second-largest company on the JSE
margins are very high by global
after BAT, with a market
standards. China, on the other hand,
capitalisation approaching
is the world’s biggest beer market by
R1 trillion. It is significantly larger, in
volume, but its profits are tiny, the
terms of market cap, than all of the
result of a highly fragmented
other companies in the food &
market. North America remains the
beverages sector combined.
global beer market’s largest profit
SABMiller is the world’s
Alan Clark
pool.
second-largest brewer behind the
SABMiller is undoubtedly
Brazilian-Belgian Anheuser-Busch
entering a new phase in its
Inbev (ABI), both in terms of volume
development, one of consolidation
brewed and market capitalisation.
of its profound and highly successful
But SABMiller has the most
acquisition programmes of recent years.
comprehensive footprint of any global brewer,
Tragically, the architect of those acquisitions,
having operations in 75 countries, mainly in
Graham Mackay, died in December 2013 from a
developing countries such as Colombia, Peru,
brain tumour. But the CEO’s baton was
TOP 5 FOOD & BEVERAGES
passed on to current incumbent Alan
Clark, who has demonstrated in a
Ranked by
Name
Net profit Total assets Market cap Equity funds
remarkably short period that he will be
net profit
Rm
Rm
Sep ’13
Rm
Rm
able to carry on the excellent work that
was initiated by Mackay. And veteran
1
SABMiller Plc
32 330,1
263 337,0
879 557,5
282 087,3
brewer Norman Adami signalled his
2
Tiger Brands
2 563,2
22 539,0
52 152,6
15 166,3
intention to retire from the group in
3
Tongaat Hulett
1 262,0
20 923,0
12 501,1
10 128,0
mid-2014. He is one of SABMiller’s
4
Illovo Sugar
1 147,1
12 226,0
12 902,0
6 564,4
longest serving and most successful
5
AVI
1 093,4
5 360,0
19 499,4
3 344,7
senior managers and will be sorely
Source: INET BFA
missed, having run both SAB in SA

markets
drive
growth

In a concentrated beer
industry that has
undertaken major
acquisitions recently

T

58

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FINANCIAL MAIL • TOP COMPANIES • 2014

Financial Mail Page 59 -13/06/14 02:30:53 PM

Financial Mail Page 60-61 -13/06/14 05:34:23 PM

FOOD & BEVERAGES

FOOD & BEVERAGES
about US$82m relating to its
(twice) as well as SABMiller’s
investment in Dangote Flour
operations in the Americas.
Beverages index
145
Food producers index
Mills (DFM) in Nigeria. DFM is
At the announcement of
140
All share index
135
likely to be a drag on Tiger’s
Adami’s retirement, it was also
130
earnings for some time to
announced that SAB and
125
come, though Nigeria’s
SABMiller Africa will be
120
favourable demographics
merged into a single entity
115
suggest that it will be a
under the stewardship of
110
105
successful investment when
Mark Bowman, who has
100
viewed in the longer term.
previously run SAB’s
95
Distell is one of SA’s
Coca-Cola operations in SA,
90
85
premier alcoholic beverage
SABMiller’s Polish operations
producers, with strong
and SABMiller Africa. In a
J FMAM J J A S O ND J F MAM
2013
2014
markets both in SA and
separate statement, SABMiller
Source: INET BFA
Share prices based to 100
globally. Spirits brands include
indicated that it will consider
Klipdrift brandy, Bisquit
the disposal of its holding in
cognac and Three Ships whisky. Its most famous
hotel and gaming operation Tsogo Sun.
liqueur is Amarula Cream and it produces a large
During 2013, the debate surrounding whether
array of well-known wines. The group also owns
or not SABMiller will become a target for ABI
Burn, Stewart Distillers in Scotland.
flared back into life. If ever consummated, such a
From an investment perspective, Distell
deal (prosaically referred to as “Megabrew”)
suffers from a very poor shareholder spread,
would create one of, if not the world’s largest
with Remgro, Capevin and SABMiller each
consumer companies. But most analysts believe
holding 29% of the company’s equity.
that Megabrew is some years away at best.
Pioneer Foods has had a torrid time in the
Tiger Brands is SA’s largest listed food
past few years, as it bore the brunt of the
company and has a long and illustrious heritage
competition commission’s probe into food price
dating back to the late 19th century. In more
fixing. But that is now a thing of the past and the
recent times it has become obvious that it is
group is once again demonstrating the power of
starting to outgrow its home base and in this
its brands. For the six months to end-March 2014,
regard has been making acquisitions on the rest
its revenue rose by 9%, while adjusted operating
of the African continent, with patchy results. It
profit rose by 43%. Adjusted headline earnings
has direct and indirect interests in Kenya,
per share for continuing operations rose by 41%
Zimbabwe, Cameroon and Nigeria. In May 2014,
to 325c.
the group announced that it was writing off
Staff writer

TRAVEL & LEISURE

All-round impressive
performance
FAMOUS BRANDS TURNED in another strong
performance in the year to end-February 2014.
This was its 13th consecutive year of record
turnover and profits, and the group managed to
surpass the 20% operating profit margin figure
for the first time ever.
In a year of superlatives, headline earnings
per share rose by 20%, the share price broke
through the R100/share mark and the market
capitalisation exceeded R10bn. The company is
debt-free and the outlet network now comprises
2 378 stores in SA, the UK, India, Dubai and 14
countries in the rest of Africa.
Tsogo Sun experienced mixed fortunes
during the year, with its gaming operations
treading water, while its hotels experienced

60

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improving occupancy levels. But at the lower
end of the spectrum, its Sun1 product
(rebranded from the previous Formule 1)
struggled somewhat as its transient commercial
base of customers travelled less. In May 2014, it
was announced that Tsogo Sun had acquired
Grand Parade’s 40% holding in Sunwest.
SABMiller may well be a seller of its 39%
holding in Tsogo Sun during 2014.
Taste Holdings announced in May 2014 that
it had acquired the master franchise licence for
US pizza multinational chain Domino’s Pizza for
SA and the surrounding countries. But at the
time of going to print, it was revealed that this
association had been challenged in the courts.
City Lodge’s average occupancy levels
improved and the group continued to grow into
the extra capacity it created in anticipation of
the 2010 soccer World Cup. Like Tsogo Sun, its
lower-end customers travelled far less. City
Lodge bought out its joint venture partners in
Kenya during 2013/2014. ■

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

HOUSEHOLD GOODS

Keeping
the fire

burning
Innovation and acquisitions
keep players in the game

T

✥

2014 were pedestrian, though the market
obviously liked the 40% increase in the dividend
that was paid out. The longer-term outlook seems
bright, particularly if the global economy maintains its current growth outlook and the Chinese
economy manages to grow in the 7%-7,5% range
in the medium term. In a recent report on the
outlook for jewellery, consulting firm McKinsey
noted that branded jewellery as a percentage of
the total global market could double in size by
2020. This is good news for Richemont, as it has
the largest share of the branded jewellery market
via its Cartier, Van Cleef and Piaget brands.
Steinhoff has now become primarily a European play, what with the increasing importance
of Conforama and recent acquisitions such as
Kika-Leiner. JD Group and Kap are the main SA
entities, which are unlikely to account for more
than 20% of profits in financial 2015. JD Group’s
last set of results to December 2013 were very
poor, with the company having to make larger
provisions for bad debts than previously
expected. Steinhoff has made an offer to JD
Group minorities to buy them out. There has
been speculation that Steinhoff may transfer its
main listing to Europe, which would leave its JSE
listing as a secondary one.
Though a tiny firm with a market cap of about
R400m, Nu-World Holdings houses an
impressive list of 22 international and local
consumer electrical and electronic brands,
including JVC and Nu-Tec.
Seardel has had a torrid
time
in recent years, but there
200
are nascent signs that it may
190
180
be turning around, after an
170
extensive transformation of its
160
businesses. During 2013, the
150
140
group sold its apparel
130
manufacturing interests to an
120
associate company of clothing
110
and textile union Sactwu. It
100
90
also acquired a 63,9% stake in
80
Sabido, the holding company
70
of e.tv and Yfm, from its
D J FMAM
2014
parent company HCI.
Share prices based to 100
Staff writer

SECTORS

SECTORS

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his is a strange collection of disparate
companies, ranging from cigarette and
tobacco producers (BAT) — the world’s
second-largest tobacco firm — through
small electronic suppliers (Nu-World),
textile manufacturers (Seardel), furniture
manufacturer (Steinhoff) and all the way up to
one of the world’s premier luxury goods makers,
Compagnie Financière Richemont (Richemont).
BAT is the largest JSE-listed company in terms
of market cap. In terms of net profit it is more
than twice the size of the personal and household goods sector combined. Though it’s experiencing declining volumes
STEINHOFF
overall, it enjoys good growth
in most of the developing
Steinhoff
countries in which it operates.
All share index
And like all tobacco firms, it is
showing remarkable resilience
in a global industry that continues to decline, albeit at a
slow pace.
In its first quarter interim
management statement
released in April 2014, it
guided to high single-digit
earnings growth in constant
J F MAM J J A S ON
2013
currency terms. GeograSource: INET BFA
phically, Asian volume growth
remains robust at over 4%, but
TOP 4 PERSONAL & HOUSEHOLD GOODS
European volumes declined by almost 8% in
the quarter. BAT’s so-called “global drive
Ranked by
Name
Net profit Total assets Market cap Equity funds
brands” — Dunhill, Kent, Lucky Strike, Pall
net profit
Rm
Rm
Aug ’13
Rm
Rm
Mall and Rothmans — continued their
traditionally strong performance, with
1
Compagnie Fin Richemont
24 396,9
155 194,0
527 115,6
110 841,5
volumes rising by 6,3% in the first quarter.
2
Steinhoff
I
n
te
r
n
a
t
i
o
n
a
l
7
036
,0
103
2
1
1
,0
108
36
4,
8
64 266,0
BAT’s innovation continues with its focus
Holdings
on so-called “e-cigarettes” and low-heat
3
Nu-World Holdings
83,0
822,0
396,3
654,9
tobacco products that deliver a cigarette
4
Seardel Investment Corp
19,0
2 469,0
1 215,5
1 426,9
flavor but with less tar and smoke.
Source: INET BFA
Richemont’s full year results to end-March
FINANCIAL MAIL • TOP COMPANIES • 2014

61

Financial Mail Page 62-63 -13/06/14 06:01:41 PM

Financial Mail Page 64-65 -17/06/14 02:37:11 PM

Offshore

✥

22-bed ophthalmology hospital near Krakow;
and 23 medical centres, which provide outpatient
care and diagnostic services, in major cities
across the country.
Life CE Andre Meyer, who took over in April
when Michael Flemming retired, said at the
company’s interim results in March that the
health-care sector in Poland allows private
entities to provide treatment to state-funded
patients. This will be boosted by reforms in the
private health insurance sector, he said, following
the introduction of mandatory health insurance
for all Polish workers.
Meyer added that Life Healthcare “will aim to
increase its presence in the fragmented Polish
private hospital market through select
acquisitions, in partnership with Medicover,
which is the second-biggest health insurer in
Poland”. Most people in the Eastern European
country use public hospitals. The private sector,
said Meyer, accounts for about 16% of healthcare services. But the Polish government is
privatising many hospitals, opening up opportunities for private investment.
Life’s entry into Poland follows its venture
ocal listed hospital groups are venturing
into India through the acquisition of Max Healthoffshore to look for bottom-line growth
care. For now the group still operates mainly in
as the SA private health-care scene for
SA and has yet to make a profit from its Indian
the rising middle-class becomes
business. It delivered a strong set of results for
increasingly saturated. Private hospitals
the interim period back home, supported by a
are also facing more competition and limitations
growing demand for its services. This led to a
on what they can charge, as health minister
total of 142 (2013: 80) acute care hospital beds
Aaron Motsoaledi continues to push for broadbeing added during the period, bringing the total
ening access to health care.
number of beds to 8 430.
The inclusion of lower-income and unHospital paid patient days (PPDs) increased by
employed individuals into the system via the
2,7%, limited by the aforementioned increase in
National Health Insurance does not seem like a
hospital beds only contributing for the last two
priority in the near term. The inquiry launched
months of the six-month period. The group's
by the competition commission in January is,
occupancy for the period increased by 2,3% to
however, expected to guide government on the
70,6%, the highest level since the company’s
kind of regulation that needs to be instituted.
listing in 2010.
Life Healthcare will return to Europe, which it
Group revenue increased by 10% to R6,2bn,
ditched six years ago in favour of developing
driven mainly by the hospital division growing
markets, by acquiring 80% of Scanmed Multirevenue by 10,5% to R5,77bn. Both normalised
medis, a large private health-care company in
earnings and normalised EPS increased by 16%
Poland, for R427m. The Polish firm has a 130-bed
to R858m and 82c/share respectively. EPS surged
multidisciplinary acute hospital in Krakow; a
to 174c from 72c in the previous year, largely
TOP 5 HEALTH & PHARMACEUTICALS
due to a R955m net-of-tax profit realised on
Ranked by
Name
Net profit Total assets Market cap Equity funds the disposal of Joint Medical Holdings during
the period.
net profit
Rm
Rm
Sep ’13
Rm
Rm
Life was the first SA hospital group to
venture into the global market, through a
joint venture in the UK in 2004. The group,
1
Aspen Pharmacare Holdings 3 952,6
20 035,0
128 363,0
22 310,3
then called Afrox Healthcare, was contracted
2
Netcare
2 024,0
20 042,0
34 458,3
7 767,0
to run surgical centres in the UK to help
3
Life Healthcare Group
1 845,0
8 792,0
40 135,5
5 072,0
government reduce waiting lists. It divested
Holdings
from the UK in 2008.
4
Mediclinic International
1 780,0
49 207,0
61 881,2
22 862,0
Netcare followed suit in 2010 with the
5
Adcock Ingram Holdings
642,3
5 368,0
10 363,0
3 760,5
acquisition of a 50,1% stake in the UK’s
Source: INET BFA

prospects
look
healthy

Saturation in the SA scene
and competition are muting
private health-care growth

L

64

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

HEALTH & PHARMACEUTICALS

Gallo Images

HEALTH & PHARMACEUTICALS

✥

in SA and Namibia. Mediclinic Corp also
has interests in Switzerland, where it owns
the largest private hospital group,
Hirslanden, as well as the Middle East,
where it holds the controlling share in
Emirates Healthcare, a private health-care
group in the UAE.
In April the UK competition
commission delivered its final report on
the investigation into the expected lack of
effectiveness of the private health-care
market. This report concluded that insured
Netcare, like its SA counterparts,
patients did not suffer from an adverse
has ventured into the global market
effect on competition outside of central
London, and that Netcare’s BMI Opco
would not be required to divest of any hospitals.
General Healthcare Group. Mediclinic bought
The report also included certain behavioural and
into the United Arab Emirates (UAE) in 2006 and,
information-sharing remedies that private
the following year, into Switzerland. The group’s
providers generally support. The order
numbers for the six months to March were
prescribing the implementation of these remedies
driven by a good trading performance from the
is expected in October and they are not expected
SA operations and aided by a weakening of the
to have a material adverse impact on BMI.
rand relative to the pound.
In Switzerland, Mediclinic has had to deal
The UK operations delivered a credible
with government’s introduction of fixed fees for
trading performance, but profitability was
in-patient services, based on the country’s new
affected negatively by costs related to a
Diagnosis Related Grouping system. Talks now
competition commission private health-care
involve the regulation of specialised services,
market investigation in the country.
with plans to exclude some hospitals from
Revenue grew 17% to R15,4bn, of which
performing these functions.
currency conversion
HEALTH
Investments into the
accounted for 11%. Adjusted
hospital industry are normally
headline earnings grew by
Health care equipment
& services index
lower-risk due to the high
21% to R1,01bn, and adjusted
Pharmaceutical &
barriers to entry. Life HealthHEPS increased by 20% to
biotechnology index
care, Netcare and Mediclinic
75c/share from 63c, marginally
All share index
155
are quality firms boasting high
contained by a 1% increase in
150
operating margins, a good
the weighted average number
140
return on equity and consisof shares in issue. Diluted EPS,
tent strong cash generation.
however, fell 77% to 68,9c due
130
Analysts, however, believe
to a one-off profit of R3,27bn
120
that above average growth in
on selling its GHG property
earnings off this high base is
businesses.
110
going to be difficult. To this
Mediclinic delivered a
100
end, the expansion into other
stellar set of results for the
territories and an
year to March due to an
90
improvement in efficiencies
increase in the number of
J F M AM J J A S O N D J F M A M
2013
2014
and occupancy rates offshore
patients treated and the effect
Source: INET BFA
Share prices based to 100
may prove essential to sustain
of a weak rand exchange rate
earnings growth.
against the Swiss franc and
In addition, regulatory pressure to provide
UAE dirham in translation of foreign operations,
greater access and reduce pricing is inevitable
which now account for more than 60% of
and may have an effect on margins. Demand for
revenue and operations.
health-care services in the hospital groups’
Normalised revenue increased by 25% to
respective markets are expected to increase due
R30bn, with normalised diluted HEPS increasing
to a higher disease burden, particularly in SA,
by 46% to 369c/share, somewhat limited by an
and an ageing population in the UK.
8% increase in the weighted average number of
Nevertheless, the private hospital operation in
shares issued.
SA remains of good quality and analysts
Mediclinic Southern Africa has nearly 7 130
generally recommend that investors hold onto
beds in more than 52 multidisciplinary hospitals
their shares for now.
Ruan Jooste
FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

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65

Financial Mail Page 66-67 -13/06/14 05:35:31 PM

RETAIL

✥

just gaining momentum. In his longerterm sights are 600 or more stores in Nigeria
alone. Angola also features high in his growth
objectives.
Success in Africa on the scale envisioned by
Basson has the potential to make Shoprite an
undisputed heavyweight champion of SA retail.
But it will not happen overnight.
It leaves the door open for other companies to
stake their claim to being the best of SA’s retail
best. There are two standout contenders: Pick n
Pay and Massmart, both anything but winners in
recent years.
Making it to the second position this year is
Woolworths, which has excelled over the past
three years in driving the metrics that count:
sales and market share growth as well as
operating margins. Crowning Woolworths’
achievements is a 59% return on equity, the
highest of any SA retailer.
The Woolworths success story is also one of
transforming a tired, decades-old business model
into one that’s ahead of the curve in the
fast-evolving clothing and food retail sectors.
etail is a tough, highly competitive
Credit for kick-starting transformation goes to
game in SA, with many retailers having
Andrew Jennings, retail director between 2007
business models that are capable of
and 2010. But it is Ian Moir, Woolworths’ CE
holding their own against the world’s
since November 2010, who has taken the retailer
best. This makes for a close race in
to new heights of profitability and scale.
which the title of top retail company is
Fresh from restoring Woolworths’ oncehard-won.
troubled Australian venture Country Road to
The top retail company title goes to Shoprite,
good health, Moir homed in on slashing costs by
with a Heps growth record over two decades
improving efficiency, ramping
matching Mr Price’s. But for
RETAILERS
up margins and growing
Shoprite the biggest factor
market share. A superbly
working against it is its own
Food & drug retailers index
125
General retailers index
executed strategy delivered
success, reflected in a 34%
120
All share index
results rapidly.
share of SA’s formal food retail
115
In Woolworths’ three
market. In an SA food sector
110
financial years to June 2013 its
where competition is
105
headline EPS rocketed by
ratcheting up fast, defending
100
110% off sales, which grew
its market share is now
95
51% to R35bn. Since Moir’s
arguably its biggest challenge.
90
appointment, Woolworths’
It makes Shoprite’s strategy
85
share price has trebled.
in Africa all the more
80
Adding to Woolworths’
important. Shoprite CE
73
achievement
is the execution
Whitey Basson puts it simply:
J FMAM J J A S ON D J FMAM
of transformation simul“Africa is our future growth
2013
2014
Source: INET BFA
Share prices based to 100
taneously across two different
driver.”
retail sectors, clothing and
Shoprite has a big firstfood. In Woolworths’ clothing division radical
mover advantage in Africa, having taken its first
streamlining of the supply chain played the key
tentative steps outside SA 25 years ago. It has
role in driving its operating margin from 10,4% to
been a long learning curve now yielding
18,5% in the three financial years to June 2013. A
significant value.
big focus is also on offering customers what they
African operations spanning 162 supermarkets
want at the right price. “We are very conscious
in 15 countries contributed 16% of sales and
about offering value across all pricing points,”
12,3% of operating profit to the group’s core
says Moir.
supermarket results in the six months to
Ambitiously, Moir looks to increase the R11bn
December.
annual sales clothing division’s operating margin
For Basson this represents a strategy that is

defending
the market
share

In a sector where
competition is ratcheting up
fast, Shoprite faces a major
challenge

R

66

FINANCIAL MAIL • TOP COMPANIES • 2014

RETAIL

to 19% and trading space by 18% by 2016.
Also crucial to Woolworths’ transformation
was the de-risking of its food division, which had
long been restricted by a limited house brand
product range and, more seriously, plagued by an
image of being overpriced. The latter cost
Woolworths market share during the 2006-2009
retail cycle slump.
“The problem was easy to fix,” says Moir. “We
gave our customers what they wanted: better
pricing and a wider product range.” The result
shows in a rapid rise in food sales, which
reached R19bn in the six months to December
2013, up 55% from R12,2bn in the year to June
2010.
Beyond driving food sales growth above the
market average since September 2011,
Woolworths’ food division excelled by lifting its
operating margin from 3,6% of sales to 6,1% over
the three financial years to June 2013. It is a
margin second only in SA to Shoprite’s 6,35%.
To drive Woolworths’ food retail
growth, Moir is looking primarily to
expanding existing stores and new store
openings. Again ambitiously, his target is
to expand trading space by 24% and lift
operating margin to 7% by 2016.
Making Woolworths’ transformation
all the more impressive has been a
simultaneous strategy in Australia, a
country in which success has eluded
many other SA retailers, most notably
Truworths and Pick n Pay. Key to Moir’s
strategy to consolidate Country Road’s
turnaround was achieving scale in
Australia’s highly fragmented speciality
apparel retail sector.
The opportunity presented itself in
then private equity owned Witchery
Group, which Woolworths acquired in
August 2012 for A$172m (then R1,5bn).
The deal, which included Witchery’s
luxury accessory goods unit Mimco,
boosted Country Road’s sales by
two-thirds and rocketed it into second
position in its market. Country Road now
contributes 17% of Woolworths’ profit.
Australia is set to play a far bigger role
in Woolworths’ future. Moir has in his
sights beleaguered Australian department
store group David Jones (DJ), now subject
to an A$2,1bn (R22,4bn) cash bid by
Woolworths.
By far the biggest acquisition in
Woolworths’ history, the deal weighs in
at 40% of its market capitalisation. Based
on Woolworths’ 2013 annual results, the
deal would boost its revenue by 35% to
R51bn, of which 43% would be derived in

✥

Australia.
Moir is confident the transformation of
Woolworths in SA will be replicated at DJ. “There
is a huge amount we can achieve without doing
any more than we did in SA,” says Moir.
Strategies to boost DJ’s dismal 3,3% operating
margin will include upping highly profitable
private label brands from 3% to 20% of sales, he
says. On a target of adding A$130m to DJ’s
earnings through synergies in five years, Moir
says: “We will do more in less time.”
But acquisitions, especially on the scale of DJ,
come with no guarantees. Any slip and waiting
in the wings to grab that second position from
Woolworths are a host of rivals.
Not least is Mr Price, ranked top retailer and
third overall in the 2013 Top Companies report.
And for good reason. Mr Price comes with a
second-to-none long-term track record,
including delivering average HEPS growth of just
on 22% since its listing in 1990.

FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

Priority is

✥

Trevor Samson

✥

Ian Moir
67

Financial Mail Page 68-69 -13/06/14 05:36:02 PM

68

✥

It is a growth pace Mr Price sustained in its
sales rise and, more pertinently, cost control that
year to March 2014 in the face of stalling
boosted operating margin from 1,3% to 1,6%, the
consumer spending growth. At work for Mr Price
first rise in five years.
is a primarily cash-based business model
Brasher gives little away. “We made the first
focused on offering fashion at reasonable prices.
step in the right direction by stabilising the
Also working in Mr Price’s favour is a steep
business,” he told the Financial Mail in April. “But
rise in apparel prices. “Our average product price
the hard work has now begun in earnest.”
is far lower than our competitors’ and rising
Massmart has also dished up disappointment
prices widen the value gap for us,” the retailer’s
in lashings since its Heps peaked in 2009. But the
chief financial officer Mark
TOP 10 RETAIL
Blair noted in a recent
interview with the Financial
Ranked by
Name
Net profit Total assets Market cap Equity funds
Mail.
net profit
Rm
Rm
Sep ’13
Rm
Rm
For Pick n Pay the prize
would be to re-emerge as a
food sector market leader. Its
1
Shoprite Holdings
3 818,7
31 850,0
90 836,3
13 805,3
hefty historic 43 p:e suggests
2
Woolworths Holdings
2 703,0
9 025,0
62 152,3
4 012,0
the market believes it will.
3
Truworths International
2 341,0
6 989,0
32 535,3
5 470,0
Achieving success hinges
4
The Foschini Group
1 715,5
14 961,0
23 787,8
6 237,0
heavily on the ability of
5
Massmart Holdings
1 669,5
19 659,0
29 852,6
3 783,6
6
Mr Price Group
1 527,0
4 658,0
39 538,9
2 486,0
Richard Brasher, Pick n Pay CE
7
The Spar Group
1 195,2
9 370,0
21 050,2
2 624,3
since March 2013 and former
8
Lewis Group
897,9
7 249,0
5 687,4
4 716,3
Tesco UK boss. It is a case of so
9
JD Group
862,0
19 200,0
6 215,1
9 096,0
far so good. In the 52 weeks to
10
Pick n Pay Stores
652,7
11 898,0
24 788,5
1 910,3
March 2 the retailer’s HEPS
Source: INET BFA
lifted 43%, thanks to a 7,6%

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

RETAIL

past five years was a period of huge transition.
Taking its toll was a R5bn expansion programme
that included a complete supply chain revamp
and entry into food retail. Adding no little
pressure was a lengthy and complex integration
with Walmart.
The heavy lifting is over and the benefits are
about to “kick in”, Grant Pattison told the
Financial Mail just prior to stepping down as
Massmart CE in June. From here on, he believes,
keys to Massmart’s success will be “discipline
and operational focus”, challenges its new CE,
Guy Hayward — former COO and a 14-year
Massmart veteran — is eminently suited to
address.
It all makes for an SA retail scene that is as
competitive as it gets. And while many retailers
may not be winners of the SA top retail company
title, they are winners in their own right.
Among smaller caps Italtile is a standout,
having beaten the odds in the building sector to
deliver a 57% rise in Heps over the past three
years.
Clicks Group is another standout retailer,
having honed its business model to deliver solid
earnings, dividend growth and robust cash flow

✥

Business Day

RETAIL

SECTORS

SECTORS

✥

Mark Blair

in good and bad times. Its reward by the market
is a record high share price, an honour shared
only by Woolworths and, notably, Pick n Pay.
Stafford Thomas

FINANCIAL MAIL • TOP COMPANIES • 2014

69

Financial Mail Page 70-71 -13/06/14 05:36:23 PM

MEDIA

✥

The effect of

restructure
to stay afloat

user patterns

given the substantial value contribution to the
Naspers share price.
Naspers’ rivals Times Media Group (TMG), the
publisher of the Financial Mail, and Caxton are
also venturing into other media areas. TMG is
diversifying into radio through the acquisitions of
majority stakes in two regional stations in
KwaZulu Natal and Mpumalanga. It has also
expanded into other territories in East and West
Africa, with acquisitions of companies that give
the group access to radio, TV and newspapers.
TMG has undergone significant restructuring,
with disposal of its retail assets such as Nu Metro
and Exclusive Books. The disposal has helped the
company to substantially reduce its debt, which
was raised to buy out the minority shareholders
in the company then known as Avusa.
edia giant Naspers continues to be
Davids points out that the share price
the best performer in the listed
increased by 50% after the reorganisation, which
media sector. Late last year its share
was led by Blackstar, and the earnings growth
price hit the R1 000 mark, primarily
profile of the business has been enhanced due to
due to the meteoric rise in the
the restructuring. “We have been impressed and
Tencent share price. Naspers owns a 34% stake in
pleasantly surprised at the speed and extent of
this Chinese firm, which makes up 95% of its
the turnaround, and we are encouraged by the
value. Naspers is therefore closely correlated
recent initiatives in radio,” says Davids.
with the share movement of Tencent.
Caxton, the owner of a number of magazines
Naspers has diversified its business from print
and a slew of community newspapers,
and pay-TV and now makes most of its money
experienced a price spike to R24/share in
from its Internet businesses in Russia, Brazil and
November last year, following the announcement
China. It is eyeing e-commerce (online shopping)
of a takeout of Element One, but has since
as a new growth area.
languished below R16, says
Kagiso Asset Management
Davids. The company also
head of research Abdul Davids MEDIA
reported a disappointing 7%
says Naspers’ substantial
240
Media index
drop in half-year earnings.
investment in e-commerce
All share index
220
Not to be left behind,
will be a drag on its earnings
Caxton has apparently
for the next few years. But
200
developed a digital strategy.
e-commerce could be a strong
180
Speculation is that it may use
value and earnings driver for
160
its online business news
the company in the future.
140
subsidiary Moneyweb in
“Naspers has invested the
certain areas. However, the
most in its online platforms
120
existing online platforms of
and though revenue growth
100
other media companies are
has been strong, profitability is
90
not necessarily yielding
still some way off,” he says. He
J FMAM J J A S ON D J FMAM
2013
2014
results. TMG does not report
says investors need to take a
Source: INET BFA
Share prices based to 100
its online platforms as a
view on Tencent’s valuation,
separate division, so “it is
TOP 5 MEDIA
difficult to gauge the profitability of its online
Name
Net profit Total assets Market cap Equity funds initiatives”, says Davids.
He says though it is a strategic move to go
Rm
Rm
June ’13
Rm
Rm
digital, a focused print media business like
Caxton, with modern printing presses as well as
“economies of scale and cost-conscious
Naspers
9 923,0
76 350,0
483 049,8
52 813,0
management can be successful and profitable”.
Caxton CTP Publishers &
514,1
6 675,0
6 674,7
5 580,2
Generally, print media companies are
Printers
battling with falling readership and newspaper
Times Media Group
194,0
2 606,0
2 732,2
1 046,0
sales. The profitable route forward is surely to
African Media Entertainment 37,5
193,0
683,8
131,8
Moneyweb Holdings
2,0
31,0
37,7
27,9
use social media to augment and support other
Source: INET BFA
media platforms.
Thabiso Mochiko

M

1
2
3
4
5

70

TELECOMMUNICATIONS

Diversify,

Firms find alternative ways
to augment revenue

Ranked by
net profit

✥

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

Competition has intensified, with MTN taking a
knock in SA compared to Vodacom. Though the
reduction in termination rates was expected,
analysts are concerned about the future
strategies of the mobile network industry.
The reduction led to a share price decline for
both major companies, but they soon regained
lost ground due to new price cuts. But, in terms
of active subscribers, MTN lost close to 1m subscribers because it discontinued inactive SIM
cards. However, because of its 79c permanent call
tariff, the market is confident that MTN will
regain its lost customers.
The introduction of affordable smartphones,
according to a study by Frost & Sullivan, will
improve subscriber growth and data usage. The
research firm advises SA telecom operators to
review their data tariffs against emerging-market
trends. Moreover, in SA the subscriber base for
smartphones is likely to exceed 50% by 2017.
Mobile devices are also quickly becoming the
ressure to cut costs and maintain market
preferred platform for Internet browsing. To
share, in addition to making profits for
counter these changes, MTN and Vodacom need
shareholders of mobile network operto promote and encourage consumers to shift to
ators MTN and Vodacom, has begun to
data-heavy smart devices and technologies,
tell on smaller companies. News of the
while providing a spectrum of
closure of Nashua Mobile, a
TELECOMS
more affordable data bundles
subsidiary of listed firm
and plans, says Lakshmi
Reunert, did not come as a
125
Telecommunications index
Narayanan from Frost &
surprise. As mobile
All share index
120
Sullivan Africa Practice.
termination rates began
115
Meanwhile, Telkom had a
declining, pressure grew on
stellar performance in its
MTN, Vodacom and Cell C to
110
share price since CEO Sipho
reduce retail prices and costs.
105
Maseko took over in April
Mobile termination rates are
100
2013. It is in its first year of a
fees that operators pay to
95
turnaround programme and so
carry each other’s calls. With
90
far it seems investors are
steadily decreasing voice
pleased with what the
services revenues, mobile
85
management is communicaoperators are looking for ways
J FMAM J J A S OND J FMAM
2013
2014
ting to them. The share price
to reduce operating costs.
Source: INET BFA
Share prices based to 100
has more than doubled to
Nashua Mobile’s demise
beyond R30 since April last
has highlighted that it has
year. But pressure is mounting on Maseko and
become increasingly difficult to differentiate
his team to return the firm to profitability. At
offerings and remain relevant. Nashua Mobile
end-May Telkom announced a proposed takeand its rival Altech Autopage operated as middle
over of Business Connexion, at which the share
men for mobile operators. Altech says there are
price of the former dropped by 2% and the
no plans to sell Autopage. Instead its product
latter’s rose by 6%.
offering will be extended.
Thabiso Mochiko
Over the past four years, there has
TOP 5 TELECOMS
been fiercer competition in the sector.
MTN and Vodacom are experiencing
Ranked by
Name
Net profit Total assets Market cap Equity funds
decreased average revenue per user
net profit
Rm
Rm
Mth year
Rm
Rm
on voice-based services. This is due to
cheaper voice tariffs offered by
1
MTN Group
24 911,0
145 456,0
403 555,7
86 989,0
competitors and a shift in end-user
2
Vodacom Group
13 892,0
49 972,0
193 419,1
15 142,0
trends.
3
Telkom SA
522,0
38 990,0
17 524,4
17 827,0
Data-based services such as social
4
Blue Label Telecoms
485,8
4 992,0
5 868,2
3 083,4
media platforms have increased the
5
Telemasters Holdings
0,9
41,0
57,5
26,813
demand for mobile data within SA.
Source: INET BFA

changing

SECTORS

SECTORS

✥

But there is room for
providers to introduce
strategies that will ensure
sustainability

P

FINANCIAL MAIL • TOP COMPANIES • 2014

71

Financial Mail Page 72-73 -13/06/14 05:36:39 PM

✥

BANKS

✥

diversification
Despite enduring the worst,
it’s mixed fortunes for the
local players

T

he big SA banks delivered a solid
performance in 2013. This was despite
predictions that the banking industry
would be under threat from a growing
global asset management industry that
could overtake banks’ asset lending values at
some future point.
The first signs of this probable trend emerged
in the first quarter of 2014, as global banks
struggled to show growth. US bank earnings
disappointed due to pressure on trading income.
And European banks were also under pressure,
with Barclays announcing 19 000 job cuts, mainly
at its investment banking division. HSBC
delivered lower earnings growth.
Some analysts have ventured that the boom
years for global banks since 2009 could be over.
But over the short term, local banks — together
with other emerging market banks — are not
expected to lose their key interlocutor role
between lenders and borrowers. The asset

Business Day

Sizwe Nxasana

72

management industry symbolises rising wealth
and income in developed countries, with banks
in an emerging market context still expected to
play an important role.
But it is not going to be easy for banks. The
surge in unsecured and mortgage lending before
2008 left the big four — Absa (now Barclays
Africa), First National Bank (FNB), Nedbank and
Standard Bank — with a huge bad debt headache
from which they recovered only recently. More
circumspection in lending has since become the
norm, leading to questions as to whether banks
are really playing their proper role as wealth
creators to the middle and lower classes.
High executive remuneration relative to
performance, stubbornly high fees and
commissions on loans, as well as excessive
capital retention remain controversial issues
affecting the banking sector. However, banks
have been improving their market rating, with
the banking index hitting new highs regularly
since the beginning of 2014.
Local banks have certainly become more
attractive investment opportunities since
reducing bad debts, resuming quality lending and
upping returns on equity (ROE), a key yardstick
for global investors. They also remain major
money-spinners, delivering strong combined
headline earnings of R27,6bn in 2013.
Over a longer-term perspective, FirstRand,
with Sizwe Nxasana as CE, has proven to be the
best investment, with an internal rate of return
(IRR) of 34,37% over the past five years. It is still
behind the 48,12% recorded by Capitec. But
compared with the other big banks, FirstRand
has pulled ahead. Nedbank has been the other
top performer over the period, growing by
25,92%, followed by Standard Bank with 15,26%.
Barclays Africa came in last with 14,2%.
FirstRand remains a quality outfit. Its average
ROE of 23,4% remains the best of the big four. At
0,77% it has the lowest credit loss ratio, and at
52,5% the lowest cost-to-income ratio. It is also
the most capital-flush, with a tier 1 capital
adequacy ratio of 14,8%, compared to 13,2% at
Standard, 12,5% at Nedbank and 11,9% at Barclays
Africa.
FirstRand’s success recipe rests on the
predominance of its FNB franchise, which under
the leadership of Michael Jordaan made
concerted and sharply innovative efforts to grow
customers with digital products, reducing costs.

FINANCIAL MAIL • TOP COMPANIES • 2014

BANKS

Its paperless branches may have frustrated some
older customers, but it remains a winning
strategy for the group. It is a strategy that is set to
be taken further under the stewardship of new
CEO Jacques Celliers.
Complementing FNB has been the WesBank
franchise, the clear leader in the motor financing
market, as well as Rand Merchant Bank (RMB).
With the life insurance interests removed from
the FirstRand structure three years ago, an
investment in the pure FirstRand banking group
has rewarded shareholders handsomely. This
was underpinned by solid results, with FirstRand
improving normalised earnings for the six
months to end-December by 20% to R8,7bn.
FirstRand has proven that without judicious
lending earnings cannot grow. It grew net
interest income (NII) by 20% to end-December,
thanks to new business at FNB and WesBank,
with RMB continuing to grow its core corporate
lending bank strongly.
By sporting the highest noninterest revenue
(NIR) ratio, the group could
BANKS
focus less on onerous fee and
commission income growth
FirstRand
by increasing NIR by a lesser
Nedbank
8% compared to that earned
Standard Bank
on NII. Its strong reduction in
Barclays Africa
bad debts makes FirstRand an
attractive investment, as
income growth can now be
reflected exclusively in
earnings without having to
include high impairments.
In many ways Nedbank has
become a mirror of
J FMAM J J A S
2013
FirstRand’s success recipe. In
Source: INET BFA
the past it was mainly a
corporate and business bank,
with retail trailing behind and being a less
successful contributor to profits. But all that
changed meaningfully when Mike Brown took
over as CEO in 2009. Under the inspired
direction of retail head Ingrid Johnson, who is
now leaving Nedbank to be financial director at
Old Mutual, the group made huge strides in the
retail sector.
In 2013 the headline earnings reported from
Nedbank retail exceeded those of the capital,
corporate and business banking divisions. The
overall headline earnings growth of 15,9% was
still lower than FirstRand’s interims. NII growth
was at 7,8%, notably lower than that of FirstRand,
probably indicating Nedbank has reached some
ceiling over the short term in its retail lending
growth. Overall NIR growth also shows the group
is prone to grow income with fees and income,
rather than on lending.
Analysts note that Nedbank will have to

ON

✥

diversify its earnings stream if it wants to
capitalise on its growth since 2009. It faces some
disadvantages compared to the other banks due
to its limited African footprint, though it has
made moves to change that through its alliance
with Ecobank. Its earnings from Africa only
amount to about 3,9%, compared with 24% at
Standard and 15% at Barclays Africa. FirstRand
obtains 8% of its earnings from Africa.
The key to Nedbank’s African expansion is the
link with Ecobank, the West African group in
which Nedbank has a US$250m loan interest.
CEO Brown has indicated the bank is likely to
convert the loan into equity. Analysts at Imara SP
Reid say this will be necessary as Nedbank is
currently the laggard in Africa among its peers. It
will then provide Nedbank a 20% stake in
Ecobank.
But the links to Ecobank have been
controversial. Brown has emphasised Nedbank
has not become embroiled in corporate
governance issues at the bank, preferring to
emphasise the positive effects
that the Ecobank links could
bring to Nedbank. But Imara
125
notes Ecobank has well
120
publicised governance woes,
115
and it will take time for
110
Nedbank’s links to positively
105
affect earnings. “On the
100
positive side, Nedbank is
95
expanding on its own in
90
Southern Africa and
85
slipstreaming Old Mutual’s
80
surge into Africa, so this will
75
improve over time,” Imara
D J FMAM
2014
notes.
Share prices based to 100
Standard Bank is the
market cap leader among the
big four, but has had its relative market
dominance challenged by FirstRand. A concerted
effort by top management under previous CEO
Jacko Maree after 2008 to reposition the group
has been successful up to a point, but it cannot
be complacent regarding FirstRand.
Standard’s 15% rise in headline earnings for
2013 was still overshadowed by that of FirstRand.
Standard’s ROE of 15,6% is also lower than that of
FirstRand, with Standard’s credit loss ratio of
1,04% more of a drag on earnings than the 0,77%
at FirstRand. Cost-to-income at Standard at
58,5% is also still measurably higher than
FirstRand’s 52,5%. Standard’s ratio is higher as a
result of the strong expansion into Africa, which
is also reflected in the lower overall ROE of
15,6%.
Standard’s footprint in Africa is the biggest of
the big four and if the earnings from this source
deliver over the coming years, Standard could

FINANCIAL MAIL • TOP COMPANIES • 2014

SECTORS

SECTORS

The secret to success lies in

✥

73

Financial Mail Page 74 -17/06/14 02:37:35 PM

BANKS

SECTORS

Business Day

✥

Mike Brown
surge ahead. Then again, the rest of Africa could
be more risky than the local market, though it
does offer potentially greater earnings growth on
historical trends.
The market has given Standard the benefit of
the doubt and has rerated the group considerably
from the deep trough it fell into after 2008.
Deutsche analysts described the 2013 results as
strong, with earnings from Africa growing 44%.
The fact that overall earnings growth of 14% was
still lower than that of FirstRand relates to greater
provisioning to address bad debt, as well as
losses still emanating from the Standard Plc
operations in London, despite being sold to
majority shareholder ICBC.
Standard’s balance sheet has been
considerably strengthened by the repatriation of
$3bn worth of assets from Standard Bank
London Plc. Clearly the bank has learnt from the
years before the 2008 crisis when provisioning
was at much lower levels. This leaves Standard in
a much better position now than in the past.
Though the market has reacted favourably to
the changed direction of the bank, which also
resulted in the appointment of Sim Tshabalala
and Ben Kruger as joint CEOs, it has not been
shooting out the market lights. One of the

TOP 6 BANKS
Ranked by
net profit

1
2
3
4
5
6

74

Name

Standard Bank Group
Barclays Africa Group GRP
FirstRand
Nedbank Group
Capitec Bank Holdings
RMB Holdings

Net profit
Rm

Total assets
Rm

14 279,0
8 833,0
14 307,0
7 474,0
1 568,8
4 969,0

1 528 019,0
804 953,0
870 986,0
675 559,0
37 939,0
55 398,0

✥

drawbacks is that Standard is still strongly linked
to global developments. Though it has exited
emerging markets such as Argentina, Turkey and
Brazil, it is now much more linked to the
vagaries of Africa.
Despite heavy investments on the continent,
Standard’s personal business banking (PBB)
activities in Africa reported a R361m loss in 2013.
The question remains whether Standard can turn
lending income around meaningfully in Africa, as
the market remains risky.
Another drag on its share price is
paradoxically its strong capital position. Deutsche
analysts have calculated that the group’s tier 1
capital ratio of 13,2% is above its own
medium-term target range of between 10,5% and
12,5%, thanks to the repatriation of Plc capital.
“Given that the growth in Africa appears to be
largely organic, with almost no merger and
acquisition activity in African banking, we are
not anticipating any substantial demands on
capital in the medium term,” Deutsche says.
That has increased clamour for management
to return some of the capital in the form of a
special dividend. But no firm commitment has
been made.
Barclays Africa has received positive market
attention recently, with some fund managers,
notably Allan Gray, increasing exposure.
Optimism rests mainly on the group’s
turnaround potential — which has been a long
time coming — under CEO Maria Ramos. On the
capital adequacy and ROE levels, Barclays Africa
has improved. But on the bad debt level, as well
as with its low NIR ratio relative to income, it
falls short compared to the other bigger banks.
This reflects the group’s subdued lending
activities, significantly curtailed since 2010. Any
real benefits of the takeover of the Barclays
Africa interests, for which it paid a hefty fee, still
have to be reflected in superior earnings growth.
And there are more questions on the horizon,
relating mainly to plans by majority shareholder
Barclays to cut its own investment banking
activities.
With Absa Capital being the star performer up
to 2009, its activities have also
been clipped locally in favour
Market cap Equity funds of the Barclays Africa franchise
on the rest of the continent.
June ’13
Rm
Rm
Barclays CEO Antony Jenkins
has emphasised Barclays Africa
will not be affected by the
224 600,6
108 829,0
changes. And with the renewed
126 314,9
65 466,0
focus on retail, the local Absa
203 529,7
71 254,0
franchise could benefit with
115 094,0
53 580,0
the implementation of the
22 425,5
7 519,5
67 705,3
52 622,0
“Prosper” retail thrust.
Source: INET BFA
The problem is that Barclays

FINANCIAL MAIL • TOP COMPANIES • 2014

Financial Mail Page 75 -13/06/14 02:33:49 PM

Projected GDP
Growth Rates for 2015:
Nigeria

POPULATION
Nigeria

177 096 000

Ethiopia

average inflation rate for

Kenya

AFRICA

Ghana

2012 - 8.9%

Zambia

86 614 000

Egypt

2015 -

84 605 000

DRC

6.4%

7.1 %
5.9 %
8.0 %

South Africa

3.0 %
7.4 %

Projected

74 618 000

South Africa

20

52 982 000

Number of African companies with at
least $3 billion in revenue last year

$52.6
Billion
Foreign direct investment
in Africa in 2013
percentage of world’s reserves in Africa
covers

63

Latin America
Europe

52

Africa

52

293 listed bonds from

17 African countries

1.1

Billion

Oil

Gold

Chromium

Platinum

10% 40% 84% 88%

people in Africa

North America
0

10

20

30

48
40

50

Number of cities with
population over 1 million

60

70

80

maintains
Equity and Indices data from

covers all listed equity corporate actions for

30 African Exchanges

20 African
exchanges

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Financial Mail Page 76-77 -13/06/14 05:37:09 PM

✥

✥

Business Day

Africa has often in the past failed to deliver, just
into transaction fee income, which grew 42,8% to
as it started to look as if everything was going
R1,93bn for the full year to end-February,
well. And the market clearly did not like these
Capitec’s earnings per share grew a credible 15%
surprises. But there are good reasons to believe
over the period. But it is probably fully priced for
that Ramos has her hand firmly on the wheel
now, as loan growth is expected to be slower this
this time, though the recovery is still expected to
year.
be gradual.
Though Investec struggled with the advent of
Among the smaller banking outfits, African
the crisis in 2008 — especially vulnerable due to
Bank Investments (Abil) has been a renewed
its exposure to the UK Kensington mortgage
disappointment. Its IRR of the past five years has
business — it has since recovered and has
been a negative 7,66%, reflecting the huge effect
delivered a strong IRR of 20% over the past five
of the bad debt scourge on its income. Abil was a
years. This is not as flashy as that of Capitec or
money-spinner before 2009, becoming a darling
FirstRand. But considering the challenges it
of shareholders because of the huge margins on
faced, Investec has regained the market’s
shorter-dated loans, with profits often distributed
confidence.
in the form of fat special dividends.
Investec’s successful asset management
All that changed after 2009 as more players
business under CEO Hendrik du Toit has since
came into the lucrative market. At the same time,
2009 been the tail wagging the Investec dog.
Abil increased the loan amounts it extended, and
With assets under management of £66bn, it has
also lengthened the payback terms. Customers
grown into a much bigger enterprise than the
soon got into trouble with paying their loans
traditional wealth and investment activities, with
back on schedule, which Abil to a degree masked
assets of just under £30bn.
in the numbers by the extension of new
That has led to speculation that Investec’s
consolidated loans to existing customers.
asset business could be listed separately from its
But the party had to end sometime. And so it
other activities, which include the property
did in 2013, with African Bank forced to come to
division. But CEO Stephen Koseff has dispelled
the market for a new capital injection of more
these notions, saying the group will remain
than R5bn. That led to some improvement at
diversified as it benefits from cyclically driven
end-2013, but the lender again disappointed the
earnings.
market with its announcement of a loss of more
Investec started as a retail private banking
than R3bn for the interims to end-June 2014. This
outfit, with normal loans extended to customers.
apparently relates to a lack of income, with fraud
The asset management business was then built
occurring in lending activities and with
up, with Du Toit relocating to London. Along the
provisioning proving to be insufficient. Whether
road Koseff embarked on a variety of global
African Bank will survive in its present form
takeovers — ranging from the US and Israel to
remains to be seen, as the unsecured lending
Australia and Ireland — but most of those have
market has changed fundamentally.
now been sold.
To some degree, Capitec has also been a
Maybe Investec’s stronger growth in asset
victim of the negative sentiment in the
management, and the subdued performance in
unsecured lending market. But it has been more
wealth and investments point to the way banks
adept at surviving, though its share price has
will generally have to diversify in the future if
remained stagnant for most of 2013. Compared to
they want to stay ahead of the game.
the bigger banks, Capitec appears to be a risky
Maarten Mittner
outfit. For example, it has a
credit loss ratio of 10%, with
loan impairments — bad debts
plus provisions less recoveries
— increasing from R2,7bn in
2013 to R4bn at end-February.
The ROE at 23% is favourable,
though down from previous
years. But to fund activities
Capitec has to keep a very high
tier 1 capital ratio of 39%. This
“lazy” capital has to be kept as
a war chest on the balance
sheet for the group not to
replicate the Abil fiasco.
Ben Kruger and Sim Tshabalala
Thanks to its diversification

76

FINANCIAL MAIL • TOP COMPANIES • 2014

LIFE ASSURANCE

✥

There is scope for

innovation
Working harder to retain
business, with a sharper
focus on end clients rather
than products

Russell Roberts

BANKS

SECTORS

SECTORS

✥

L

ife assurance remains the bedrock of the
SA economy. Only in Taiwan and South
Korea do life assurance premiums make
up a larger part of GDP than in SA, where
the proportion is more than 11%. The two
largest life offices remain Old Mutual, with a
market cap of R174bn, and Sanlam, with R128bn.
But competition in the sector has developed
as a result of entrepreneurial activity. Donald
Gordon’s Liberty set the mould, but with a
market cap of R37,2bn it is behind newer groups
such as Adrian Gore’s Discovery (R49bn) and
MMI, born out of a union between Momentum
and Metropolitan. Momentum was developed
from a tiny life office in the 1980s into an
investment powerhouse by maverick Afrikaans
businessmen Niel Krige and Hillie Meyer. It now
has a R41bn market cap.
Discovery Life now has a 40% higher profit
than its older sibling Discovery Health. But
Discovery Life CE Herschel Mayers concedes that
it would not have enjoyed the same success
without the relationship to the health business.
Key to growing and retaining business has been
the use of the Vitality programme, which has led
to improved mortality and
LIFE INSURANCE
morbidity.
The other listed life office,
Life insurance index
Clientele, can also boast
All share index
entrepreneurial roots in the
Enthoven family group.
Clientele is the king of the
infomercial and has an
enviable low-cost distribution
model.
It may be surprising to see
such entrepreneurial activity
in what might seem to be a
mature slow growth industry,
J F MAM J J A S ON
2013
except for two factors.
Source: INET BFA
Apartheid meant that the

Thabo Dloti

proportion of formal life products among black
South Africans was low in 1994 — in spite of a
cultural affinity for the industry’s funeral
products in particular. The other factor is that SA
companies that were excluded in the dark years
of apartheid from investing in the rest of Africa
have been able to do so since
1994.
Take Sanlam, which has a
135
new-business margin of about
130
3% in its traditional “white”
125
business. The SA emerging
markets have a 5% margin,
120
while out of SA it is closer to
115
8%. Sanlam’s acquisition of
110
African Life in 2005 gave it the
105
best footprint in Africa.
Thabo Dloti, the new CE of
100
Liberty, says the top end of the
95
market, which Liberty targets,
D J FMAM
2014
has grown. This is thanks to
Share prices based to 100
the JSE’s bull run, which has

FINANCIAL MAIL • TOP COMPANIES • 2014

77

Financial Mail Page 78-79 -13/06/14 05:37:26 PM

created an unexpected number of millionaires.
And life companies have realised that there is
scope for innovation if they use their balance
sheets creatively. Liberty has sold another R4bn
of its Evolve products, which do not charge
clients fees until they achieve a 13% return.
But Dloti concedes that the traditional
high-advice model at Liberty may not translate
well into Africa — apart from the more affluent
sectors in Nigeria. It is looking at a cheaper, more
outbound-based model for the rest of Africa.
To confirm Dloti’s point on new wealth

✥

✥

coming into SA, the driver of sales growth has
not been life insurance itself but saving for
retirement. Sanlam CE Johan van Zyl says the
pendulum has swung back from unit trusts to life
products, as many people cannot stomach the
volatility of pure market-linked products. But
whether in unit trusts or life-based retirement
annuities, South Africans significantly upped
their retirement savings efforts last year,
resulting in strong premium growth for
retirement annuity (RA) policies in 2013.
Says Peter Dempsey, deputy CEO of the

SHORT-TERM INSURANCE

Edwyn O’Neill

MORE THAN ANY other sector on the JSE,
short-term insurance needs new blood. Gone
are many of the great names of the past, such
as Guardian National and Commercial Union,
and more recently broker Glenrand-MIB was
folded into Aon.
All that is left of the sector are two shares —
the overall market leader Santam, with a market
cap of R25bn, and Zurich SA (once known as SA
Eagle), which has a more chequered past and a
market cap of R3bn.
Santam isn’t a bargain on a p:e ratio of 20,
while Zurich is recovering from heavy
underwriting losses, though it still pays a
dividend. Neither share had a strong past 12
months — Santam is up just 8%, Zurich down
2%.
Arguably, the best quality indirect play is
Rand Merchant Insurance (RMI), in which about
a third of earnings are provided by Outsurance,
the most profitable insurer in SA with an
underwriting margin north of 20%. It has an
implied market capitalisation (once RMI’s
holdings in MMI and Discovery are excluded) of
R18,4bn, not far behind the much older and
more diversified Santam. Discovery and MMI
also have short-term insurance businesses, but
they are each a fraction of the size of their life
and health units.
Outsurance is the leading direct insurer,
selling policies directly over the telephone and
the Internet. Its direct peers such as Telesure
(the company behind Dial Direct and Budget
Insurance) and MiWay (part of Santam) also
boast high underwriting margins.
In contrast, the broker-based businesses
such as Zurich and Mutual & Federal reported
losses in 2013. Santam CE Ian Kirk says the
Bellville-based insurer lost R45m in its personal

Jeremy Glyn

More harsh realities

lines, but thanks to strong commercial and
specialised business, it was able to eke out a
modest 2,8% underwriting margin. The weather
turned out to be particularly harsh on the
insurers, with two major hailstorms in Gauteng
in November and floods in the Western Cape in
the same month.
Zurich SA MD Edwyn O’Neill says that even
taking into account the increase in catastrophes
over the past few years, the quantum of events
in 2013 was way above long-term benchmarks.
“We shouldn’t complain as we are here to help
people when there is a crisis, but we should
budget for a 4%-6% loss ratio just from major
weather events.”
But O’Neill says Zurich’s future lies in large
corporate business, leveraging off the global
capabilities of the group, which is the largest
corporate insurer in Europe and the secondlargest in the US. “We are not pushing product
but rather offering bespoke solutions.”
Stephen Cranston

LIFE ASSURANCE

✥

Association for Savings & Investment
healthy increase of 16% from
SA (Asisa): “Over the past three years
the R1,7 trillion held at the end
consumers have shown a renewed
of 2012. Dempsey says this
appreciation for the benefits offered
means in 2013 the long-term
by RA products. This indicates that
insurance industry assets
concerted efforts by government, the
exceeded liabilities by 2,4
media and the savings and
times the legal reserve buffer
investment industry to highlight the
required.
importance of retirement savings in
In 2013 the life industry
light of the country’s poor savings
attracted total new premium
rate are paying off.”
income (recurring and single
New recurring RA policy prepremiums) of R105,7bn, an
miums grew by 29% to R2,2bn in
increase of 22% from the
2013 from R1,7bn in 2012.
R87bn collected in 2012.
Single-premium RAs had significant
Recurring premium income
growth of 37% in premiums last year,
grew by 13% in 2013 to R19bn,
from R6,2bn in 2012 to R8,4bn in
driven mainly by risk policies,
2013.
retirement annuities and
Life risks were not ignored by any
endowment policies.
means. In 2013 consumers took out
Single-premium policies
5,3m new individual risk policies,
(investment policies, living
paying monthly premiums of R10bn
annuities, compulsory
for the year to cover events such as
annuities, retirement
death, disability and dread disease.
annuities) delivered strong
In 2012 consumers took out 5m risk
growth of 24% in 2013, with
Herschel Mayers premium income of R86,7bn.
policies worth premiums of R8,8bn.
This represents a 13% increase in
Of course, these figures
risk policy premiums for 2013.
were achieved in the comparatively balmy
Dempsey points out that the beneficiaries of
conditions of 2013, not under the technical
individual policyholders who had death and disability
recession that has struck in 2014. But in the
cover in place in 2013 received benefit payments worth
freshest trading update before Top Companies
R26,7bn from the life insurance industry. Group
went to press, MMI’s CE Nicolaas Kruger says
policies paid out death and disability benefits of
there was a 15% increase in new business flows,
R13,8bn in 2013.
measured in the present value of premiums, the
Living annuities maintained their popularity in 2013,
actuary’s measure of the business. He says this
recording a 29% increase in new single premiums from
was achieved even though the operating
R27,4bn in 2012 to R35,4bn in 2013. Dempsey says
environment is highly competitive and
compulsory annuities, on the other hand, had only 5%
consumers are under pressure.
growth in new single premiums from R4,3bn in 2012 to
MMI and its peers are certainly working
R4,5bn in 2013. He says market conditions in 2013
harder at retaining business. Until recently the
favoured living annuities. “The equity market
focus of these businesses was on the broker and
performed well, which is good for living annuities. At
not on the end client. Now MMI’s purpose is “to
the same time, low interest rates meant lower annuity
enhance the lifetime financial wellness of people,
rates. This made compulsory annuities a hard sell.”
their communities and their businesses”. As the
Unfortunately, living annuity sales are also driven by
companies now all say, they are no longer in the
demand from consumers who have not saved enough
business of products but in the business of
for their retirement and then turn to living annuities
solutions.
Stephen Cranston
for the wrong reason. Being able to
draw a higher income from a living
TOP 6 LIFE ASSURANCE
annuity than would be available from a
Ranked by
Name
Net profit Total assets Market cap Equity funds
traditional compulsory annuity may
net profit
Rm
Rm
Dec ’13
Rm
help someone who does not have
Rm
enough retirement capital to maintain a
1
Old Mutual Plc
12 628,7
1 931 835,0
173 402,5
96 289,6
certain lifestyle in the early years. But,
2
Liberty
Holdings
3
4
75,0
291
74
5,0
35
589,
3
17 574,0
warns Dempsey, hardship will follow
3
MMI Holdings
3 011,0
332 267,0
38 617,2
26 843,0
when the capital has been depleted
4
Discovery
2 899,0
50 844,0
49 936,3
15 959,0
over a short period of time.
5
Sanlam
2 592,0
555 450,0
124 658,8
38 884,0
The life insurance industry held
6
Clientele
300,8
2 909,0
4 935,2
291,8
assets of R2 trillion at the end of 2013, a
Robbie Tshabalala

LIFE ASSURANCE

SECTORS

SECTORS

✥

Source: INET BFA

78

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

79

Financial Mail Page 80-81 -17/06/14 02:37:57 PM

FINANCIAL SERVICES

Eclectic, but some are

✥

FINANCIAL SERVICES

✥

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

exemplary

T

Russell Roberts

personal service and building lifelong relationships.
There are 182 offices and 597 advisers in the
PSG Konsult network. It has three divisions: PSG
Wealth (the advisory business); PSG Asset Management (unit trusts and wholesale fund
management); and PSG Insure, the insurance
broker.
he financial services sector has an
The outstanding story in the financial services
unusually wide mix of companies. These
sector has to be Coronation Fund Managers,
range from banks such as Investec and
which now sits on a market cap of R34bn, just a
Sasfin to Grand Parade — the main
little below the much larger Liberty Holdings. It
shareholder in Burger King — and the
is also larger in market cap than Barloworld,
JSE, which has a monopoly over SA’s listed
Nampak, Pick n Pay and Tsogo Sun.
markets.
Over the past year to March 2014, CoronaThere has been a wide range of activity, from
tion’s assets under management have increased
a 36% decline in fund manager Prescient and
by a third to R547bn. Coronation does not have to
28% in Cadiz, right up to a 120% rise in Purple
increase its cost much to handle new business; it
Capital and 81% in Peregrine. The heavyweight
still employs the same number of portfolio
PSG was up 60%. In many ways, PSG represents
managers and might have to employ two or three
what the financial services sector should be all
more people in client service. Its revenue from
about — a catalyst to developing new business.
fund management increased by 56% to R23bn,
PSG has already given birth to a bank, Capitec;
but its profit increased by two-thirds to R1,29bn.
an investor into private schools, Curro; and an
Staff numbers increased by just 32 to 262.
agricultural holding company, Zeder. It is about
It is a ruthless game in the retail unit trust
to bring PSG Konsult, its financial planning
field, where the spoils are almost all enjoyed by
business, onto the boards. Through a national
half a dozen companies. Coronation had retail
network of advisers, PSG aims to be known for
inflows of R17bn in the half
TOP 15 FINANCIAL SERVICES
year. The house has closed its
Ranked by
Name
Net profit Total assets Market cap Equity funds domestic portfolios to new
institutional business, so it did
net profit
Rm
Rm
Dec ’13
Rm
Rm
not have the benefit of flows
from pension funds, except into
its emerging markets and global
1
Investec Plc
4 087,2
704 865,0
51 634,6
45 021,1
funds. Net institutional flows
2
Investec
4 087,2
704 865,0
24 004,2
45 021,1
were a negative R2,3bn. Money
3
Brait SE
2 835,0
15 141,0
27 330,4
13 279,0
can leave Coronation as quickly
4
Coronation Fund Managers
1 405,0
71 734,0
34 630,1
1 085,0
as it comes in, but the house’s
5
PSG Group
1 338,4
27 426,0
19 264,3
9 332,2
6
JSE
605,6
21 074,0
8 278,6
1 759,0
long-term track record will
7
Peregrine Holdings
441,8
18 037,0
3 995,9
1 446,1
protect it. Its houseview equity
8
Sasfin Holdings
143,6
6 170,0
1 481,0
1 048,7
fund, started in October 1993,
9
Prescient Limited
93,2
6 863,0
1 198,5
696,0
has outperformed the Swix
10
London Finance & Investment 66,4
231,0
120,0
198,6
index since inception by 3,5%.
Group Plc
Coronation is top of the
11
Blue Financial Services
41,4
933,0
1 069,9
64,2
Alexander
Forbes global large
12
Vunani
16,0
515,0
226,6
169,2
manager watch over five years.
13
African Bank Investments
5,0
64 815,0
16 136,8
7 820,0
With a 21,7% return, it is second
14
Efficient Group
3,1
46,0
216,4
72,9
only to Foord in the domestic
15
Cadiz Holdings
2,5
5 376,0
267,9
639,1
large manager watch over five
Source: INET BFA
years.

with equity trades up 45% in 2013, currency
Coronation has created a range of unit trusts
derivative contracts up 81% and bond derivatives
designed to make it simple for advisers: from low
contracts up 48%.
risk to highest it has Strategic Income, Balanced
The equity market, what most of us underDefensive, Capital Plus, Balanced Plus and Top
stand as “the stock exchange”, still represents
20. All the funds are in the first quartile over five
26% of revenue and is not yet mature — revenue
and 10 years.
grew 17% last year. With just a 14% increase in
CEO Anton Pillay does not talk up the share;
revenue to R1,58bn, profit after tax was up 68% to
he prefers to say the absolute level of market
R507m.
returns is not sustainable and expectations must
The JSE used to be notorious for wasting
be reset. “We are in a cyclical business and our
money on grandiose technology projects, but in
strong performance cannot continue indethe two years under Newton-King that repufinitely,” says Pillay.
tation is changing. It has impaired the final R48m
Asset managers are by no means always a
from the disastrous project to replace its back
good investment. Prescient, which listed last
office system. In contrast, its repatriation of the
year, has a market cap of barely R1bn, in spite of
trading system from the UK has been a great
a strong reputation as the top quantitative asset
success — by May there had been zero downtime
manager in SA. It did not impress the sharesince it went live last year.
holders much by acquiring a fund management
Newton-King says even though the JSE is a
shop from Allied Irish Bank and selling it again
sole provider, it has no divine right to succeed.
within a year.
“Just look at Eskom and SAA. We have to work
Peregrine, now worth R4,2bn, has been a
hard for our success.”
more successful story. It has a portfolio of quality
Stephen Cranston
assets, including Citadel — PSG Konsult’s great
rival — with R30bn under management; the
Peregrine Capital hedge fund business; and
Peregrine Securities, well known as a prime
broker. Securities is now the second-largest
stockbroker by volume, and its low charges are
favoured by algorithmic traders and hedge
funds. Some of today’s top hedge fund
managers, such as Bateleur, 36One and Visio,
Jonathan
are Peregrine clients.
Hertz
Peregrine CE Jonathan Hertz says Citadel
operates at a higher level than most wealth
management groups. Its average new client has
R9m of investable assets. “We are happy to
partner advisers and offer a different service
for clients with R2m-R3m investable.” He says
the group slightly increased its interest in
Stenham, its fund of hedge funds and property
business in the UK, to 71%. Both business lines
are benefiting from a recovery of the UK
economy and, in the case of property, a solid
trading environment in Germany.
Peregrine paid very little last year for Cannon Asset Managers. Hertz says the business
came with distribution, through which he
would like to see the Peregrine product set
sold. “Cannon itself has had a tough time as the
market has not favoured its value style, but
there has been some rotation in its favour.”
Perhaps the best way to benefit from the
cyclical business of investment management is
to invest “on the house” by taking shares in the
JSE. Every share bond or derivative traded on
the JSE contributes towards shareholder
wealth, whether in tough times or easy ones.
However, as JSE CE Nicky Newton-King points
out, market activity remains generally strong,

It’s been a few months of
declines, rises and
outstanding performances

80

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SECTORS

SECTORS

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81

Financial Mail Page 82-83 -27/06/14 03:21:16 PM

INFORMATION TECHNOLOGY

No strategic
plan, no
survival

2013. Over the past 15 years, it has been growing
at an annual compound growth rate of 44%.
EOH’s longstanding formula of organic and
acquisitive growth continues to bear fruit. EOH
has had a steady operating model that is efficient
due to its simplicity and superior market
relevance, says technology research associate at
Frost & Sullivan Ankit Trivedi.
But its run rate is expected to slow down at
some point as it grows bigger and the markets it
operates in mature. Trivedi says even with this
exceptional performance, institutional investors
may not be comfortable with holding the stock.
That would be due to difficulties in understanding EOH’s share price and earnings as a
result of, among other things, a lack of clarity in
factoring in the growth from acquisitions. Its
current p:e ratio is a high 22,29.
Pinnacle Technology, which in 2013 surprised
epressed microeconomic conditions in
the market by buying a 33,4% stake in another
addition to competition from
listed entity, Datacentrix, saw its share price
noninformation and technology
plummet in March and April. This came after the
providers such as telecommunications
arrest of executive director Takalani Tshivase —
operators have put the pressure on
an event not communicated to the market when
traditional IT firms.
it occurred. He was accused of bribery, though by
More providers in adjacent sectors are
early June the case had not been resolved. The
entering the IT services market, according to the
market will be watching to see how this affects
International Data Corp. Telecommunications
its ability to secure more public-sector business
operators are aggressively targeting networkand retain existing business.
related services and providing cloud and data
Pinnacle has a tough task ahead as it needs to
centre services. Hardware providers, meanwhile,
restore investor confidence. Government business
are pushing the benefits of integrated systems
is an important market for technology firms, and
and offering specialised implementation services.
for Pinnacle such contracts have been estimated
Listed electronics group Altron has combined
to be worth about 25% of its revenue. Before the
the businesses of its delisted communications
scandal, it was seen as a steadily growing firm
unit Altech with its technology firm Bytes,
and the acquisition of a stake
forming one entity that will
SOFTWARE & COMPUTER SERVICES
in Datacentrix was expected to
sell end-to-end products and
boost the business, with the
services.
140
Software &
market expecting some collacomputer
Lise Hagen, research
135
services index
boration between the firms.
manager for software and IT
All share index
130
Gijima, which took a huge
services at IDC SA, says local
125
financial and reputational
providers, who often have a
120
knock three years ago after
multinational presence, are
115
losing one of its biggest
capturing the lead in the
110
government tenders, is
market.
showing encouraging signs of
Small software provider
105
a turnaround. It has cut costs,
AdaptIT has topped the list of
100
appointed impressive new
top performing companies in
95
management and has also
the IT sector. Ranked number
J F MAM J J A S ON D J FMAM
2013
2014
renewed R1,6bn worth of
two in Top Performers,
Source: INET BFA
Share prices based to 100
multiyear contracts. Even
AdaptIT has shown consistent
though revenue is falling, it
growth as a result of the
seems to be on the path to a full recovery.
strong performance of the manufacturing and
Business Connexion continues its geograeducation sectors. There has been an uptrend in
phical expansion, with acquisitions in Botswana
AdaptIT’s share price and overall earnings over a
and Nigeria, where it is already operating a data
number of years.
centre. The company is aiming to have 25% of its
But it was EOH that again stood out last year.
turnover coming from international operations.
The company was a top performer on the JSE,
with its share price surging just over 100% in
Thabiso Mochiko

Traditional IT changes as
other providers seize
opportunities in the sector

D

82

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FINANCIAL MAIL • TOP COMPANIES • 2014

✥

PROPERTY

✥

Ups and
downs

delivered a total return of 24% while new kid
among the JSE’s offshore property stocks,
Investec Australia Property Fund, notched up a
23% total return since listing in November last
year.
Rockcastle Global Real Estate Company,
which owns a R10bn portfolio of globally listed
property stocks and stakes in three Zambian
shopping centres, was also among the sector’s
top performers with a total return of 15%.
However, not all SA-focused property stocks
disappointed. A number of local players, most
notably the newer listings and those funds that
have been involved in some form of corporate
action, have also comfortably outperformed the
sector’s -3,64% total return. These are developer
Attacq, which made its JSE debut in November
last year (24%); government-tenant focused
Ascension Properties A units (10%), which has
he huge swings in listed property share
been the subject of a three-way merger with
prices over the past year will no doubt
Rebosis Property Fund and Delta Property Fund;
prompt investors to realign their real
Synergy Income Fund B units (17%), which is
estate holdings and become increasingly
involved in merger talks with Vukile Properties;
picky in their stock selections.
and the sector’s newest kid on the block,
Though the R280bn SA listed property index
township mall owner Safari Investments (12%),
has recovered some of its losses in recent
which listed in March this year.
months, the index is still down around 12% for
The key question for investors is what are the
the year to May 16 2014. The sector’s average
main drivers that will affect listed property
forward income yield is now sitting around 7,5%,
returns? Analysts cite three key factors that are
up from 6,7% a year ago.
likely to affect the performance of the sector over
But the performance of individual property
the next 12 months: rising interest rates,
counters differs significantly. In fact, the
continued capital market volatility and corporate
performance gap between the best and worst
action. “The SA listed property sector will
performers among the JSE’s 41 individual
continue to be characterised by corporate
property counters is a hefty 112% for the 12
activity. There are likely to be more new
months ending April, latest figures from
property listings as well as further consolidation
Cape-based Catalyst Fund Managers show.
in 2014/2015,’’ says Catalyst Fund Managers
Investors who betted on a weaker rand were
investment manager Paul Duncan. He believes
clearly in the pound seats with offshore property
new listings are encouraging, as it will give
stocks generally outperforming their local
investors access to previously unavailable real
counterparts by far. Redefine International,
estate investment opportunities. “However, the
which owns an R18bn portfolio of shopping
investment case and value proposition will be
centres, offices and hotels spread throughout the
the only factor that
UK, Germany, Switzerland
determines our decision
and Australia, was one of the
PROPERTY
whether or not to support
top performers with a
123,5
SA listed property index
new listings.”
substantial 92% total return
All share index
120,0
Keillen Ndlovu, head of
for the 12 months ending
117,5
listed property funds at
April.
115,0
Stanlib, agrees that mergers,
London-focused Capital &
112,5
acquisitions and takeovers will
Counties Properties and
110,0
remain a major theme over
Romanian retail play New
107,5
105,0
the next six to 12 months. He
Europe Property Investments
102,5
notes that the sector has
(Nepi) delivered an equally
100,0
already raised about R7,8bn in
impressive 37% and 34%
97,5
new equity in the year to date
respectively over the same
95,0
93,0
to fund acquisitions, which
period. Intu Properties,
J F MAM J J A S ON D J FMAM
Ndlovu argues is a reflection
formerly Liberty International,
2013
2014
of a still strong appetite for
Source: INET BFA
Share prices based to 100
which owns some of the
listed property scrip.
largest malls in the UK,

continue

SECTORS

SECTORS

✥

Investors forced to realign
their real estate holdings

T

FINANCIAL MAIL • TOP COMPANIES • 2014

83

Financial Mail Page 84 -27/06/14 03:21:55 PM

✥

✥

SECTORS

However, as far as the consolidation trend
goes, Ndlovu says most of the merger and
takeover deals have already been announced.
“There’s not much low hanging fruit anymore.
There may be one or two more deals on the
horizon, but the next stage is the finalisation of
those transactions already under way.”
There are 16 companies involved in merger or
takeover talks. These include Growthpoint/
Acucap/Sycom; Redefine/Fountainhead;
Redefine/Annuity; Arrowhead/Vividend;
Arrowhead/Dipula; Premium/Octodec; Rebosis/
Delta/Ascension; and Vukile/Synergy. “If all these
potential deals materialise, the JSE’s property
sector could have 10 less counters by year-end.”
Ndlovu says though that will mean less choice
for investors, the upside is that investors will gain
access to larger and more liquid companies with
improved ratings.
“Until recently, we had a lot of newer, smaller
funds that were struggling to grow their
portfolios, given higher funding costs and
increased volatility in bond yield movements
since May 2013. That meant these funds could
not improve their liquidity, which saw them
trading at a much higher yield than the market
average and made it difficult to conclude
yield-enhancing acquisitions.”
However, Ndlovu believes investors’ primary
focus should now be on yield, as property stocks
are likely to continue to beat other asset classes
on the income return front.
“Listed property still has a place in any
balanced investment portfolio. It is less volatile
than equities and offers better returns over the

TOP 15 REAL ESTATE
Ranked by
net profit

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

84

PROPERTY

Name

Intu Properties Plc
Capital Property Fund
Resilient Property Income
Fund
Redefine International Plc
Emira Property Fund
Fortress Income Fund
Fountainhead Property Trust
SA Corporate Real Estate
Fund
Hyprop Investments
Redefine Properties
Capital & Counties Prop Plc
Sycom Property Fund
New Europe Property
Investments Plc
Tradehold
Octodec Investments

Net profit
Rm

Total assets
Rm

3 898,1
1 846,5
1 533,7

142 655,0
20 690,0
18 061,0

1 006,0
769,2
744,8
679,5
636,1

16 926,0
10 114,0
8 802,0
11 598,0
9 442,0

633,7
631,6
581,7
460,0
402,2

22 969,0
42 999,0
39 701,0
8 987,0
7 220,0

118,5
79,9

1 403,0
4 022,0

long term than cash and bonds. But what makes
listed property stand out among all asset classes
is its stable and growing income stream.”
He notes that property stocks are now trading
at a relatively attractive one-year forward yield
of 7,5%, with distribution growth likely to
continue to outpace inflation. “We are looking at
an income growth range of 7%-8% over the next
two years and to average at about 6,9%/year over
the next four years.”
Ndlovu concedes that capital growth will
come over time, but stresses that ongoing
volatility in bond yields (and therefore also
property yields) will require investors to take a
longer three- to five-year view.
Evan Jankelowitz, a director of boutique
property asset manager Sesfikile Capital says
though the SA Reserve Bank decision in March to
keep interest rates on hold gave the sector some
breathing room, Bank governor Gill Marcus
clearly indicated that SA is in an upward interest
rate cycle. “So the sharp respite in listed property
prices could be somewhat overdone in the short
term.”
Jankelowitz believes rising interest rates could
negatively affect the earnings growth of property
stocks that are aggressively geared. “As such, we
continue to tend towards higher-quality
portfolios with specific focus on balance sheet
strength.”
He says though there is lots of hype in the
market surrounding consolidation, with the
smaller counters being primed as targets by the
bigger players, Sesfikile is not swayed by this
theme. “We prefer stocks that have a solid
investment case outside of corporate action.
We are happy to have a limited and
Market cap Equity funds calculated exposure to smaller cap stocks,
but remain vigilant of the liquidity discount
Dec ’13
Rm
Rm
they deserve.”
Jankelowitz expects listed property to
deliver
an average 12%-14%/year total return
48 448,8
57 243,7
over the next three to five years as time will
16 841,2
15 050,7
smooth out the impact of interest rate
16 673,4
11 249,1
movements. However, he says continued
short-term volatility in property share
11 941,1
4 357,2
6 903,8
6 608,9
prices, driven primarily by movements in
5 312,4
3 472,2
bond yields, will allow for attractive entry
8 743,6
8 249,1
points into the sector.
7 920,4
7 280,2
Of late, distribution growth for the sector
has been strong, with a number of
18 669,9
10 844,4
companies surprising on the upside with
29 327,8
20 422,8
growth in income payouts exceeding 10%.
46 990,0
31 559,7
But Jankelowitz cautions that earnings
4 603,0
6 707,3
growth is likely to moderate in light of
17 877,2
4 459,6
higher funding costs. “However, there is no
1 898,4
1 273,7
reason to believe that long-term growth
2 264,8
1 811,7
should be under any significant pressure.”
Source: INET BFA
Joan Muller

FINANCIAL MAIL • TOP COMPANIES • 2014

CHARLIE BRAVO #315-14

Financial Mail Page 85 -13/06/14 02:34:30 PM

Need more space?

If you need less space, more space or just better
space, contact Redefine Properties. We have the
place you need to work smarter. To view our portfolio,
go to www.redefine.co.za or call 0860DEFINE.

COMMERCIAL | INDUSTRIAL | RETAIL

Job 315-14 Financial Mail Top 100 293x210mm.indd 1

We’re not landlords. We’re people.

2014/05/28 2:08 PM

Financial Mail Page 86-87 -13/06/14 05:38:35 PM

TOP PERFORMERS

✥

✥

When success
breeds success
But how much longer can this remarkable winning formula
be maintained?

T

sation companies, whose share prices can easily
double, triple, quadruple within a short period.
Unfortunately, they can often unwind on the
downside in similarly spectacular fashion.
This is certainly not the case in this year’s Top
Performers. For the second year in succession,
Coronation Fund Managers is top of the ranking,
and by a very wide margin. It has a five-year IRR
in its share price of 92,06%, a return on equity
(ROE) of 129% and a five-year compound annual
growth rate (CAGR) in EPS of 52,3%. Its fundamentals underpin its spectacular share price
movement in recent years. The company now
has more than R500bn in assets under management and has been a major participant in the
Hetty Zantman

he Top Performers section used to be
regarded as something of an “incubator”
for high-flying firms that could conceivably graduate to becoming the
overall Top Company. And there have
been such incidences over the years.
But because the ranking is based on the
five-year internal rate of return (IRR) in the share
price, it is not always a given that the companies’
underlying fundamentals in the ranking match
the share price performance. In certain years, a
number of “one-hit wonders” have zoomed to
near the top of the rankings, only to subsequently disappear virtually without a trace.
These have often been small- or micro-capitali-

Anton Pillay

86

FINANCIAL MAIL • TOP COMPANIES • 2014

TOP PERFORMERS

excellent performance of global equity markets.
Besides its extraordinary share price performance, it’s a classic case of success breeding
success at Coronation. In recent years, it has
beaten many large competitors by generating
performance fees that are related to outperforming the market. And everyone in the firm
participates in its success. It is estimated that the
average bonus paid to its 250 employees in 2014
will be R4,5m.
It will be instructive to observe for how much
longer Coronation’s excellent fund management
team can continue beating its benchmark and
generating large performance fees. Investment
history suggests that no manager can continue
beating the market forever — so Coronation’s
remarkable run may not last much longer.
AdaptIT’s share price rose by 240% during
2013. It provides a variety of innovative information technology (IT) services and specialised
solutions to the mining & manufacturing, energy,
financial services and higher education sectors.
Operating out of business divisions in Johannesburg, Pretoria, Durban and Cape Town, AdaptIT
has 120 customers in SA, East Africa, Asia, the US
and Europe. This is a highly focused IT company
that specialises in production and processes,
something that sets it apart from many of its
peers in the IT space.
EOH has made regular appearances in the
upper echelons of Top Performers in recent years
and moves up from last year’s number seven
position to number three this year. During 2013,
its share price rose by 117%. Listed in 1998, EOH
is represented in 120 locations in SA, in 15
countries in the rest of the African continent and
in the UK. It has achieved virtually exponential
growth in revenue, operating profit and earnings
per share (EPS) during the past 16 years and yet
still managed to increase revenue by over 38%
and EPS by over 30% in the six months to
January 2014. EOH provides technology, knowledge, skills and organisational ability to a wide
variety of clients.
Taste Holdings, number 11 last year, moves up
to number four, even though its share price
declined during the course of 2013. This is a
statistical anomaly, as its share price in 2008 (the
base year for calculating its five-year IRR this
year) was significantly lower than its base year
the previous year. But Taste is a worthy inclusion
in Top Performers. It has not only confounded
critics who suggested that incorporating
jewellery and fast food franchises together under
one banner wouldn’t work, but its earnings have
also grown strongly in recent years. The group
operates from three main areas — Natal Wholesale Jewellers (NWJ); Scooters and St Elmo’s
Pizza/Maxi’s; and The Fish & Chip Shop.

✥

Recently Taste announced the acquisition of
Zebro’s Chicken and the acquisition of the
master franchise licence for Domino’s Pizza in
Southern Africa. All of its pizza outlets will
eventually be converted to Domino’s Pizza.
Five-year compounded annual growth in EPS
during the past years has averaged just under
11%, while ROE is 15,3%. Though reasonable,
these are not superlative metrics, which are
belied by the very strong five-year IRR in the
share price of 66,8%. Investors obviously expect
great things from this company during the next
few years.
Mix Telematics has soared up the rankings
from 64 last year to number five. It is a global
provider of fleet and mobile asset management
solutions. Put simply, it offers mobile tracking
systems for individual and corporate clients in
112 countries in six continents. Its most wellknown brand, at least from an individual consumer perspective, is Matrix Vehicle Tracking.
EPS growth over the past five years has averaged
just over 11% and its ROE is 21,6%. The five-year
IRR in its share price has been 66,7%.
Listed in 1998, Micromega is a holding firm
with controlling interests in a number of operating subsidiaries, with include occupational
health and safety, financial services, IT and
labour supply services. It has come from
virtually nowhere (148 last year) to this year’s
number six position. Its chairman and founder is
Dave King, who recently came to an agreement
with Sars over a long-standing dispute regarding
his tax affairs. Its five-year EPS growth is
negative, at -4,9%, and it has a relatively pedestrian ROE of just under 11%. Investors and speculators obviously believe that freed from his battle
with Sars, King will be able to impart his former
magic touch to Micromega.
Onelogix is a specialised logistics business,
with PostNet as its most well-known asset. The
group has an extensive logistics footprint extending into Namibia, the DRC, Zambia, Zimbabwe,
Botswana, Mozambique and Malawi. Its five-year
CAGR in EPS has been just over 13% and it has
an ROE of 18%. But its five-year IRR in share
price of 64,2% allowed it to move from position
49 last year to seventh place this year.
Poynting is involved in the manufacture and
supply of a wide range of antenna applications.
Its commercial division manufactures low-cost
antennas for wireless networking and cellular
end-user antenna applications and radio
frequency identification (RFID), while its defence
and specialised division focuses on electronic
warfare antenna solutions for the global defence,
security and communications markets. A high
(29,3%) ROE company, its five-year CAGR in EPS
is not so impressive, averaging a dismal -13,9%.

FINANCIAL MAIL • TOP COMPANIES • 2014

INVESTMENT

INVESTMENT

✥

87

Financial Mail Page 88-89 -13/06/14 05:39:05 PM

TOP PERFORMERS

Nevertheless, its five-year IRR in share price is
an impressive 63,4%, which propelled it from
position 47 last year to the eighth spot this year.
Metair holds and manages a portfolio of
companies that manufacture and distribute
products mainly for the automotive industry.
Starting life more than 30 years ago as a supplier
to Toyota SA, then a sister company, Metair today
produces and supplies components to all of the
major original equipment manufacturers (OEMs)
in SA. The group also manufactures and
distributes spare parts for use in the motor
vehicle aftermarket, and nonautomotive products
for various other sectors of industry. Though its
ROE is relatively low at 10,75%, Metair has an
enviable five-year CAGR of 24,2%. Its five-year
share price IRR of 61,7% helped moved it up from
position 39 to ninth.
Labat Africa is an incongruous inclusion in
the otherwise illustrious Top 10 of Top
Performers. A serial underperformer, Labat has
an ROE of -146,7% and doesn’t have a five-year
CAGR of EPS owing to its extremely patchy

✥

✥

earnings record that oscillates between profit and
loss. The nature of its business appears to have
changed in recent times, ranging from the
manufacture of integrated circuits to offshore oil
and gas, and more recently rail. It now operates
as an oil, gas and energy management company
in SA. It holds interests in three Namibian
offshore blocks covering about 25 000 km².
There were three notable falls from grace as
far as performance in last year’s rankings goes —
Woolworths, Mr Price and Capitec. Woolies fell
from four to 19; Mr Price from three to 21; and
Capitec from nine to 26. The Woolies and Mr
Price share prices languished during 2013 as
investors dumped retail shares in the face of
depressed consumer spending. Only towards the
end of the year did they recover, which adversely
affected their five-year IRR in share price
movement. Capitec’s share price also languished
in the wake of the troubles that affected fellow
bank African Bank, as unsecured lending was
reduced by banks and retailers alike and lending
criteria were tightened.
Staff writer

200 TOP PERFORMERS
Ranking
IRR

88

Company

IRR 5 years to
Mar 2014

1
2
3
4
5

Coronation Fund Managers
AdaptIT Holdings
EOH Holdings
Taste Holdings
Mix Telematics

6
7
8
9
10

✥

200 TOP PERFORMERS
Ranking
IRR

Company

IRR 5 years to
Mar 2014

EPS growth
over
5-year period

Return on
equity over
5-year period

Return on Dividend yield Pretax profit
assets over 5-year average growth over
5-year period
7-year period

26
27
28
29
30

Capitec Bank Holdings
Compagnie Fin Richemont
ELB Group
Invicta Holdings
Mondi

48,12
47,83
47,23
47,10
47,04

42,45
5,02
9,00
20,73
11,67

20,86
22,01
20,28
25,01
9,86

8,57
15,93
9,53
9,82
7,16

2,93
12,08
3,42
4,76
3,64

46,56
7,08
6,45
11,20
2,88

31
32
33
34
35

CSG Holdings
Metrofile Holdings
Aspen Pharmacare Holdings
Brait SE
Brimstone Investment Corp

46,36
45,25
44,72
44,65
44,11

14,31
12,11
27,78
18,06
1,48

47,75
24,47
17,72
21,35
33,81

40,41
24,60
24,17
19,68
22,38

1,02
1,21
0,13
6,56
3,12

10,98
20,72
31,38
56,25
0,01

36
37
38
39
40

Amalgamated Electronic Corp
Trematon Capital Investments
Steinhoff International Holdings
Rand Merchant Insurance Holdings
Kaydav Group

43,26
42,67
42,06
41,30
41,20

6,15
6,40
8,42
NA
52,64

15,57
9,07
10,95
8,91
21,16

16,17
6,66
10,88
7,02
12,57

6,15
1,11
0,66
5,53
0,00

11,12
5,69
18,88
NA
9,49

41
42
43
44
45

Assore
Life Healthcare Group Holdings
Old Mutual Plc
Vukile Property Fund
Rolfes Holding

40,37
39,74
39,15
39,13
39,06

-21,33
NA
-6,03
8,30
6,07

12,41
36,38
13,95
0,18
14,92

16,77
26,88
2,33
8,09
13,09

2,10
2,46
5,25
8,94
4,45

0,84
NA
0,41
18,51
12,35

46
47
48
49
50

Clicks Group
Trencor
Oceana Group
Indequity Group
Seardel Investment Corp

38,78
38,33
38,06
37,69
37,68

17,61
21,32
15,47
NA
NA

70,78
11,84
29,60
26,99
1,33

15,84
6,51
17,91
18,06
2,51

1,14
5,97
5,93
0,75
0,00

13,10
14,02
16,11
NA
NA

92,06
79,35
75,79
66,80
66,65

EPS growth
over
5-year period
52,33
22,12
28,50
10,98
11,05

Return on
equity over
5-year period
129,49
33,20
29,52
15,29
21,63

Micromega Holdings
Onelogix Group
Ponyting Holdings
Metair Investments
Labat Africa

64,72
64,16
63,36
61,70
58,49

-4,91
13,04
-13,91
24,23
NA

10,63
18,03
29,28
10,75
-146,69

7,96
12,18
31,12
7,80
-20,47

0,00
0,86
0,00
3,98
0,00

-4,57
10,78
13,58
21,06
NA

51
52
53
54
55

New Europe Property Investments Plc
Pan African Resources Plc
Transpaco
Super Group
Litha Healthcare Group

37,54
36,84
36,41
35,91
35,43

NA
30,36
17,92
78,01
-11,32

9,02
15,53
17,91
18,12
2,45

6,78
14,31
11,51
11,60
10,22

4,86
4,72
5,84
0,00
0,00

NA
27,98
18,92
57,41
34,97

11
12
13
14
15

Findbond Group
Mondi Plc
Howden Africa Holdings
Cullinan Holdings
Afrimat

56,64
56,55
56,36
56,35
56,00

-37,50
11,67
-100,00
60,86
1,78

4,10
9,86
NA
11,38
13,46

7,11
7,16
NA
5,29
11,97

0,00
3,80
3,31
0,37
4,63

-21,47
2,88
-100,00
NA
3,06

56
57
58
59
60

RMB Holdings
Consolidated Infrastructure Group
FirstRand
Sabvest
Imperial Holdings

35,17
35,14
34,37
34,22
34,15

3,30
65,80
7,64
22,68
20,23

9,44
6,68
20,08
14,77
22,70

9,15
6,22
3,97
14,34
10,92

4,80
0,00
4,21
1,45
3,90

1,37
20,69
4,81
22,92
15,19

16
17
18
19
20

Pinnacle Holdings
Famous Brands
ISA Holdings
Woolworths Holdings
Capital & Counties Prop Plc

55,62
52,05
51,94
50,96
50,92

24,05
18,68
1,20
24,09
NA

31,99
36,90
23,54
67,37
1,82

13,61
49,00
17,14
31,84
2,35

3,21
4,21
10,28
6,25
0,68

25,94
18,51
-5,60
19,61
NA

61
62
63
64
65

Omnia Holdings
Verimark Holdings
Ellies Holdings
ARB Holdings
African Media Entertainment

34,06
33,96
33,87
33,50
33,45

12,93
15,42
19,32
-3,43
10,72

18,64
6,96
22,29
15,70
28,42

12,42
5,12
16,42
12,10
21,31

1,58
6,09
0,57
5,10
4,09

17,29
3,78
34,58
-2,74
6,87

21
22
23
24
25

Mr Price Group
Calgro M3 Holdings
Curro Holdings
Naspers
PSG Group

50,25
50,24
49,58
49,46
48,46

23,75
18,77
NA
9,86
10,23

61,42
28,80
1,87
18,79
14,34

32,78
14,17
2,68
15,88
7,00

4,18
0,00
0,00
0,85
4,94

24,01
21,04
NA
17,96
16,93

66
67
68
69
70

AVI
Spur Corp
SABMiller Plc
Datatec
Mustek

33,08
32,75
32,69
32,54
32,49

17,02
15,41
10,88
-0,46
-0,23

32,73
22,78
11,46
10,12
16,48

21,61
31,71
16,76
5,60
7,98

5,23
5,01
2,54
0,00
3,96

13,97
10,92
11,07
7,73
1,73

FINANCIAL MAIL • TOP COMPANIES • 2014

Return on Dividend yield Pretax profit
assets over 5-year average growth over
5-year period
7-year period
1,96
7,51
50,12
21,45
4,44
23,81
19,05
2,80
41,24
17,54
1,72
25,55
37,13
5,52
21,08

TOP PERFORMERS

FINANCIAL MAIL • TOP COMPANIES • 2014

INVESTMENT

INVESTMENT

✥

89

Financial Mail Page 90-91 -13/06/14 05:39:25 PM

✥

TOP PERFORMERS

✥

✥

90

Company

IRR 5 years to
Mar 2014

EPS growth
over
5-year period

Return on
equity over
5-year period

✥

200 TOP PERFORMERS
Return on Dividend yield Pretax profit
assets over 5-year average growth over
5-year period
7-year period

Ranking
IRR

Company

IRR 5 years to
Mar 2014

EPS growth
over
5-year period

Return on
equity over
5-year period

Return on Dividend yield Pretax profit
assets over 5-year average growth over
5-year period
7-year period

71
72
73
74
75

Sanlam
Pioneer Food Group
Alexander Forbes Pref Share Inv
Peregrine Holdings
Kumba Iron Ore

32,41
31,98
31,93
31,72
31,58

25,18
5,86
NA
-9,01
31,27

6,67
10,28
4,23
30,55
83,54

0,75
7,69
11,32
3,82
50,30

4,45
1,80
0,00
4,85
8,25

NA
8,24
NA
-4,98
32,40

116
117
118
119
120

Santova
Sephaku Holdings
Trans Hex Group
Capital Property Fund
Ingenuity Property Investments

23,46
22,90
22,19
21,68
21,67

103,90
NA
NA
18,54
5,92

15,72
-1,59
2,10
12,27
2,04

7,06
-1,09
2,87
10,62
4,12

0,00
0,00
0,00
7,56
0,74

29,61
NA
9,48
51,68
-13,21

76
77
78
79
80

Hosken Consolidated Investments
Vodacom Group
Barloworld
Cargo Carriers
Mediclinic International

30,97
30,89
30,88
30,80
30,50

9,14
NA
6,96
9,31
NA

8,47
91,74
14,33
6,71
7,79

8,45
30,12
8,68
5,76
7,47

0,42
5,02
2,54
2,53
2,40

-6,43
NA
5,59
12,56
19,02

121
122
123
124
125

Hyprop Investments
Adcorp Holdings
SA Corporate Real Estate Fund
Imbalie Beauty
Reinet Investments SCA

21,44
21,09
20,82
20,79
20,72

-1,50
3,89
1,94
-38,33
NA

5,84
12,38
8,74
10,12
8,76

8,66
12,28
7,85
12,88
8,08

6,52
6,44
8,96
0,00
0,00

80,80
16,18
0,02
-24,14
NA

81
82
83
84
85

Foneworx Holdings
AfroCentric Investment Corp
Discovery
Austro Group
The Bidvest Group

29,87
29,79
29,71
29,43
29,17

7,45
34,35
16,68
-41,33
7,88

24,55
18,10
18,17
1,60
17,97

18,36
21,68
6,52
2,05
10,21

5,87
0,72
2,04
3,17
2,59

13,39
80,82
15,92
-48,77
7,95

126
127
128
129
130

JSE
Investec
Investec Plc
Liberty Holdings
Workforce Holdings

20,70
20,68
20,54
20,30
20,11

7,13
-11,13
-11,07
-14,52
-22,71

34,43
9,25
9,25
19,35
1,76

7,02
3,36
3,36
1,39
4,35

3,46
3,62
3,72
3,40
0,00

5,61
-6,10
-6,04
-10,72
-47,62

86
87
88
89
90

Italtile
Shoprite Holdings
Clientele
Bell Equipment
Remgro

29,12
28,96
28,68
28,58
28,49

6,62
16,86
16,70
-9,28
-12,78

19,61
27,66
103,09
14,66
5,05

17,58
13,39
11,01
10,67
4,86

6,50
2,60
6,41
0,00
2,40

7,59
16,74
11,73
-6,77
-10,98

131
132
133
134
135

AdvTech
Sasol
Arrowhead Properties
Growthpoint Prop
Delta EMD

19,93
19,81
19,78
19,74
19,70

1,57
6,68
NA
NA
NA

22,00
18,05
1,64
-287,00
3,98

14,14
14,52
6,71
0,97
3,39

1,76
3,94
14,52
7,22
21,62

4,12
5,03
NA
NA
NA

91
92
93
94
95

Palabora Mining Company
Santam
Nampak
Netcare
MMI Holdings

28,18
28,10
27,94
27,93
27,07

NA
12,01
3,37
17,61
NA

11,66
21,50
16,08
26,06
11,22

12,08
6,61
7,18
13,93
1,43

5,29
5,94
3,78
2,29
11,81

-19,12
16,52
1,40
18.22
NA

136
137
138
139
140

Exxaro Resources
Premium Properties
Business Connexion Group
MTN Group
Sasfin Holdings

19,65
19,65
19,54
19,52
19,47

26,94
NA
-5,38
13,24
-6,08

11,13
1,34
12,46
28,64
13,69

10,60
6,82
11,39
22,30
6,70

3,82
8,05
4,80
3,15
4,91

25,85
-0,41
12,26
14,61
-2,09

96
97
98
99
100

Mpact
Control Instruments Group
Zeder Investments
Combined Motor Holdings
AECI

26,90
26,83
26,79
26,72
26,58

NA
NA
-10,70
13,48
9,03

16,62
NA
15,70
29,67
14,07

12,26
NA
13,73
10,01
9,00

1,23
NA
2,17
3,99
3,08

NA
NA
20,72
11,49
7,33

141
142
143
144
145

Tiger Brands
Purple Group
Marshall Monteagle Plc
Phumelela Gaming & Leisure
Vunani Prop Inv Fund

19,25
19,14
19,08
19,00
18,97

1,28
NA
NA
-0,47
NA

16,88
-9,69
3,33
20,40
4,91

13,25
-11,19
4,68
13,57
9,53

2,58
0,00
4,79
6,74
5,23

0,09
NA
NA
-2,98
NA

101
102
103
104
105

Resilient Property Income Fund
Grand Parade Investments
Tawana Resources NL
Wescoal Holdings
British American Tobacco Plc

26,46
26,39
26,19
26,14
26,12

7,29
4,39
NA
1,19
14,50

13,63
8,54
-138,73
11,83
21,62

14,54
7,97
-190,69
11,81
16,48

6,20
4,35
0,00
0,67
4,40

NA
-27,13
NA
8,61
14,09

146
147
148
149
150

Cashbuild
Massmart Holdings
Grindrod
Reunert
Compu-Clearing Outsourcing

18,93
18,84
18,81
18,59
18,08

7,69
10,51
-14,26
-2,20
0,51

25,70
44,13
5,93
20,98
29,76

13,62
9,72
5,25
15,05
21,25

3,66
4,05
2,10
5,06
7,74

7,97
7,15
-3,41
-3,72
1,79

106
107
108
109
110

Nedbank Group
Conduit Capital
Hudaco Industries
The Foschini Group
Infrasors Holdings

25,92
25,85
25,62
25,42
25,21

2,08
19,51
-0,76
9,44
NA

13,94
11,74
18,49
27,51
-36,80

4,86
5,83
18,41
14,56
-27,56

4,49
0,00
4,75
4,86
0,00

3,81
16,99
3,57
8,69
NA

151
152
153
154
155

Fortress Income Fund
Investec Property Fund
Putprop
Synergy/Income Fund AL/U
Redefine Properties

17,80
17,49
17,23
17,02
16,99

NA
NA
5,57
NA
38,88

21,45
-4 953,85
6,96
4,32
3,09

14,93
2,56
6,74
8,28
9,01

8,02
7,09
5,48
6,15
7,87

NA
NA
4,46
NA
NA

111
112
113
114
115

Truworths International
Kap Industrial Hldgs
Clover Industries
The Spar Group
Distell Group

24,73
24,15
23,80
23,70
23,51

14,07
0,49
NA
11,42
2,61

42,80
11,71
11,41
45,54
14,74

33,50
9,45
7,77
13,02
10,54

4,03
0,94
1,56
4,13
3,70

12,02
54,95
NA
11,05
3,12

156
157
158
159
160

Value Group
Datacentrix Holdings
Pick n Pay Holdings
Ferrum Crescent
Comair

16,88
16,87
16,68
16,62
16,39

19,74
-5,30
-10,86
NA
25,48

17,30
18,67
43,80
-121,98
26,70

11,67
10,72
6,57
-104,64
10,04

4,65
6,45
4,06
NA
1,79

17,08
-5,40
-9,02
NA
34,32

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

INVESTMENT

INVESTMENT

200 TOP PERFORMERS
Ranking
IRR

TOP PERFORMERS

91

Financial Mail Page 92 -13/06/14 05:39:41 PM

✥

TOP PERFORMERS

✥

INVESTMENT

200 TOP PERFORMERS
Ranking
IRR

Company

IRR 5 years to
Mar 2014

EPS growth
over
5-year period

Return on
equity over
5-year period

Return on Dividend yield Pretax profit
assets over 5-year average growth over
5-year period
7-year period

161
162
163
164
165

Bowler Metcalf
City Lodge Hotels
Emira Property Fund
MAS Real Estate Inc
Dipula Income Fund

16,23
16,23
16,06
15,98
15,91

4,03
2,47
4,53
NA
NA

11,97
39,94
11,64
1,67
5,26

11,14
17,71
9,97
2,03
8,54

4,51
3,82
8,90
1,82
9,19

2,72
0,49
4,91
NA
NA

166
167
168
169
170

Acucap Properties
Octodec Investments
Spanjaard
Blue Label Telecoms
Pick n Pay Stores

15,81
15,72
15,72
15,64
15,63

65,02
-45,41
2,36
16,19
-10,95

0,52
4,41
9,33
15,76
34,17

7,51
8,96
8,13
12,74
6,59

7,88
8,40
8,82
2,34
3,52

-3,29
12,55
3,48
18,39
-8,98

171
172
173
174
175

Fairvest Property Holdings
Standard Bank Group
Rebosis Property Fund
Sappi
BHP Billiton Plc

15,59
15,26
15,20
15,18
14,99

NA
-1,39
NA
NA
-2,30

-1 983,13
13,12
5,28
8,03
13,01

-2,68
3,50
9,72
4,72
10,72

7,04
4,13
5,92
0,00
3,48

NA
4,96
NA
-16,33
-0,37

176
177
178
179
180

Fountainhead Property Trust
Barclays Africa Grp
Lewis Group
Hospitality Property Fund
Sycom Property Fund

14,43
14,20
14,08
14,03
14,01

3,98
-2,63
7,77
-3,85
6,38

8,24
13,49
19,04
2,19
6,86

7,70
4,48
13,84
7,50
6,14

7,67
4,33
6,61
11,73
7,48

6,59
-1,80
6,20
-11,67
4,13

181
182
183
184
185

Adcock Ingram Holdings
Tongaat Hulett
Wilson Bayly Holmes-Ovcon
Petmin
Country Bird Holdings

14,00
13,29
13,24
13,22
13,13

12,37
11,16
-1,84
-0,07
23,44

17,08
12,43
14,78
5,01
2,54

13,75
9,34
6,12
6,50
4,59

2,16
2,10
2,78
1,37
0,70

13,85
19,80
0,42
-23,29
NA

186
187
188
189
190

Mazor Group
Chrometco
Blackstar Group SE
Anglo American Plc
London Finance & Investment Group Plc

12,96
12,93
12,77
12,67
12,62

-12,76
NA
NA
-20,32
-8,15

7,45
-3,96
24,85
6,65
33,41

7,46
-6,98
22,62
7,69
28,77

5,00
12,94
4,86
1,90
1,87

-19,35
NA
NA
-7,29
NA

191
192
193
194
195

Cafca
Group Five
Stefanutti Stocks Holdings
Trustco Group Holdings
Oasis Crescent Property Fund

12,47
12,19
12,11
11,94
11,75

-86,33
-8,71
NA
NA
-0,52

11,31
12,25
7,57
4,44
5,65

9,82
3,91
4,44
5,52
5,45

0,00
2,73
3,98
3,62
7,85

NA
-3,39
-0,54
NA
7,84

196
197
198
199
200

Crookes Brothers
Tradehold
Tsogo Sun Holdings
Interwaste Holdings
African Rainbow Minerals

11,71
11,71
11,58
11,04
10,65

19,70
NA
2,92
-10,03
-1,86

16,62
9,30
17,38
6,51
10,38

13,60
8,47
19,50
7,01
10,81

3,67
0,00
2,35
0,00
2,15

18,22
NA
34,71
-7,42
-4,78

Source: INET BFA

92

FINANCIAL MAIL • TOP COMPANIES • 2014

Financial Mail Page 93 -13/06/14 02:34:53 PM

Financial Mail Page 94-95 -17/06/14 02:38:26 PM

Managing
risk is a
priority
The JSE is justifiably proud
of its standing among global
exchanges

2

014 marked the end of an era in the 127year history of the JSE with the retirement of chairman Humphrey Borkum,
bringing to an end a 70-year family
association with the exchange. His late
father, Max, was a leading broker and also
president of the JSE.
“My father was a cofounder of the brokerage
firm Davis Borkum Hare. I was a founder
member of the JSE board in 2000, when the JSE
became an incorporated company, and I became
chairman in 2002.” Columnist Jamie Carr, with
pardonable exaggeration, described Borkum as “a
highly respected member of the broking
community since the days of quill pens and
frock coats”.
It is now more than 20 years since the JSE,
under the leadership of Roy Andersen, ditched
the open-outcry trading system. Subsequent
technological advances have also brought new
risks and challenges that were unimaginable in
the 1990s.
“When I first became a member of the JSE,”

NEW LISTINGS IN 2013
Company
Sibanye Gold
GoGlobal Properties
Giyani Gold Corp
Tower Property Fund
The Waterberg Coal Company
Southern View Finance
Attacq
Investec Australia Property Fund
Redefine International Plc
Glencore Xstrata Plc
Ascendis Health
Accelerate Property Fund

Date Price (c)
Feb 11
Apr 29
Jun 26
Jul 19
Sep 30
Oct 1 1
Oct 14
Oct 23
Oct 28
Nov 13
Nov 22
Dec 12

1 775
1 409
—
870
—
033
1 450
767
—
1 100
488

Sector
Gold Mining
Alternative Exchange
Alternative Exchange
Diversified Reits
Coal
Alternative Exchange
Real Estate Holding & Dev
Real Estate Holding & Dev
Diversified Reits
General Mining
Pharmaceuticals
Retail Reits
Source: JSE

JSE

✥

Borkum recalls, “a manual system of back-office
desks and white boards was adequate to clear
trades. The global business of clearing has
changed dramatically since then and is still
changing, enabled by technological innovations.
Previously seen as an unglamorous part of the
market, post-trade risk management is moving
to centre stage and a growing number of
exchanges are looking to expand their clearing
and settlement services rather than offering
purely traditional trading.”
The JSE is acutely aware that as an effective
monopoly or virtual sole provider of exchange
facilities, “we don’t have a divine right to
business success”, says CEO Nicky Newton-King.
She told the Financial Mail in March that the JSE
has to provide a service at an acceptable price to
its clients. It made so much money on its core
equity market in 2013 — revenue was up 17% to
R385m — that it rebated R84m to clients. Even
after this the JSE’s net profit after tax was up 68%
to R507m. Of course, its revenues are really out
of its control, in the sense that they are directly
related to the amount of trading on the market.
The JSE had a mixed record on its IT development in 2013. It wrote off a further R48m (after
losing R75m in 2012) on the aborted software it
had earmarked to replace its back-office service.
But its new trading system, brought back from
London, was 100% interruption-free. Its latest
preoccupation was the T+3 project aimed at
forcing clients to settle trades three days after
execution instead of five.
The JSE is justifiably proud of its standing
among global markets. For the fourth
consecutive year, SA (and by extension the JSE
and its regulator, the Financial Services Board)
was placed first in the WEF Global Competitiveness
Report 2013-2014 in terms of regulation of
securities markets; number one in the protection
of minority shareholders’ interests; and number
two in financing through the local equity market.
In September 2013 the Financial Mail noted
that JSE data on local shareholding registers
showed SA institutions swimming against the
tide of foreign selling of SA mining shares in the
past couple of years.
The local appetite for undervalued blue-chip
mining shares, especially those with SA operations, may help to explain why Glencore
decided to take a secondary listing on the JSE in
the fourth quarter of last year. The group has
significant coal and ferrochrome mining interests
in SA and copper in the Democratic Republic of
Congo, though most of its revenue is earned from
its global marketing activities.
“Africa is an important and growing market
for the group and SA has a strong institutional
investor base,” Glencore said. JSE business

✥

JSE

✥

RIGHTS ISSUES FOR 2014

Coal of Africa and Pan African Resources, have
Capital raised issued shares in SA as well as their primary
(Rm)
markets, which has boosted tradability.
One of the reasons major producers’ shares
Pan African Resources Plc
Jan 7
190
703,1
were more attractive to local than offshore
Rebosis Property Fund
Jan 28
1 120
650,0
Rainbow Chicken (RCL Foods)
Feb 25
1 420
3 932,9 institutions is that SA institutions don’t apply a
Delta Property Fund
Apr 26
840
1 000,0 sovereign risk discount. They don’t need to
Curro Holdings
May 6
1 200
605,9 because their portfolios are denominated in
Sycom Property Fund
May 20
2 725
900,0 rand. “The lack of companies listing in SA and
Vividend Income Fund
May 27
540
247,4 raising capital in the past couple of years is due
Gijima Group
Jun 14
5
150,0 partly to the financial crisis and the markets —
RBA Holdings
Jul 8
8
10,0 locally and globally — not being conducive for
New Europe Property Investments
Jul 23
6 480
1 349,9 the listing of a company,” Kula says. “This was
Vunani Property Investment Fund
Aug 19
987
478,9 not just an SA phenomenon.”
African Bank Investments
Dec 2
800
5 482,3
In Jamie Carr’s selection of the JSE as a
Source: JSE
“diamond” in one of his Financial Mail weekly
columns, he remarked that the JSE “is a huge
development manager Patrycja Kula said
asset for the country, allowing investors to buy
Glencore’s listing strongly indicated that large
into a slice of African equity with the reasonable
multinational companies believe the JSE is an
assurance that they’ll be able to exit gracefully
exchange that provides world-class services and
when they move on to the next hot story.
access to another investor pool that understands
“The JSE had a great year in 2013, with
resource companies. About 20% or R1,63 trillion
revenues growing strongly and operating costs
of the JSE’s market capitalisation is represented
on a tight leash, keeping cost growth down to a
by basic resources companies.
creditable 5%. Its revenues are variable,
Globally, mining company shares were hit
depending on activity levels on its various
hard by weaker commodity prices and many
markets, so it has to concentrate on doing the
fund managers shifted to other sectors. One of
basics well, providing innovative products that
the charts presented by Glencore during its
the punters will want to trade and keeping its
investor day in September 2013 showed the
costs down.”
Staff writer
HSBC global mining index had dropped 19%
over one year and 28% over three years.
DELISTINGS FOR 2014
Foreign sentiment towards SA-based miners
(Rm) Market
has been even more negative, mainly because
Company
Date
capitalisation
of events around Marikana and the long
platinum strike. However, uncertainty over
Sallies Debentures
Jan 2
14,4
New Africa Investments
Jan 30
0
nationalisation, classification of strategic
Queensgate Hotels & Leisure
Feb 18
18,1
minerals, higher taxes on mining companies
Hardware Warehouse
Feb 26
0,8
and steeply rising operating costs — especially
JCI
Apr 16
604,9
for Eskom power — have had an effect. As a
Simmer & Jack Mines
Apr 16
37,8
result, there was an interesting swing in the
Zaptronix
Apr 30
9,5
proportion of shares traded on the SA register
Cape Empowerment
May 14
256,0
of some of the biggest dual-listed mining
New Bond Capital
Jun 4
62,5
companies, including Anglo American, Lonmin
Amalgamated Appliance Holdings
Jul 2
740,5
and Aquarius Platinum.
Thabex
Jul 9
9,0
Anglo American’s local shareholding register
Mobile Industries
Jul 16
10,7
Cipla Medpro
Jul 16
4 484,9
represented 49% of shares in issue from 35%
Muvoni Tech Group
Jul 30
34,4
four years ago. Lonmin’s local share register
RGT Smart Market Intelligence
Jul 30
43,7
was 51% of the total, against 6% in January
Lonrho
Plc
Aug
5
1
877,2
2009.
Allied Technologies
Aug 20
5 038,0
There are two requirements for a successful
AG Industries
Aug 27
86,4
secondary listing: maintaining good investor
Sable Holdings
Sep 3
0,1
relations and ensuring there’s sufficient share
IFA Hotels & Resorts
Sep 10
41,5
liquidity. The local shareholding register of the
Uranium One Inc
Oct 22
9,4
Billiton portion (listed on the JSE) of BHP
Redefine Properties International
Nov 4
85,0
Billiton has remained fairly flat at 19%-22% for
Racec Group
Nov 5
34,4
Mvelaserve
Nov 12
1 299,5
the past four years as the group has focused its
Kagiso Media
Dec 10
3751,1
investor relations efforts in Australia and the
First Uranium Corp
Dec 24
26,2
UK rather than SA. Some companies, such as
.
Company

.
Date

.
Price (c)

INVESTMENT

INVESTMENT

✥

Source: JSE

94

FINANCIAL MAIL • TOP COMPANIES • 2014

FINANCIAL MAIL • TOP COMPANIES • 2014

95

Financial Mail Page 96-97 -13/06/14 05:40:14 PM

in
numbers
continues
Multi-asset funds, though,
are proving to be best
sellers

I

n a country with barely 60 tradable shares
and a dozen tradable bonds, the number of
unit trusts continues to grow to baffling
levels. In the year to March, the number of
funds increased by a further 65 to 1 053.
Unit trusts used to be a convenient way to
make monthly investments into the JSE. SA
equity funds still make up 27% of all unit trusts,
but they mainly attract lump sums from
sophisticated financial planners — debit-order
business has been neglected for years.
However, Thabo Khojane, MD of Investec
Asset Management SA, says he
expects unit trusts to become ever
more important to the shop. “The
retail savings pool is growing a lot
faster than the institutional asset
base, and unit trusts are now
making their way into the pension
fund market as a convenient way to
offer member choice in a defined
contribution environment.”
To get into this market, fund
houses often have to simplify their
range and reduce duplication that
has crept in. Investec plans to merge
its Growth and Active Quants funds
into its Equity Fund, but it will keep
Investec Value separate, as it has its
own well-defined client base. In
common with its peers, the best
sellers at Investec are multi-asset
funds, the Opportunity and
Cautious Managed Fund along with
Diversified Income and Global
Strategic Managed.

96

✥

Pure equity funds are a declining portion of
the industry. Over the past year R2,37bn has
been pulled out of equity funds. There was a
period in the late 1990s and early 2000s in which
money market funds appeared to be taking over
the industry. They offered the security of bank
deposits, but at much more attractive yields. It
was not long before corporate treasurers piled
excess cash into money funds. But over the past
year there has just been a trickle of R125m into
money funds. Not only are bank rates becoming
more competitive, but many investors have
discovered the joys of other interest-bearing unit
trusts that offer both enhanced yields on moneymarket rates, and more capital protection than
bond funds.
Short-term funds attracted R20bn over the
past year while variable term funds brought in
R7,1bn.
The heart of the industry is now the multiasset funds. They account for 506 funds, almost
half the funds in the industry, across the spectrum of risk profiles, from multi-asset income
funds right up to high-equity funds. Over the
past year the flow into high-equity funds —
made up primarily of traditional balanced funds
— has been R53,8bn, with a further R38,7bn into
low-equity funds.
Peter Dempsey, the deputy CEO of the
Association for Savings & Investment SA (Asisa),
says it is a good thing that multi-asset classes are
now the preferred vehicle for unit trust
investment. “Financial planners are tending to
leave the asset allocation decisions to asset
managers. Multi-asset funds can be called

FINANCIAL MAIL • TOP COMPANIES • 2014

Thabo Khojane

UNIT TRUSTS

Jeanette Marais

Hetty Zantman

Growth

✥

Hetty Zantman

UNIT TRUSTS

one-stop shops or solution-based vehicles.”
No less than six of the largest funds in SA are
multi-asset funds — Allan Gray Balanced
(R89,4bn); Coronation Balanced Plus (R56,9bn);
Investec Opportunity (R36,5bn); Allan Gray Stable
(R35bn); Foord Balanced (R34,1bn); and
Coronation Balanced Defensive (R30,7bn).
Only one of the top 10 is an equity fund, Allan
Gray Equity with R38,8bn, and only three are
now money funds. These are Absa Money Market
(R49,6bn), Standard Bank Corporate Money
Market (R32,2bn) and Investec Money Market
(R27,9bn).
Khojane says few of these businesses are
focusing on independent financial advisers — the
fixed income offering at Stanlib is an exception
to this — and rely on the selling of structured and
guaranteed products through their tied agents.
The structure of the industry has changed
significantly over the past four years. Back in
March 2009, money market accounted for 36% of
assets: prudential funds — balanced funds that
are in line with the prudential guidelines of the
Pension Funds Act — accounted for 16% of
assets.
The proportion in money funds has fallen to
18% and multi-asset dominates, with high-equity
multi-asset funds making up 21% of assets,
low-equity 12% and multi-asset income funds

✥

(the flexible fixed income funds) account for a
further 8%. The industry remains highly concentrated in spite of the large number of funds. The
top 10 management companies account for 76%
of the assets, including money market funds and
78% of assets excluding money funds. The top 30
funds account for 70% of industry flows.
Pieter Koekemoer, head of Coronation unit
trusts, says the preference for multi-asset funds
has made it tough for start-up asset managers, as
the majority are equity specialists with no
expertise to run a blend of equities, bonds,
property, cash and international assets. “One of
the recent trends, though, has been for balanced
funds to be launched by a group such as Sygnia,
in which there are passive (index tracking)
building blocks for each asset class,” he says.
The weight of money into Allan Gray and
Coronation has positioned them as the largest
management companies in SA, ahead of Stanlib,
which could rely on its money market assets to
keep it at the top. Allan Gray head of retail
Jeanette Marais says Gray also has the largest
linked-product provider in SA, with R128bn
under management. Other management companies wait eagerly for the annual ballot when
advisers who use the Allan Gray platform choose
new funds that they would like to see introduced. It is critical for management companies to
get onto a platform such as this, or similar
platforms from Momentum, Glacier and Investec.
Starting a fund, however, has become easier
with the introduction of Boutique Collective
Investments. It was started by the former head of
Momentum unit trusts Robert Walton. He has a
restraint until July 1 before he can take on
business which is leaving Momentum. But he
says on that day his book will grow from R7bn to
R34bn. He provides all the administration, compliance and marketing backup the fund houses.
“This is all I do,” says Walton, “so the
managers wake up one day to find that the
business unit has been closed, and many of the
outsourcing businesses at the large houses have
been closed. The white labelling, or hosting of
funds by management companies, has been
controversial, not least because of the quality of
some of the funds, particularly those managed by
advisers and not by professional asset managers.”
But Walton says minimum levels of compliance and transparency are not negotiable. He
has brought some top houses on board, including
two of the finalists in the Morningstar small fund
house of the year, Southern Charter and AS Sure.
BCI might soon become the largest component of
its parent company, the Efficient Group, as it
offers a full backup service to aspiring unit trust
businesses, on an asset base of R34bn.
Stephen Cranston

FINANCIAL MAIL • TOP COMPANIES • 2014

INVESTMENT

INVESTMENT

✥

97

Financial Mail Page 98-99 -13/06/14 05:40:32 PM

✥

In need of a

confidence boost

P

erhaps the best brief analysis of SA’s
economic malaise of the past few years
came from Nomura analyst Peter Attard
Montalto. In May this year, as SA celebrated 20 years of democracy, Montalto
noted that while the lives of average South
Africans are undoubtedly much better, quality of
life generally could have been far better with
alternative policy choices.
In June the IMF and the World Bank revised
their predictions for GDP growth in SA for 2014
downwards to around 2%. And there are fears
that, due to contraction in mining
and manufacturing as a result of the
prolonged strike in the platinum
sector, SA will have two successive
quarters of negative growth, thus
technically entering a recession for
the first time in five years.
Economists have for months
been noting the factors that point to
lower growth. In particular, the
consumer is not about to come to
the rescue, as household indebtedness is still around record levels.
Montalto pointed to some moderately encouraging aspects behind
Gill Marcus
the depressing headline numbers.
“The youth wage subsidy, the public
sector build programme and a more
general fiscal response from government to
counter external shocks (in a stalling of
consolidation) could offset the negative rate
effects to some degree, offsetting the last point.
“Corporates are cash-rich but not in cyclically
adjusted terms. This basically means there is
sufficient cash at this recovery point of the cycle
to fund expansions without the need for credit
extensions to reach particularly high levels
during the rate-hiking cycle.
“Real rates are still historically low and so real
wage increases look very healthy at this point in
the cycle. Equally, neither the SARB nor our-

selves expects strong inflation as our baseline
with simply a period of rising core and headline
inflation sitting on the top of the central bank’s
target — this means some shielding of households from rate increases on this front.”
The Reserve Bank has said it will do its best to
stave off rate increases. Though inflation is
pushing the upper end of the 3%-6% band, the
fear is that nascent economic growth will be
snuffed out by a hike. In mid-June governor Gill
Marcus warned that export figures will be
affected if the five-month-long platinum strike
continues. She said the strike has already negatively affected economic growth, but has not yet
shown an effect on export data as mining houses
have significant platinum inventories.
“However, these inventories are being
depleted and the longer the strike continues, the
sooner the adverse effects on exports will be
felt,” she said. Like new finance
minister Nhlanhla Nene, Marcus
believes a recession is unlikely but
urged all sectors to work together to
rebuild confidence. “It behoves all
of us — government, business and
labour — to rebuild the confidence
and trust that is an imperative to
change the negative trajectory that
the economy is presently on.”
She said the main risks to the
economy are the strike and electricity supply constraints, with the
stoppage accounting for 19 percentage points of the total mining
sector contraction in Q1.
At the same time, new mining
minister Ngoaka Ramathlodi
signalled government’s frustration and
impatience with the strike, warning for the first
time that shafts and mines might have to close. It
was the first time that government appeared to
take the side of the mining companies.
What seems clear is that the platinum strike
may have changed the labour, business and
government relations landscape more dramatically than any other event in the past 30 years.
How the parties handle this will determine
whether SA will take a high or low economic
road as the global economy slowly recovers.
David Williams
Business Day

As the global economy
slowly recovers, SA moves
in the opposite direction

98

✥

FINANCIAL MAIL • TOP COMPANIES • 2014

CORPORATE GOVERNANCE

It should
all be
about

openness
Alleged executive
transgressions should be
dealt with in a transparent
way

T

he suspension of a senior executive of
any listed entity is a serious matter,
especially if that person is the financial
director or chief financial officer (CFO).
Three cases over the past eight months
— at Telkom, Pinnacle Holdings and Protech
Khuthele — have raised questions about how
transparent boards are (and should be) about
executive transgressions or alleged transgressions.
It is also not clear whether the present
approach by boards to report these issues
through the Stock Exchange News Service (Sens)
is adequate and serving
its intended purpose — to
inform investors without
favour on matters that,
once known, could have a
material impact on the
share price.
In early June 2014,
investors in Telkom could
be forgiven for having
forgotten the identity of
its CFO — suspended at
that stage for seven
months, with no information on his case for
almost as long. The bones
of the matter were briefly
revealed in a series of
Sens announcements:
❑ September 30 2013:
Telkom CFO Jacques

✥

Schindehütte buys 243 700 shares worth R5,9m.
❑ October 2 2013: A routine update on Telkom
directors’ dealings states that “clearance has been
obtained in respect of these dealings in securities
on the open market”.
❑ October 8 2013: A trading update states that
Telkom’s basic and headline earnings per share
for the six months to end-September 2013 are
expected to be at least 20% higher than those of
the prior comparable period.
❑ October 24 2013: Shareholders are told that
Schindehütte has been suspended immediately
pending a disciplinary process. This follows a
probe commissioned by the board after “certain
allegations were made against Schindehütte”.
❑ October 25 2013: “This note is issued to shareholders in order to clarify certain misconceptions
about and to dispel speculation on the reasons
behind Schindehütte’s suspension.” The board
states unequivocally that “there is no connection
whatsoever between the suspension and the
insider trading inquiry instituted by the JSE in
relation to Schindehütte’s trade in Telkom shares
on September 30 2013”.
However, the board’s October 25 statement
also stated that “the suspension has no connection with and will not have an impact on the
financial performance of the company. The
suspension relates to allegations of personal
misconduct levelled against Schindehütte and
which came to the board’s attention through a
whistle-blower”.
In early June, more than seven months after
the suspension started, he remains suspended
and there has not been a word on the
disciplinary process.
One other subsequent Sens comment related
to Schindehütte, and it was immediately assumed by many commentators that this might
explain the suspension:
Sipho Maseko
❑ February 24 2014:
Telkom announces it has
received a compliance
notice from the Companies & Intellectual
Property Commission
(CIPC) relating to an
interest-free loan to
Schindehütte during
November 2013. The CIPC
says it believes Telkom
has contravened the
Companies Act, as the
payment of the loan “was
authorised prematurely
and prior to the board of
directors of Telkom
passing the necessary

FINANCIAL MAIL • TOP COMPANIES • 2014

Business Day

ECONOMY

INVESTMENT

INVESTMENT

✥

99

Financial Mail Page 100-101 -13/06/14 05:41:02 PM

100

CORPORATE GOVERNANCE

precursory financial assistance resolutions”.
The CIPC, part of whose mandate is the
“efficient and effective enforcement of relevant
legislation”, required Telkom to recover the loan
(which was done) and ordered Telkom CEO
Sipho Maseko “to attend a corporate governance
and director duties course within 90 business
days”. Such an order to the CEO of a listed
company is humiliating and unprecedented, but
apparently Maseko had no choice but to obey it.
What the order strongly implied was that the
loan to Schindehütte should not have been
approved by Maseko, though the company
sought to make it clear that this had been done
in good faith. Could the loan have been the
reason for Schindehütte’s suspension? If so, the
CIPC directive would have offered an opportunity to confirm this, but there has been no
confirmation or denial from Telkom.
There has inevitably been much speculation
on what Schindehütte is alleged to have done, or
not done. The disciplinary process remains
shrouded in silence, perhaps for legal reasons.
But shareholders surely have a right to some
clarification, and the Sens process has raised the
matter only to obscure it.
Then there was the case of Pinnacle Holdings,
a successful player in the ICT sector. One of its
directors, Takalani Tshivhase, was arrested in
January 2013 on suspicion of offering a bribe of
R5m to a lieutenant-general in the SA Police
Service. However, the company only announced
this more than a year later.
❑ March 25 2014: Pinnacle states that Tshivhase
“denies all allegations of attempted bribery, and
will defend the charges. From the evidence thus
far available to the company, (it) is satisfied that
there is no reason to doubt the veracity of
Tshivhase’s denial of the allegations”.
However, as with the first Telkom statement
on Schindehütte, this aroused much controversy.
Why had the company not announced the
allegation of bribery a year earlier? The share
price dropped sharply and, as with Telkom,
Pinnacle was compelled to issue a second
statement the next day to explain the delay:
❑ March 26 2014: “The company, acting on legal
advice, made the announcement immediately
that a charge was formally made against Tshivhase. The making of the charge on Monday,
March 24 2014, was the moment at which criminal proceedings were initiated and was the
first appropriate time for the company to report
thereon.”
More to the point was the sale of Pinnacle
shares prior to the Sens announcement, by
parties with inside knowledge of the arrest — a
family trust connected to CEO Arnold Fourie
(1,2m shares sold) and Tshivhase himself

✥

(200 000 shares worth around R4m).
The company explained that “these sales
occurred prior to the bringing of any charge
against Tshivhase and therefore prior to the Sens
announcement.”
It also said the first sale was occasioned by the
exercise of an option and was therefore a forced
sale, and that Tshivhase’s sale represented “a
very small percentage of his holdings and was
related to the need to fund a specific transaction
of a personal nature”. Two subsequent
statements were made:
❑ April 24: Pinnacle announces that Tshivase has
appeared in court in the morning and the matter
is postponed until July 2.
❑ April 30: Pinnacle says the Financial Services
Board (FSB) has registered an investigation in
terms of section 84 of the Financial Markets Act,
relating to insider trading in “share transactions
in the company executed during March 2014”.
Pinnacle said that it had taken legal advice
before it decided not to immediately announce
the allegation of bribery. But the reaction of the
market when the announcement was eventually
made showed that to be legally in the right might
not be sufficient. The two share trades may well
have been explicable and innocent, but the FSB
thought they were worth investigating. Did the
Pinnacle board apply its mind fully to these
matters? And did it make the best use of Sens?
At the end of May 2014, Protech Khuthele, a
small construction company, announced that it
had filed for business rescue because it did not
have cash to meet its commitments. Two days
earlier the CEO and two nonexecutive directors
had resigned. There had been earlier warning
signs via SENS — at the end of January, Protech
admitted that its cash resources were “under
considerable strain” because of a nonperforming
contract in the Democratic Republic of Congo.
But was enough attention paid to the news
that a special board meeting was held in December 2013 to discuss “the way forward” — and in
particular the evidently tense relationship with
major shareholder Eqstra? Or to the earlier
announcement in November that the financial
director had not been re-elected to the board at
the AGM? He continued working for the firm —
but why was he moved off the board?
The spirit of disclosure is to ensure the release
of all relevant information to all players to make
certain that the market works fairly and efficiently. These cases show that it is easy to
observe the letter but not the spirit and —
through cryptic announcements — to obscure
issues relevant to investors, rather than throw
light on them. The media, analysts and investors
should not have to do detective work to find out
what is going on in a company.
David Williams

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

LEGAL ADVISERS

✥

A move in the
right direction

SERVICES

INVESTMENT

✥

The benefits of mediation can now finally help alleviate
pressure in the justice system

M

ediation will be introduced as a
preferred alternative to litigation in
magistrates’ courts from August 1,
when amendments to the rules
regulating the conduct of
proceedings of these courts come into effect.
The revised rules, following from the Rules
Board for Courts of Law Act, include the addition
of a chapter regulating court-annexed mediation.
They were published in the Government Gazette in
March for public comment.
The Centre for Effective Dispute Resolution, a
global conflict management and resolution
consultancy, defines mediation
as “a flexible process
conducted confidentially in
which a neutral person actively
assists parties in working
towards a negotiated
agreement of a dispute or
difference, with the parties in
ultimate control of the decision
to settle and the terms of the
resolution”.
Yvonne Wakefield, founder
of Caveat Legal, a local
low-cost legal service provider,
says it is hoped the
introduction of court-annexed
mediation into the SA legal
system will lead to quicker and
more cost-effective dispute
resolution in matters that fall
under the jurisdiction of the
magistrates’ courts.
In terms of the new rules, a
magistrate or the parties
themselves may refer a dispute
for mediation prior to the
commencement of litigation or

where litigation has already started, but before
judgment has been passed — and provided all
parties agree. The new rules set out the
procedures that must be followed once a dispute
has been referred to mediation.
Wakefield says mediation is increasingly
becoming a preferred option in complex
commercial disputes, workplace disputes and
those involving family trusts. This is because it
helps preserve relationships between litigants
and facilitates an expeditious and cost-effective
resolution of a dispute.
Acting judge Martin Brassey, in his judgment
in Brownlee v Brownlee in the
South Gauteng high court,
further stressed the need to
rely on mediation in
matrimonial disputes. The
judge voiced his unhappiness
at the failure of both parties’
Yvonne
attorneys in this matter, as they
Wakefield
did not advise their clients to
use mediation before settling
the matter through the court.
In line with this dissatisfaction,
the judge capped the fees of
the attorneys of both parties.
However, notwithstanding
the broadened jurisdiction of
magistrates’ courts as from
June 1 (regional courts will be
able to hear matters involving
amounts of up to R400 000),
most commercial disputes far
exceed the jurisdiction limits
and are usually resolved in the
high court, with litigation costs
running into hundreds of
thousands, even millions of
rand.

FINANCIAL MAIL • TOP COMPANIES • 2014

101

Financial Mail Page 102 -13/06/14 05:41:12 PM

SERVICES

✥

LEGAL ADVISERS

Industry players hope to see mediation rules
introduced into the high court in the near future.
Mieke Krynauw, a senior associate in mergers
and acquisitions at Bowman Gilfillan, says SA is a
latecomer to the commercial mediation space
compared to its global counterparts. However,
the judicial system can draw from an already
rich body of law and of practical and theoretical
literature in other jurisdictions, including the UK,
North America, the European Union, China,
Singapore and a number of Middle Eastern
countries.
“In addition to the lack of a statutory
framework, one of the primary hindrances to
large commercial cases going to mediation is that
many local commercial lawyers are unfamiliar

✥

with the benefits. And too often they have an
outdated perception that mediation is a ‘soft’
process relevant only in family law or labour
disputes,” she says. “Commercial mediation
facilitated by trained mediators can successfully
assist parties to resolve complex and large
commercial cases. At the very least, it can narrow
the issues to be decided in arbitration or
litigation.
“The introduction of court-annexed
mediation in the magistrate’s court is an
encouraging sign that the SA civil justice system
is moving in the right direction. Extending this
approach to the high court will free up an
overloaded court roll and benefit all parties
involved.”
Ruan Jooste

LEGAL ADVISERS AND CORPORATE CLIENTS
■ ABSA LEGAL SERVICES
SA Giants: Absa (16)
Top Performers: Absa (177)
■ ADAMS & ADAMS
SA Giants: Woolies (37)
Top Performers: Woolies (19)
■ ALLEN & OVERY LLP (UK)
SA Giants: Lonmin (65)
Top Performers: Lonmin
(298)
■ BAKER & MCKENZIE
SA Giants: Bidvest (8),
Adcorp (85), Trustco (220)
Top Performers: Bidvest
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(194)
■ BARNARD INC
SA Giants: Calgro (201)
Top Performers: Calgro (22)
■ BELL DEWAR INC
SA Giants: RBPlat (125),
Wildrness (168)
Top Performers: RBPlat
(238), Wildrness (275)
■ BERKOWITZ COHEN
WARTSKI
SA Giants: Gooderson (285)
Top Performers: Gooderson
(242)
■ BERNADT VUKIC POTASH &
GETZ ATTORNEYS
SA Giants: Mr Price (68),
Invicta (93), Spurcorp (215),
Trematon (320)
Top Performers: Mr Price
(21), Invicta (29), Trematon
(37), Spurcorp (67)
■ BLAKISTON & CRABB
(AUSTRALIA)
SA Giants: Gfields (32)
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(278)
■ BOTOULAS KRAUSE & DA
SILVA INC
SA Giants: EOH (108)
Top Performers: EOH (3)
■ BOWMAN GILFILLAN
102

SA Giants: Stanbank (12),
Barworld (18), Datatec (34),
ARM (52), Nampak (53),
Tongaat (64), Northam (115),
RBPlat (125), DRDGold (140),
Value (146), Trnshex (204)
Top Performers: Datatec
(69), Barworld (78), Nampak
(93), Control* (97), Trnshex
(118), Value (156), Stanbank
(172), Rebosis (173)
■ BRINK FALCON HUME INC
SA Giants: Afgri* (77),
ELBGroup (145), Rockwell
(262)
Top Performers: ELBGroup
(28), Rockwell (245)
■ CHRISTELIS ARTEMIDES
ATTORNEYS
SA Giants: Fambrands (134)
Top Performers: Fambrands
(17)
■ CLAYTON UTZ (PERTH)
SA Giants: Aquarius (124)
Top Performers: Aquarius
(302)
■ CLEARY GOTTLIEB STEEN
& HAMILTON LLP
SA Giants: SAB (6)
Top Performers: SAB (68)
■ COERTZEN WILLIAMS
ATTORNEYS
SA Giants: Calgro (201)
Top Performers: Calgro (22)
■ COGHLAN WELSH & GUEST
(ZIMBABWE)
SA Giants: Cafca (269)
Top Performers: Cafca (191)
■ COLLINS NEWMAN & CO
(BOTSWANA)
SA Giants: Wildrness (168)
Top Performers: Wildrness
(275)
■ COREUS (FRANKFURT)
SA Giants: Steinhoff (10)
Top Performers: Steinhoff
(38)
■ COUZYNS INC
FINANCIAL MAIL • TOP COMPANIES • 2014

SA Giants: Omnia (66)
Top Performers: Omnia (61)
■ COX YEATS ATTORNEYS
SA Giants: Tongaat (64),
Hulamin (341)
Top Performers: Tongaat
(182), Hulamin (269)
■ DE CHALAINS
SA Giants: BCX (98)
Top Performers: BCX (138)
■ DLA CLIFFE DEKKER
HOFMEYR
SA Giants: Steinhoff (10),
Richmont (11), Massmart (19),
Medclin (48), WBHO (49),
Santam (50), PNR Foods (51),
Remgro (59), Omnia (66),
LifeHC (70), Sunint (75)
Top Performers: Metair (9),
Richmont (27), Brimston
(35), Steinhoff (38), LifeHC
(42), Omnia (61), PNR Foods
(72), Medclin (80)
■ DM KISCH INC
SA Giants: Primeserv (216)
Top Performers: Primeserv
(236)
■ DEREK H RABIN &
ASSOCIATES
SA Giants: Itltile (138)
Top Performers: Itltile (86)
■ DOGULIN SHAPIRO & DA
SILVA INC
SA Giants: Dorbyl (281)
■ DORSEY & WHITNEY LLP
SA Giants: Fiuunit* (244)
■ EDELSTEIN-BOSMAN INC
SA Giants: Digicor (195),
Ansys (290)
Top Performers: Ansys
(254), Digicor (261)
■ EDWIN JAY INC
SA Giants: Moneywb (316)
Top Performers: Moneywb
(266)
■ ELVINGER, HOSS &
PRUSSEN (LUXEMBOURG)

Financial Mail Page 103 -13/06/14 05:41:31 PM

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Webber Wentzel is an associate member of ALN, an integrated network with member firms in
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FM_WebberWentzel submission_topcomp_HR copy.indd 1

12/06/2014 15:05:57

Financial Mail Page 104-105 -13/06/14 05:42:35 PM

✥

LEGAL ADVISERS

✥

✥

104

SA Giants: Reinet (362)
Top Performers: Reinet (125)
■ ENSafrica (EDWARD
NATHAN SONNENBERGS)
SA Giants: BATS (4), Sanlam
(5), Sasol (7), Bidvest (8),
Massmart (19), Picknpay (22),
Pikwik (23), Nedbank (24),
Gfields (32), Woolies (37)
Top Performers: Woolies (19),
Brimston (35), Trencor (47),
Oceana (48), Seardel (50),
Litha (55), Sabvest (59),
Sanlam (71), HCI (76)
■ EOH LEGAL SERVICES
SA Giants: ArcMittal (40),
Exxaro (60)
Top Performers: Exxaro
(136), ArcMittal (285)
■ EVERSHEDS
SA Giants: Itltile (138), Kelly
(150), Workforce (159),
Keaton (193), Insimbi (197),
Fiuunit* (244), Taste (230),
PSV (233), JCI* (328)
Top Performers: Taste (4),
Itltile (86), Workforce (130),
Insimbi (215), Kelly (267),
PSV (288), Keaton (303)
■ FASKEN MARTINEAU
DUMOULIN LLP (CANADA)
SA Giants: Urone* (111),
Fiuunit* (244)
■ FLUXMANS INC
SA Giants: Suprgrp (71),
Afgri* (77), Caxton (107),
Winhold (186), Wearne (242),
Invprop (247), Secdata*
(257), AME (270)
Top Performers: Poynting
(8), Suprgrp (54), AME (65),
Compclear (150), Invprop
(152), Vividend (201)
■ FRIEDLAND HART
SOLOMON & NICOLSON
SA Giants: Finbond (340)
Top Performers: Finbond (11)
■ GARLICKE & BOUSFIELD
INC
SA Giants: Spar (31), Tongaat
(64), Bonatla (319)
Top Performers: Spar (114),
Tongaat (182)
■ GIDE LOYRETTE NOUEL
AARPI (PARIS)
SA Giants: Steinhoff (10)
Top Performers: Steinhoff
(38)
■ GILDENHUYS MALATJI INC
SA Giants: Silverb (298)
Top Performers: Silverb
(286)
■ GIRARD HAYWARD INC
SA Giants: York (182)
Top Performers: York (264)
■ GLYN MARAIS INC
SA Giants: Sanlam (5),
Firstrand (17), Growpnt (100),
Andulela (163), Verimark
(239), VPIF (266), Blue

(339), Invltd (345)
Top Performers: FirstRand
(58), Verimark (62), Sanlam
(71), Invltd (127), Growpnt
(134), VPIF (145)
■ GRAYSTON ELLIOT
SA Giants: Zeder (254)
Top Performers: Zeder (98)
■ HALSTEAD PAOLA
SA Giants: Nutrition (317)
Top Performers: Nutrition
(284)
■ HERBERT SMITH
FREEHILLS
SA Giants: Lonmin (65)
Top Performers: Lonmin
(298)
■ HR LEVIN ATTORNEYS
SA Giants: Fambrands (134),
Amecor (255), Infrasors
(259)
Top Performers: Fambrands
(17), Amecor (36), Infrasors
(110)
■ HUTCHEON ATTORNEYS
SA Giants: Adrenna (318)
Top Performers: Adrenna
(257)
■ JAVA CAPITAL
SA Giants: Redefine (121),
Hyprop (136), CIL (141), Ellies
(144), Andulela (163),
Buildmax (177), Mixtel (179),
Conduit (180)
Top Performers: Mixtel (5),
Onelogix (7), Kaydav (40),
CIL (57), Ellies (63), Austro
(84), Conduit (107)
■ JONES DAY
SA Giants: ResGen (366)
Top Performers: ResGen
(255)
■ KWA ATTORNEYS
SA Giants: Wescoal (213)
Top Performers: Wescoal
(104)
■ KERN & PARTNERS
SA Giants: CountryB (126)
Top Performers: CountryB
(185)
■ KNOWLES HUSAIN
LINDSAY INC
SA Giants: Accent (258)
Top Performers: Accent
(243)
■ LARSON FALCONER
HASSAN PARSEE INC
SA Giants: IFA* (307)
■ LE ROUX, VIVIER &
ASSOCIATES ATTORNEYS
SA Giants: Fairvest (308)
Top Performers: Fairvest (171)
■ LEVIN VAN ZYL INC
SA Giants: Indeqty (313)
Top Performers: Indeqty (49)
■ LINKLATERS (UK)
SA Giants: Glencore (1),
BHPBill (2), Anglo (3),
Steinhoff (10), OldMutual
(30), Gfields (32), Intuprop
FINANCIAL MAIL • TOP COMPANIES • 2014

✥

LEGAL ADVISERS AND CORPORATE CLIENTS
(91), Mpact (95), Capco (154)
Top Performers: Capco (20),
Steinhoff (38), OldMutual
(43), Mpact (96), BHPBill
(175), Anglo (189), Intuprop
(213), Gfields (278)
■ LIVINGSTON LEANDY INC
SA Giants: Santova (130),
Crookes (241)
Top Performers: Santova
(116), Crookes (196)
■ M PARTNERS
SA Giants: MAS (312), Brait
(350)
Top Performers: Brait (34),
MAS (164)
■ MALAN SCHOLES INC
SA Giants: BlueTel (55)
Top Performers: BlueTel
(169)
■ MARTINI & PATLANSKY
ATTORNEYS
SA Giants: AME (270)
Top Performers: AME (65)
■ MAWERE & SIBANDA
LEGAL PRACTITIONERS
(ZIMBABWE)
Top Performers: Hwange
(314)
■ MCCARTHY TETRAULT LLP
(CANADA)
SA Giants: Atlatsa (191)
Top Performers: Atlatsa
(252)
■ MCMILLAN LLP
SA Giants: Eastplats (211)
Top Performers: Eastplats
(304)
■ MCPHERSON KRUGER
ATTORNEYS
SA Giants: Dcentrix (149)
Top Performers: Dcentrix
(157)
■ MICHAEL KRAWITZ & CO
SA Giants: Rex True (235),
Af & Ovr (236)
Top Performers: Rex True
(204), Af & Ovr (220)
■ MILBANK (US)
SA Giants: Steinhoff (10)
Top Performers: Steinhoff
(38)
■ MINTER ELLISON
(AUSTRALIA)
SA Giants: Gfields (32)
Top Performers: Gfields
(278)
■ MOSS COHEN & PARTNERS
SA Giants: Micromega (205)
Top Performers: Micromega
(6)
■ MOURANT OZANNES
SA Giants: Pallinght (363)
Top Performers: Pallinght
(221)
■ NORTON ROSE FULBRIGHT
CANADA LLP
SA Giants: Eastplats (211),
Delrand (372)
Top Performers: Delrand

(273), Eastplats (304)
■ NORTON ROSE FULBRIGHT
SA
SA Giants: Firstrand (17),
Kumba (33), ARM (52),
Omnia (66), Assore (67),
Coronat (123), Sanyati (161),
Huge (261), Rare (278)
Top Performers: Coronat (1),
Labat (10), Assore (41),
Firstrand (58), Omnia (61),
Kumba (75), ARM (200)
■ PETER WENTZEL
ATTORNEYS
SA Giants: Primeserv (216)
Top Performers: Primeserv
(236)
■ PSG CAPITAL
SA Giants: Zeder (254)
Top Performers: Zeder (98)
■ PAGDENS
SA Giants: Sovfood (170)
Top Performers: Sovfood
(246)
■ PAUL HASTINGS LLP
SA Giants: Blackstar (184)
Top Performers: Blackstar
(188)
■ PENNINGTONS MANCHES
LLP
SA Giants: Sabvest (352)
Top Performers: Sabvest
(59)
■ PETERSEN HERTOG &
ASSOCIATES
SA Giants: Afdawn (330)
Top Performers: Afdawn
(316)
■ PINSENT MASONS LLP
SA Giants: IPSA (306)
Top Performers: IPSA (292)
■ PRINSLOO, TINDLE &
ANDROPOULOS INC
SA Giants: ABIL (118), Alert
(208)
Top Performers: ABIL (268),
Alert (320)
■ READ HOPE PHILLIPS
ATTORNEYS
SA Giants: Adcock (104),
Village (127)
Top Performers: Adcock
(181), Village (223)
■ ROBERT MITCHLEY
ATTORNEY
SA Giants: 1Time (169)
■ ROODT INC
SA Giants: S Ocean (165),
Phumelela (194)
Top Performers: Phumelela
(144), S Ocean (260)
■ RUDOLPH, BERNSTEIN &
ASSOCIATES
SA Giants: Cenrand (277)
Top Performers: Cenrand
(321)
■ RUSHMERE NOACH INC
SA Giants: Iquad* (297)
■ SCHALK BRITZ INC

SA Giants: Torre (299)
■ SCHWARZ-NORTH INC
SA Giants: Sqone (271)
■ SHAPIRO-AARONS INC
SA Giants: Hosp (251)
Top Performers: Hosp (179)
■ SHEPSTONE & WYLIE
ATTORNEYS
SA Giants: Tongaat (64),
CMH (84), Masnite (214),
Adaptit (256), Biosci (322)
Top Performers: Adaptit (2),
CMH (99), Tongaat (182),
Masnite (206)
■ SLAUGHTER AND MAY (UK)
SA Giants: BHPBill (2),
OldMutual (30)
Top Performers: OldMutual
(43), BHPBill (175)
■ SMIT SEWGOOLAM INC
SA Giants: BCX (98),
Net1UEPS (119)
Top Performers: BCX (138),
Net1UEPS (258)
■ STAN FANAROFF &
ASSOCIATES
SA Giants: AH-Vest (286)
Top Performers: AH-Vest
(277)
■ STEINEPREIS PAGANIN
(AUSTRALIA)
SA Giants: Firestone (364)
Top Performers: Firestone
(283)
■ STRAND PARTNERS (UK)
SA Giants: Lonrho* (129)
■ STRAUSS SCHER
ATTORNEYS
SA Giants: Growpnt (100)
Top Performers: Growpnt
(134)
■ SWEIDAN ATTORNEYS
SA Giants: Mustek (110)
Top Performers: Mustek (70)
■ TW FERGUSON
SA Giants: Seakay (275),
Mastdrill (293)
■ TABACKS
SA Giants: Woolies (37),
Tongaat (64), AVI (82),
Metair (106), Metmar (142),
Trnshex (204)
Top Performers: Metair (9),
Woolies (19), AVI (66),
Trnshex (118), Tongaat (182),
Metmar (281)
■ TANYA BESSINGER LEGAL
CONSULTANT
SA Giants: BCX (98)
Top Performers: BCX (138)
■ THEUNISSEN LOUW &
PARTNERS (NAMIBIA)
SA Giants: Nictus (265)
Top Performers: Nictus (237)
■ THOMSON WILKS INC
SA Giants: Esorfrank (135),
Miranda (348)
Top Performers: Esorfrank
(291), Miranda (306)
FINANCIAL MAIL • TOP COMPANIES • 2014

■ TRAVERS SMITH LLP (UK)
SA Giants: Steinhoff (10)
Top Performers: Steinhoff
(38)
■ TUGENDHAFT WAPNICK
BANCHETTI & PARTNERS
SA Giants: Pinnacle (96),
ABIL (118), Litha (164),
Octodec (228), Premium
(237), Bonatla (319)
Top Performers: Pinnacle
(16), Litha (55), Premium
(137), Octodec (167), ABIL
(268)
■ VAN DER MERWE
ATTORNEYS
SA Giants: Afgri* (77)
■ VAN DER MERWE-GREEFF
INC
SA Giants: Trustco (220)
Top Performers: Trustco
(194)
■ VAN HOEPEN ATTORNEYS
SA Giants: Indeqty (313)
Top Performers: Indeqty (49)
■ VAN HULSTEYNS
ATTORNEYS
SA Giants: Rangold (354)
Top Performers: Rangold
(265)
■ VAN HUYSSTEENS
SA Giants: Telemastr (283)
Top Performers: Telemastr
(249)
■ VAN DER HEEVER &
ASSOCIATES
SA Giants: Cashbil (97)
Top Performers: Cashbil
(146)
■ VAN DER MERWE DU TOIT
INC
SA Giants: Rolfes (200)
Top Performers: Rolfes (45)
■ VAN DER SPUY &
PARTNERS
SA Giants: Capitec (86)
Top Performers: Capitec (26)
■ WEBBER WENTZEL
SA Giants: Anglo (3), MTN
Group (9), Firstrand (17),
Mondi (20), Aveng (28),
Woolies (37), Implats (42),
ARM (52), Remgro (59)
Top Performers: Afrimat (15),
Woolies (19), Capco (20),
Mondi (30), Metrofile (32),
RMIH (39), Assore (41),
Oceana (48), Firstrand (58)
■ WERKSMANS ATTORNEYS
SA Giants: Glencore (1),
Sanlam (5), Bidvest (8),
Naspers (29), Lib Hold (41),
Santam (50), PNR Foods (51),
Aspen (54), Afgri* (77)
Top Performers: Naspers
(24), Aspen (33), Sanlam
(71), PNR Foods (72), Pergrin
(74), Afro-C (82), Bidvest
(85), Santam (92)
*Delisted

SERVICES

SERVICES

LEGAL ADVISERS AND CORPORATE CLIENTS

LEGAL ADVISERS

105

Financial Mail Page 106-107 -13/06/14 05:42:58 PM

✥

ACCOUNTANTS

landscape
tightens
further
With SA staying ahead as a
number of requirements are
already in practice

T

hough the fundamental role and
reporting responsibilities of a company’s
auditor have remained constant over the
years, the regulatory environment in
which they operate has become quite
burdensome — and rightfully so.
“The industry cannot
afford another large
failure,” says Andrew
Mackie, leader of Clients &
Industries for Audit Africa
at Deloitte. “Auditors have
accepted and embraced
the fact that the audit
industry is a regulated
profession, and auditing
standards and audit quality
are entrenched in law.”
He says company audit
committees — comprising
independent nonexecutive
directors — are
increasingly asserting their
right and obligation to
determine the scope of
audits and negotiate audit
fees, independently of
management, as is
required by the Companies
Act.
Regulators abroad,
however, feel more can be
done. There is a growing
expectation that the
statutory audit report
should provide more
insight into areas of risk
within the financial
statements.

106

The International Auditing & Assurance
Standards Board, the US Public Company
Accounting Oversight Board and the European
Union have issued proposals to make auditors’
reports more informative. They have introduced
a new section providing insight into key audit
matters that are of most significance or involve
the most difficulty.
“This will be a significant change in reporting.
And, as a result, auditors’ dialogue with audit
committees in future will inevitably include
discussions on such critical audit matters and
what they propose to say about them,” says
Brendan Deegan, head of Assurance for Africa at
PwC.
He says there is also a wider recognition that
corporate reporting needs to continue to evolve
from the traditional annual reporting to a
broader and more integrated approach.
“In SA, we are at the forefront of this thinking,
due primarily to the JSE requirement for all listed
companies to prepare integrated reports, which
in many cases will contain nonfinancial data
such as sustainability, rather than old-style
annual reports. Notwithstanding this, there is still
a long way ahead before the practice of
preparing and assuring
integrated reports is well
developed,” says Deegan.
Furthermore, in April
the European parliament
ratified and formally
adopted proposals
intended to reform its
audit market. These
include the mandatory
rotation of audit firms after
10 years; a cap on the
provision of nonaudit
services; and further
restrictions on the
provision of nonaudit
services.
The regulatory position
in SA on audit rotation,
however, is that the audit
partner (not the firm)
needs to rotate every five
years. Most audit firms
support this position, as
does the recently released
Practice Note issued by the
Institute of Directors and
the King committee.
The Practice Note takes
a balanced view by
Andrew
highlighting the pros and
Mackie
cons of mandatory
rotation, commenting on

FINANCIAL MAIL • TOP COMPANIES • 2014

✥

ACCOUNTANTS

the various developments in territories around
the world — for example, the US, Australia and
Canada do not support it. It then concludes that
mandatory rotation actually takes away the
rights of the audit committee and shareholders to
decide who their auditors should be and when it
is necessary to change them.
It also states that, through compliance with
the SA legal and regulatory frameworks, the
objectives of enhancing the independence and
objectivity of the auditor and the quality of the
audit will be better served.
Andrew Hannington, CE of Grant Thornton
Johannesburg, agrees and says SA already has a
sufficiently robust regulatory framework that
avoids the conflicts which these reforms set out
to address.
This is most clearly evident in the local
stipulation of audit partner rotation every five
years, in terms of the Companies Act, as opposed
to the audit firm rotation as expected in the EU.
He argues that the factors that make this

Net closes
in for
corporate tax
evaders
But until more jurisdictions
commit, culprits will still use
existing loopholes

N

ew global standards on the exchange
of tax information, intended to raise
the bar for international co-operation,
will make it easier for the authorities
to track down corporate tax cheaters
and to fight tax evasion.
The global common reporting standard for the
automatic exchange of information between tax
authorities is the brainchild of the Organisation
for Economic Co-operation & Development
(OECD). It has a strong focus on tax collection,
compliance and international co-operation to

✥

unsustainable in SA include the tremendous cost
involved in rotating firms, as well as loss of
corporate knowledge.
Another area in which SA already surpasses
the new regulations is in the requirement that
nonaudit services account for no more than 70%
of the audit fee. SA practice tends to be less than
the maximum proposed in Europe, Hannington
says.
The Companies Act also already imposes
limitations on the scope of services that auditors
can provide, he says. Similarly, the EU reforms
that call for greater communication and
transparency to shareholders by the auditors are
already well entrenched in local reporting
practices.
“Given IFRS [International Financial
Reporting Standards], Companies Act and JSE
disclosure requirements, I think shareholders are
getting more than enough information and I
would be surprised if there is a demand for more
information,” Hannington says.
Ruan Jooste

SERVICES

SERVICES

Regulatory

✥

increase revenue collections.
The common reporting standard will require
financial institutions and brokers to report
information to the tax authorities in their own
jurisdictions, which will in turn be shared with
the tax authorities of other relevant countries.
This comes in the wake of a mandate from
the G20 leaders to take action against tax
evasion, as well as to promote greater fairness
and trust in the international tax system — at a
time when economic uncertainty prevails and
national deficits expand.
To date, more than 40 jurisdictions have
committed to the new standard, including SA.
Tax evasion is a hot topic, and the biggest
culprits seem to be large multinational
corporations. Huge globalised US-listed
companies Amazon, Google and Apple have been
put through the wringer in the US and Europe
due to alleged dubious tax practices.
India has gone after Cadbury, Vodafone and
Nokia. And more recently a Chinese state-run
newspaper has accused British drugmaker
GlaxoSmithKline of evading at least 100m yuan
in taxes.
Closer to home, tax evasion charges against
cellphone giant MTN Uganda were filed but later
dropped. SABMiller has also been accused by the
Tax Justice Network and Action Aid of doing the
same in Ghana, but without result.
Data in a Global Finance Integrity report
shows that global corporate tax evasion
accounted for 60%-65% of the global total for

FINANCIAL MAIL • TOP COMPANIES • 2014

107

Financial Mail Page 108-109 -13/06/14 05:43:22 PM

ACCOUNTANTS

illicit financial flows. This is well above the global
proceeds generated through criminal activities
and corruption, which accounted for 30%-35%
and 3% respectively.
No proceeds of commercial tax evasion were
calculated for Africa. But a separate report by the
Africa Progress Panel in 2013 revealed that an
estimated US$38bn is being removed from the
continent every year due to “illicit deals such as
tax avoidance and evasion, unfair pricing
practices and secrecy around company
ownership and revenue flows”.
Companies and other legal structures such as
trusts, whose ownership and control are not clear
are viewed as a key mechanism of tax avoidance,
according to Zweli Mabhoza, head of tax at
SizweNtsalubaGobodo. And this can seriously
undermine many countries’ development efforts.
“The opaque nature of ownership also
frustrates countries negotiating with one another
on who should be allowed to tax what on a
certain company. Even where the taxing rights
are clear, these structures ultimately shift profits
to jurisdictions with lower taxes,” he says.
The second area of concern involves transfer
pricing. This is where a company uses
intersubsidiary charges, often at hugely inflated
or deflated rates, in order to move revenue into
more favourable tax environments. That way it
avoids heavy profit taxation in the country
where the revenue was actually generated.
“Multinationals often report huge profits in tax
havens such as Ireland, the Cayman Islands and
the Isle of Man — very much out of proportion to
their economic activity there,” says Mabhoza.
“Such governments may also find it difficult
to deal with political aspects relating to various
tax laws,” he adds. For example, certain countries
need to consult extensively before they can
implement any changes in tax laws. Other

✥

✥

ACCOUNTANTS

✥

AUDITORS AND CORPORATE CLIENTS
Stefstock (193)
■ BANCO SANTANDER SA
(SPAIN)
SA Giants: Bell (101)
Top Performers: Bell (89)
■ BANK OF AMERICA (US)
SA Giants: Aspen (54)
Top Performers: Aspen (33)
■ BANK OF MONTREAL
SA Giants: Eastplats (211)
Top Performers: Eastplats
(304)
■ BANK OF WINDHOEK
SA Giants: Trustco (220)
Top Performers: Trustco
(194)
■ BANQUE CANTONALE DE
FRIBOURG (SWITZERLAND)
SA Giants: Bell (101)
Top Performers: Bell (89)
■ BARCLAYS BANK (MIDDLE
EAST)
SA Giants: Stefstock (81)
Top Performers: Stefstock
(193)
■ BARCLAYS BANK (UK)
SA Giants: Anglo (3), SAB
(6), Bidvest (8), Aveng (28),
Suprgrp (71), Intuprop (91),

Dennis Davis

Bell (101), Lonrho* (129),
Afeagle (369), Diamondcp
(371)
Top Performers: Suprgrp
(54), SAB (68), Bidvest (85),
Bell (89), Anglo (189), Intuprop (213), Aveng (232),
Diamondcp (296)
■ BARCLAYS BANK
(ZIMBABWE)
SA Giants: Cafca (269)
Top Performers: Cafca (191)
■ BIDVEST BANK
SA Giants: Stefstock (81)
Top Performers: Stefstock
(193)
■ CALYON CORPORATE &
INVESTMENT BANK
SA Giants: ArcMittal (40)
Top Performers: ArcMittal
(285)
■ CANADIAN IMPERIAL
BANK OF COMMERCE
SA Giants: GB Gold* (174),
Atlatsa (191)
Top Performers: Atlatsa
(252)
■ CHINA CONSTRUCTION
BANK

SA Giants: Nuworld (148)
Top Performers: Nuworld
(216)
■ CITIBANK INTERNATIONAL
SA Giants: Oando (36)
Top Performers: Oando (259)
■ CITIBANK NA
SA Giants: Shoprit (13),
Oando (36), Telkom (39),
ArcMittal (40), JDGroup
(45), Invicta (93), Nuworld
(148)
Top Performers: Invicta (29),
Shoprit (87), Nuworld (216),
Telkom (218), JDGroup (239),
Oando (259), ArcMittal (285)
■ COMMONWEALTH BANK OF
AUSTRALIA
SA Giants: Bidvest (8),
Aveng (28), Aspen (54),
Suprgrp (71)
Top Performers: Aspen (33),
Suprgrp (54), Bidvest (85),
Aveng (232)
■ CONSOLIDATED
DISCOUNTS (NIGERIA)
SA Giants: Oando (36)
Top Performers: Oando (259)
■ COUTTS & CO (UK)

SERVICES

SERVICES

✥

countries that are viewed as tax havens believe
that low taxes attract businesses and they may
not be prepared to forgo this advantage.
In SA former finance minister Pravin Gordhan
kicked off a major tax system review in 2013,
with the global tax evasion debate as its
backdrop. Currently under way, the investigation
led by Judge Dennis Davis is undertaking a “tax
review to assess our tax policy framework and its
role in supporting the objective of inclusive
growth, employment, development and fiscal
sustainability”.
Ruan Jooste

AUDITORS AND CORPORATE CLIENTS
■ ASB BANK (UK)
SA Giants: Bidvest (8)
Top Performers: Bidvest (85)
■ ABSA BANK
SA Giants: BHPBill (2),
Sanlam (5), Sasol (7),
Bidvest (8), Shoprit (13),
Imperial (14), Absa (16),
Barworld (18), Massmart (19),
Picknpay (22), Pikwik (23),
Aveng (28), Naspers (29),
Kumba (33), MMI (38),
Telkom (39), ArcMittal (40)
Top Performers: EOH (3),
Poynting (8), Metair (9),
Labat (10), Finbond (11),
Fambrands (17), ISA (18), Mr
Price (21), Curro (23),

108

Naspers (24), PSG (25),
Invicta (29), MSHolding (31),
Aspen (33), Trematon (37),
Vukile (44), Indeqty (49)
■ ACCESS BANK (NIGERIA)
SA Giants: Oando (36)
Top Performers: Oando (259)
■ AFRICAN BANKING CORP
(ZIMBABWE)
SA Giants: Bell (101)
Top Performers: Bell (89)
■ ALLIED IRISH BANKS
(IRELAND)
SA Giants: Kibo (368)
Top Performers: Kibo (322)
■ AUSTRALIA & NEW
ZEALAND BANKING GROUP

FINANCIAL MAIL • TOP COMPANIES • 2014

SA Giants: Aveng (28), ELBGroup (145), Tawana (332)
Top Performers: ELBGroup
(28), Tawana (103)
■ BNP PARIBAS
SA Giants: Oando (36), ZCI
(229)
Top Performers: Oando
(259), ZCI (290)
■ BANCABC
Top Performers: Hwange
(314)
■ BANCO INTERNACIONAL
DE MOCAMBIQUE SA
SA Giants: Stefstock (81),
Bell (101)
Top Performers: Bell (89),

FINANCIAL MAIL • TOP COMPANIES • 2014

109

Financial Mail Page 110-111 -13/06/14 05:43:41 PM

✥

ACCOUNTANTS

✥

✥

110

SA Giants: IPSA (306),
Lonfin (356)
Top Performers: Lonfin (190),
IPSA (292)
■ CREDIT SUISSE
(LUXEMBOURG)
SA Giants: Marshall (151)
Top Performers: Marshall
(143)
■ DEXIA BIL (LUXEMBOURG)
SA Giants: Brait (350)
Top Performers: Brait (34)
■ DIAMOND BANK PLC
SA Giants: Oando (36)
Top Performers: Oando (259)
■ ECOBANK NIGERIA PLC
SA Giants: Oando (36)
Top Performers: Oando (259)
■ EMIRATES NBD BANK PJSC
SA Giants: Stefstock (81)
Top Performers: Stefstock
(193)
■ FNB NAMIBIA
SA Giants: Trustco (220)
Top Performers: Trustco
(194)
■ FIDELITY BANK PLC
SA Giants: Oando (36)
Top Performers: Oando (259)
■ FIRST BANK OF NIGERIA
SA Giants: Oando (36)
Top Performers: Oando (259)
■ FIRST CITY MONUMENT
BANK
SA Giants: Oando (36)
Top Performers: Oando (259)
■ FIRST NATIONAL BANK (A
DIVISION OF FIRSTRAND
BANK)
SA Giants: Bidvest (8),
Shoprit (13), Imperial (14),
Vodacom (15), Firstrand (17),
Massmart (19), Picknpay
(22), Pikwik (23), Anggold
(25), Aveng (28), Naspers
(29), Spar (31), MMI (38),
ArcMittal (40), Implats (42),
JDGroup (45), Altron (47)
Top Performers: Taste (4),
Micromega (6), Finbond (11),
Fambrands (17), Mr Price (21),
Calgro (22), Curro (23),
Naspers (24), PSG (25),
Capitec (26), ELBGroup (28),
Invicta (29), Aspen (33)
■ FIRST NATIONAL BANK OF
BOTSWANA
SA Giants: Wildrness (168)
Top Performers: Wildrness
(275)
■ FIRSTRAND BANK
SA Giants: KAP (62), Afgri*
(77), Primeserv (216), Hosp
(251), Sabvest (352)
Top Performers: Sabvest
(59), KAP (112), Hosp (179),
Primeserv (236)
■ GOLDMAN SACHS
INTERNATIONAL
SA Giants: Blackstar (184)

Top Performers: Blackstar
(188)
■ GUARANTY TRUST BANK
PLC
SA Giants: Oando (36)
Top Performers: Oando (259)
■ HSBC INTERNATIONAL
(JERSEY)
SA Giants: Marshall (151)
Top Performers: Marshall
(143)
■ HSBC AFRICA
SA Giants: Shoprit (13),
Barworld (18), Stefstock (81),
Invicta (93), Sentula (139)
Top Performers: Invicta (29),
Barworld (78), Shoprit (87),
Stefstock (193), Sentula (315)
■ HSBC BANK BERMUDA
SA Giants: Aquarius (124)
Top Performers: Aquarius
(302)
■ HSBC BANK PLC
SA Giants: Bidvest (8),
Datatec (34), Lonmin (65),
Suprgrp (71), Intuprop (91)
Top Performers: Suprgrp
(54), Datatec (69), Bidvest
(85), Intuprop (213), Lonmin
(298)
■ HSBC NORTH AMERICA
HOLDINGS INC
SA Giants: Datatec (34)
Top Performers: Datatec
(69)
■ ING LUXEMBOURG
SA Giants: Blackstar (184)
Top Performers: Blackstar
(188)
■ INVESTEC BANK (CHANNEL
ISLANDS)
SA Giants: Pallinght (363)
Top Performers: Pallinght
(221)
■ INVESTEC BANK
SA Giants: Bidvest (8),
Shoprit (13), Massmart (19),
Aveng (28), Naspers (29),
JDGroup (45), Aspen (54)
Top Performers: Mixtel (5),
Fambrands (17), ISA (18),
Naspers (24), Aspen (33),
Suprgrp (54), Foneworx (81)
■ KEYSTONE BANK
SA Giants: Oando (36)
Top Performers: Oando (259)
■ LLOYDS TSB (UK)
SA Giants: Lonmin (65),
Intuprop (91)
Top Performers: Intuprop
(213), Lonmin (298)
■ MERCANTILE BANK
SA Giants: lliad (114), Purple
(294), Biosci (322)
Top Performers: Purple
(142), lliad (219)
■ NATIONAL AUSTRALIA
BANK
SA Giants: Aspen (54), Bell
(101), Coal (171), Ferrum (367)
FINANCIAL MAIL • TOP COMPANIES • 2014

Top Performers: Aspen (33),
Bell (89), Ferrum (159), Coal
(312)
■ NATIONAL BANK OF NEW
ZEALAND
SA Giants: Bell (101)
Top Performers: Bell (89)
■ NATIONAL WESTMINSTER
BANK PLC (UK)
SA Giants: OldMutual (30),
Jubilee (303)
Top Performers: OldMutual
(43), Jubilee (295)
■ NEDBANK
SA Giants: Bidvest (8),
Shoprit (13), Imperial (14),
Massmart (19), Nedbank (24),
Aveng (28), Naspers (29),
ArcMittal (40), Tigbrands
(43), Netcare (44), JDGroup
(45), Altron (47), ARM (52)
Top Performers: Coronat (1),
Onelogix (7), Pinnacle (16),
Naspers (24), Invicta (29),
Aspen (33), Brimston (35),
Rolfes (45), Oceana (48),
Indeqty (49), Seardel (50)
■ NEDBANK SWAZILAND
SA Giants: Stefstock (81)
Top Performers: Stefstock
(193)
■ OLD MUTUAL BANK
SA Giants: Aspen (54)
Top Performers: Aspen (33)
■ RMB CORPORATE BANKING
(A DIVISION OF FIRSTRAND
BANK)
SA Giants: Crookes (241)
Top Performers: Crookes
(196)
■ RAND MERCHANT BANK
SA Giants: Imperial (14),
Firstrand (17), Naspers (29),
Aspen (54), Suprgrp (71),
Sunint (75), Tsogo Sun (78),
RMIH (88), Pinnacle (96),
Adcock (104), PSG (143),
Attacq (203)
Top Performers: Pinnacle
(16), Naspers (24), PSG (25),
Aspen (33), RMIH (39),
Suprgrp (54), Firstrand (58),
Imperial (60), Adcock (181),
Tsogo Sun (198), Sunint (212)
■ ROYAL BANK OF CANADA
SA Giants: Forbes (202),
Fiuunit* (244)
Top Performers: Forbes (319)
■ ROYAL BANK OF
SCOTLAND PLC
SA Giants: ArcMittal (40),
Intuprop (91)
Top Performers: Intuprop
(213), ArcMittal (285)
■ ST GEORGE BANK
SA Giants: Suprgrp (71),
ResGen (366)
Top Performers: Suprgrp
(54), ResGen (255)
*Delisted

✥

A stifling operating
environment
But legislation changes
could give the industry the
boost it needs
to stay competitive

T

he Board of Healthcare Funders (BHF)
has acknowledged that reforms are
needed in the Medical Schemes Act
(MSA) to support affordability. Of
particular importance is the
introduction of tariffs against which health-care
practitioners will have to benchmark their fees
as well as revisiting prescribed minimum
benefits (PMB).
As it stands now, legislation dictates that
medical schemes pay in full for a list of 270 PMB
conditions, regardless of the charges, BHF spokesman Heidi Kruger told the Financial Mail earlier
this year that these two issues are pushing up
costs significantly, increasing the shortfall
between what doctors charge and what medical
schemes pay. She said until these reforms are in
place, government cannot stop people from
protecting themselves by taking out shortfall
cover.
It is for that reason that a second set of draft
regulations under the Long-term Insurance Act
and the Short-term Insurance Act were
published by national treasury for public
comment at the end of April. This followed
significant industry push-back against draft
regulations published in 2012.
The first set of demarcation regulations
proposed the banning of gap cover altogether
and the introduction of strict rules in the
marketing of hospital cash plans. This was done
to protect medical schemes amid claims by the
Council for Medical Schemes that these products
posed a threat to the sustainability of medical
schemes. National treasury agreed that the
sustainability of medical aid schemes is under
threat from the rapid growth of health insurance
products, which often attract young and healthy
people. This left the old and sickly to be carried
by medical aid schemes, which are not allowed
to turn anyone away.

SERVICES

SERVICES

AUDITORS AND CORPORATE CLIENTS

MEDICAL AID

Treasury explains that the revised draft
regulations contain so-called added safeguards to
ensure that the design, sale and marketing of
health insurance products do not undermine the
social solidarity principles of medical schemes.
According to law firm Bowman Gilfillan, the
basics of a health insurance policy are that it is a
contract in terms of which an insurance
company promises to pay for certain costs if the
insured falls ill or is injured, and the insured pays
a premium directly informed by his or her age,
health status and income on a monthly basis.
Medical schemes, however, don’t fall within the
ambit of this definition.
Unlike insurers, medical schemes may not
link contributions to age, health status or income.
Rather, contributions apply universally and as a
result, medical schemes can only effectively
function through the collective pooling of good
and bad risk. “Because of the different regulatory
environments within which medical schemes
and insurance companies operate, the challenge
is to formulate regulations which allow for
insurance companies to develop health insurance
products that do not undermine medical
schemes, which are compelled to uphold social
solidarity principles of community rating, open
enrolment and cross-subsidisation,” says
Bowman Gilfillan.
In addition, it says, in a further effort to
protect the sale of medical scheme benefit
options, the revised draft regulations contemplate
“an alignment of broker commission between
health insurance and medical schemes products,”
which are currently regulated separately. “The
revised draft regulations propose a cap on
commission on insurance products to the
maximum allowed in terms of the MSA
regulations, presumably to discourage brokers
from pushing health insurance products to the
detriment of medical schemes.”
The latest rules suggest medical gap cover
benefits be capped to R50 000 per individual per
year, and that the per-day benefit applicable to
lump sum or income replacement policy benefits
payable on a health event be limited to R3 000.
However, Bowman Gilfillan says a broker
would still be motivated to sell medical scheme
membership to an individual at a lower benefit
option, “topping-up” that benefit option with a

FINANCIAL MAIL • TOP COMPANIES • 2014

111

Financial Mail Page 112-113 -13/06/14 05:44:01 PM

MEDICAL AID

gap cover product, resulting in two commissions
payable to that broker.
“Brokers should tread carefully, in light of the
statutory (FAIS), professional and ethical
standards associated with providing independent
advice,” the firm says.
With the proposed broadening of the
regulatory environment, allowing for the further
development of health insurance policies,
medical schemes are understandably fearful.
Their concern is that the increase in such
products will result in current members
downgrading to less comprehensive benefit
packages and new members buying in at lower
benefit packages, negatively affecting the ability
of medical schemes to cross-subsidise.
“The actual meaning of these and other
proposed ‘safeguards’ requires further attention
and analysis,” says Bowman Gilfillan. “The draft

✥

✥

regulations are ambiguous and thus open to
interpretation, which could lead to confusion in
the industry if published in their current form.”
The BHF agrees that gap-cover products
should be fairer and perhaps not include risk
rating. “Though we believe that the concept of
community rating [charging a uniform premium
regardless of health risk and claims record]
within the health insurance products covered by
the short-term and long-term insurance acts is
laudable, there may be unintended consequences
in that the cost of gap cover and hospital cash
plans may rise, thereby potentially increasing
out-of-pocket expenditure,” says the BHF’s
Kruger.
“This may result in people buying down and
leading to product consolidation and
rationalisation — possibly also increasing the
burden on the state.”
Ruan Jooste

MEDICAL AID SCHEMES/SOCIETIES AND CORPORATE CLIENTS
■ AECI MEDICAL AID SOCIETY
SA Giants: AECI (63)
Top Performers: AECI (100)
■ AFROX MEDICAL AID
SOCIETY
SA Giants: Afrox (103)
Top Performers: Afrox (217)
■ ANGLO MEDICAL SCHEME
SA Giants: Anglo (3), Mondi
(20)
Top Performers: Mondi (30),
Anglo (189)
■ ANGLOVAAL GROUP
MEDICAL SCHEME
SA Giants: ARM (52), AVI
(82)
Top Performers: AVI (66),
ARM (200)
■ BHP BILLITON SA MEDICAL
SCHEME
SA Giants: BHPBill (2)
Top Performers: BHPBill
(175)
■ BUPA (UK)
SA Giants: Anglo (3)
Top Performers: Anglo (189)
■ BANKMED
SA Giants: Stanbank (12),
Absa (16), Net1UEPS (119)
Top Performers: Stanbank
(172), Absa (177), Net1UEPS
(258)
■ BARLOWORLD MEDICAL
SCHEME
SA Giants: Barworld (18)
Top Performers: Barworld
(78)
■ BESTMED MEDICAL
SCHEME
SA Giants: Sanlam (5), Sappi
(26), Telkom (39), Santam
(50), Suprgrp (71)
Top Performers: Suprgrp
(54), Sanlam (71), Santam
112

(92), Sappi (174), Telkom
(218)
■ BONITAS MEDICAL FUND
SA Giants: Vodacom (15),
Kumba (33), Telkom (39),
ArcMittal (40), Exxaro (60),
ABIL (118), Sentula (139),
Hulamin (341)
Top Performers: Kumba (75),
Vodacom (77), Exxaro (136),
Telkom (218), ABIL (268),
Hulamin (269), ArcMittal
(285), Sentula (315)
■ BUILDING &
CONSTRUCTION INDUSTRY
MEDICAL AID FUND
SA Giants: Stefstock (81)
Top Performers: Stefstock
(193)
■ CAPE MEDICAL PLAN
SA Giants: Caxton (107),
Afrimat (167)
Top Performers: Afrimat (15),
Caxton (208)
■ CHARTERED ACCOUNTANTS
(SA) MEDICAL AID FUND
SA Giants: MTN Group (9)
Top Performers: MTN Group
(139)
■ COMPCARE WELLNESS
MEDICAL SCHEME
SA Giants: Basread (94)
Top Performers: Basread
(244)
■ DECISION HEALTH
SA Giants: Pzgold (249)
■ DISCOVERY HEALTH
MEDICAL SCHEME
SA Giants: Bidvest (8),
Steinhoff (10), Vodacom (15),
Firstrand (17), Anggold (25),
Aveng (28), Gfields (32),
Kumba (33), M&R Hld (35),
Telkom (39), ArcMittal (40),
FINANCIAL MAIL • TOP COMPANIES • 2014

Implats (42), JDGroup (45),
Grindrod (46), Altron (47),
WBHO (49), Santam (50)
Top Performers: Coronat (1),
Adaptit (2), EOH (3),
Micromega (6), Onelogix (7),
Metair (9), Labat (10),
Howden (13), Culinan (14),
Afrimat (15), Pinnacle (16),
Fambrands (17), ISA (18), Mr
Price (21), Curro (23), PSG
(25), Capitec (26)
■ FEDHEALTH MEDICAL
SCHEME
SA Giants: Implats (42),
Reunert (74), Astral (87),
Growpnt (100), Zurich SA
(122), Insimbi (197), Invprop
(247), Invltd (345)
Top Performers: Invltd (127),
Growpnt (134), Reunert
(149), Invprop (152), Zurich
SA (202), Insimbi (215),
Astral (222), Implats (253)
■ FOSCHINI GROUP MEDICAL
AID SCHEME
SA Giants: Foschni (69)
Top Performers: Foschni
(109)
■ GEN-HEALTH MEDICAL
SCHEME
SA Giants: Cafca (269)
Top Performers: Cafca (191)
■ GENESIS MEDICAL SCHEME
SA Giants: Vodacom (15),
Reunert (74)
Top Performers: Vodacom
(77), Reunert (149)
■ HORIZON MEDICAL
SCHEME
SA Giants: Clicks (57),
Holdsport (166)
Top Performers: Clicks (46),
Holdsport (230)
■ IMPERIAL GROUP MEDICAL

MEDICAL AID

✥

MEDICAL AID SCHEMES/SOCIETIES AND CORPORATE CLIENTS
SCHEME
SA Giants: Imperial (14),
Eqstra (83)
Top Performers: Imperial
(60), Eqstra (207)
■ INGWE HEALTH PLAN
SA Giants: Telkom (39),
JDGroup (45), Foschni (69),
Truwths (79), Mustek (110),
Pzgold (249)
Top Performers: Mustek (70),
Foschni (109), Truwths (111),
Telkom (218), JDGroup (239)
■ LIBERTY MEDICAL SCHEME
SA Giants: Lib Hold (41),
Converge (188), Pzgold
(249), Spanjaard (284), Don
(325)
Top Performers: Lib Hold
(129), Spanjaard (168),
Converge (308)
■ MALCOR MEDICAL AID
SCHEME
SA Giants: Aspen (54),
Omnia (66)
Top Performers: Aspen (33),
Omnia (61)
■ MASSMART HEALTH PLAN
SA Giants: Massmart (19)
Top Performers: Massmart
(147)
■ MEDIHELP
SA Giants: Dcentrix (149),
Gijima (153)
Top Performers: Dcentrix
(157), Gijima (313)
■ MEDSHIELD MEDICAL
SCHEME
SA Giants: Trnshex (204)
Top Performers: Trnshex (118)
■ METROPOLITAN MEDICAL
SCHEME
SA Giants: Implats (42)
Top Performers: Implats
(253)
■ MINEMED MEDICAL
SCHEME
SA Giants: Harmony (58),
Pzgold (249)
Top Performers: Harmony
(294)
■ MOMENTUM HEALTH
SA Giants: Suprgrp (71),
Illovo (73), Stefstock (81),
Cashbil (97), Bell (101),
Caxton (107), ABIL (118),
Metmar (142), Gijima (153)
Top Performers: Afrimat (15),
Suprgrp (54), Bell (89),
Cashbil (146), Stefstock
(193), Caxton (208)
■ MOREMED MEDICAL
SCHEME
SA Giants: JDGroup (45)
Top Performers: JDGroup
(239)
■ MOTO HEALTH CARE
SA Giants: CMH (84)
Top Performers: CMH (99)
■ NAMIBIA MEDICAL CARE

SA Giants: Exxaro (60)
Top Performers: Exxaro (136)
■ NAMMED MEDICAL AID
FUND
SA Giants: Nictus (265)
Top Performers: Nictus (237)
■ NASPERS MEDICAL FUND
SA Giants: Naspers (29)
Top Performers: Naspers (24)
■ NATIONAL MEDICAL PLAN
SA Giants: Invicta (93),
Marshall (151)
Top Performers: Invicta (29),
Marshall (143)
■ NEDGROUP MEDICAL AID
SCHEME
SA Giants: Nedbank (24)
Top Performers: Nedbank
(106)
■ NETCARE MEDICAL
SCHEME
SA Giants: Netcare (44)
Top Performers: Netcare (94)
■ OCSACARE
SA Giants: KAP (62)
Top Performers: KAP (112)
■ OLD MUTUAL HEALTHCARE
SA Giants: JCI* (328)
■ OXYGEN MEDICAL SCHEME
SA Giants: Caxton (107),
AME (270)
Top Performers: AME (65),
Caxton (208)
■ PSMAS WELLNESS
MEDICAL AID SCHEME (ZIM)
Top Performers: Hwange
(314)
■ PHAROS MEDICAL PLAN
SA Giants: Exxaro (60),
Rainbow (76), Sanyati (161),
Pzgold (249), Gooderson
(285)
Top Performers: Exxaro
(136), Rainbow (226),
Gooderson (242)
■ PICK N PAY MEDICAL
SCHEME
SA Giants: Picknpay (22),
Pikwik (23)
Top Performers: Pikwik (158),
Picknpay (170)
■ PLATINUM HEALTH
SA Giants: Amplats (27),
Atlatsa (191)
Top Performers: Amplats
(241), Atlatsa (252)
■ PRO SANO MEDICAL
SCHEME
SA Giants: Telkom (39)
Top Performers: Telkom
(218)
■ QUANTUM MEDICAL AID
SOCIETY
SA Giants: Bidvest (8),
Sunint (75)
Top Performers: Bidvest
(85), Sunint (212)
■ REMEDI MEDICAL AID
SCHEME
FINANCIAL MAIL • TOP COMPANIES • 2014

SA Giants: Medclin (48),
Remgro (59), Distell (61),
Trnshex (204)
Top Performers: Medclin
(80), Remgro (90), Distell
(115), Trnshex (118)
■ RESOLUTION HEALTH
MEDICAL SCHEME
SA Giants: Rex True (235),
Af & Ovr (236)
Top Performers: Rex True
(204), Af & Ovr (220)
■ RETAIL MEDICAL SCHEME
SA Giants: Shoprit (13)
Top Performers: Shoprit (87)
■ SASOLMED
SA Giants: Sasol (7)
Top Performers: Sasol (132)
■ SIZWE MEDICAL FUND
SA Giants: Sappi (26),
ArcMittal (40), Exxaro (60),
Timesmed (99), Adcock (104),
DAWN (112), EHSV (116),
Buildmax (177), Delta (250)
Top Performers: Delta (135),
Exxaro (136), Sappi (174),
Adcock (181), DAWN (214),
ArcMittal (285), Buildmax
(305), EHSV (311)
■ SA BREWERIES MEDICAL
SCHEME
SA Giants: SAB (6)
Top Performers: SAB (68)
■ SPECTRAMED
SA Giants: Trnpaco (183),
Phumelela (194)
Top Performers: Trnpaco
(53), Phumelela (144)
■ SUREMED HEALTH
SA Giants: Northam (115)
Top Performers: Northam
(205)
■ TIGER BRANDS MEDICAL
SCHEME
SA Giants: Spar (31),
Tigbrands (43), Adcock (104)
Top Performers: Spar (114),
Tigbrands (141), Adcock (181)
■ TOPMED MEDICAL SCHEME
SA Giants: Sanlam (5)
Top Performers: Sanlam (71)
■ UMVUZO HEALTH MEDICAL
SCHEME
SA Giants: Exxaro (60),
Clover (92), Adcock (104),
Sentula (139)
Top Performers: Clover (113),
Exxaro (136), Adcock (181),
Sentula (315)
■ WITBANK COALFIELDS
MEDICAL AID SCHEME
SA Giants: Exxaro (60)
Top Performers: Exxaro (136)
■ WOOLTRU HEALTHCARE
FUND
SA Giants: Woolies (37),
Truwths (79)
Top Performers: Woolies (19),
Truwths (111)
*Delisted

SERVICES

SERVICES

✥

113

Financial Mail Page 114-115 -13/06/14 05:44:25 PM

ADVERTISING

Digital
takeover
gains
speed
As online access grows, it’s
becoming more
cost-effective to advertise
on the Web

D

igital advertising in SA is reaching
critical mass, with a range of
indicators showing that it is a
far-reaching and cost-effective
platform for advertisers who want to
reach a mass audience.
According to a report released last year by
PwC, during the next five years the Internet will
be the fastest growing advertising category, with
a 37% compound annual increase. The Internet’s
share of total advertising in SA will more than
triple to 7,9% in 2016 from 2,5% in 2011.
The report marks a milestone, reflecting the
fact that people are spending ever more time
online — especially on their smartphones.
Less than two years ago, it seemed as if the
arrival of the smartphone as a primary means to
access communications and entertainment was
going to cap the growth of online giants, but the
mobile offering has actually enhanced the
offering.
Most of SA’s Internet users use their
smartphones to access the Web. This is according
to the SA Mobile Report — a survey of desktop
users’ attitudes and uses of mobile phones —
released in March by Effective Measure, a
provider of digital audience, brand and
advertising measurements.
In addition, about 20% of smartphone owners
have been exposed to mobile-based
advertisements in the past. The company based
its findings on a survey of 4 956 desktop Internet
users in SA.
Interestingly enough, the report found that

114

✥

✥

accessing social media sites is the third most
popular activity by South Africans on their
smartphones.
Yahoo, Google and Facebook say that the
biggest advantages of ads on their platforms are
lower advertising expenses, greater control over
ad campaigns, faster customer conversions,
easier performance tracking and more accurate
customer targeting.
Mobile advertising accounts for 59% of
Facebook’s total advertising revenues, says Eden
Zoller, a consumer telecom principal analyst at
Ovum, a UK-based information business.
Facebook used its f8 developer conference at
the beginning of May to officially launch an
eagerly awaited mobile advertising network
called the Facebook Audience Network, which
will support standard IAB banners, interstitials
(ads that appear while webpages are still loading)
and native advertising. Ovum expects the
Audience Network to play a key role in driving
further growth in mobile advertising.
“But the mobile advertising network space is
very crowded and Facebook’s offering will have
to compete with more established players such
as Google’s AdMob, Millennial Media and
Twitter’s MoPub, to name but a few,” says Zoller.
“But the entry of Facebook will without doubt
shake up the market and keep at least some of
these players awake at night.”
From a return on investment (ROI)
perspective, digital advertising is not just a new
wave, it’s something well worth taking a second
look at because it makes financial sense — and
this is what will get advertising budgets
prioritised by a company’s CFO.
“The initial uncertainty of digital migration is
giving way to a sharper focus on identifying and

FINANCIAL MAIL • TOP COMPANIES • 2014

Vicki
Myburgh

ADVERTISING

executing the business models, organisational
structures and skill sets that will deliver rising
future value in the changed environment,” writes
Vicki Myburgh, Entertainment & Media leader at
PwC Southern Africa. “Put simply, digital is now
established as the new normal. The relative
availability and affordability of fixed and mobile
broadband will set the pace of consumer
adoption of digital.”
Local CEs are, however, still concerned about
their companies’ ability to keep up with the
speed of technological change, another PwC
report finds. The CEs see advances in social

✥

media and mobile devices as a trend that will
transform their businesses over the next five
years, together with demographic changes and
global shifts in economic power. The interplay
between these trends will be “as significant as
the trends themselves. Together they will create
new opportunities for innovation and growth,
but also raise new challenges”.
The findings are based on interviews with 39
communications CEs in 25 countries, which are
part of PwC’s 17th annual global CE survey. SA
CEs regard technological advances as the most
important trend.
Ruan Jooste

SERVICES

SERVICES

✥

ADVERTISING AGENCIES AND CORPORATE CLIENTS
■ ALL BRAND NO FLAKES
SA Giants: Vividend (273)
Top Performers: Vividend
(201)
■ ARTIFACT ADVERTISING
SA Giants: Taste (230)
Top Performers: Taste (4)
■ AT PACE DESIGN &
ADVERTISING
SA Giants: Coronat (123)
Top Performers: Coronat (1)
■ BBDO SA
SA Giants: Cadiz (280)
Top Performers: Cadiz (225)
■ BASE TWO
SA Giants: Absa (16)
Top Performers: Absa (177)
■ BASTION GRAPHICS
SA Giants: Implats (42),
Emira (189)
Top Performers: Emira (163),
Implats (253)
■ BROOKE BROWDE
COMMUNICATIONS
SA Giants: B&W* (243)
Top Performers: B&W* (289)
■ CREATIVITY ADVERTISING
& DESIGN
SA Giants: lliad (114)
Top Performers: lliad (219)
■ CROSS COLOURS
SA Giants: Tsogo Sun (78)
Top Performers: Tsogo Sun
(198)
■ DDB SA
SA Giants: Control* (351)
Top Performers: Control*
(97)
■ DESIGN INK STUDIO
SA Giants: Afrox (103)
Top Performers: Afrox (217)
■ DIESELBROOK BRAND
CONSULTING
SA Giants: Tsogo Sun (78)
Top Performers: Tsogo Sun
(198)
■ dotJWT
SA Giants: Altron (47)
Top Performers: Altron (210)
■ DRAFTFCB SA
SA Giants: Firstrand (17),

Tigbrands (43), Adcock
(104), Dorbyl (281)
Top Performers: Firstrand
(58), Tigbrands (141), Adcock
(181)
■ FCB REDLINE
SA Giants: Rainbow (76)
Top Performers: Rainbow
(226)
■ FD BEACHHEAD
SA Giants: Miranda (348)
Top Performers: Miranda
(306)
■ FISHGATE ADVERTISING
SA Giants: Digicor (195)
Top Performers: Digicor (261)
■ GLOBAL MOUSE
SA Giants: Discovery (56)
Top Performers: Discovery
(83)
■ GRAPHICOR
SA Giants: Sovfood (170)
Top Performers: Sovfood
(246)
■ GRAPHICULTURE
SA Giants: Primeserv (216)
Top Performers: Primeserv
(236)
■ GREYMATTER & FINCH
SA Giants: PSG (143),
Trnshex (204), Sephaku (310)
Top Performers: PSG (25),
Sephaku (117), Trnshex (118)
■ HKLM
SA Giants: WBHO (49), AECI
(63)
Top Performers: AECI (100),
WBHO (183)
■ HAAS COLLECTIVE
SA Giants: Spurcorp (215)
Top Performers: Spurcorp
(67)
■ IDEA ENGINEERS
SA Giants: Tsogo Sun (78)
Top Performers: Tsogo Sun
(198)
■ INCE
SA Giants: Imperial (14),
Massmart (19), M&R Hld (35),
Altron (47), Suprgrp (71)
Top Performers: Suprgrp
FINANCIAL MAIL • TOP COMPANIES • 2014

(54), Litha (55), Imperial
(60), Conduit (107)
■ INITIATIVE MEDIA SA
SA Giants: Taste (230)
Top Performers: Taste (4)
■ INTIMEDIA
SA Giants: Growpnt (100)
Top Performers: Growpnt
(134)
■ IRELAND/DAVENPORT
SA Giants: Vodacom (15),
Altron (47), Invprop (247)
Top Performers: Vodacom
(77), Invprop (152), Altron
(210)
■ JWT
SA Giants: Lewis (117)
Top Performers: Lewis (178)
■ JACKSON ADVERTISING
INC
SA Giants: Masnite (214)
Top Performers: Masnite
(206)
■ JALAPENO ADVERTISING &
PROMOTION
SA Giants: Primeserv (216)
Top Performers: Primeserv
(236)
■ JOE PUBLIC
SA Giants: Nedbank (24),
Amplats (27), Clover (92)
Top Performers: Nedbank
(106), Clover (113), Amplats
(241)
■ JOHNSON HAYDENBRY
AFRIKA
SA Giants: JDGroup (45)
Top Performers: JDGroup
(239)
■ KEYTER RECH INVESTOR
SOLUTIONS CC
SA Giants: Sanyati (161)
■ KING JAMES GROUP
SA Giants: Sanlam (5),
Tigbrands (43), Santam (50),
Comair (105)
Top Performers: Sanlam (71),
Santam (92), Tigbrands (141),
Comair (160)
■ LOWE AND PARTNERS SA
SA Giants: Adcock (104)
115

Financial Mail Page 116-117 -13/06/14 05:44:53 PM

✥

ADVERTISING

✥

✥

116

Top Performers: Adcock (181)
■ MAGNA CARTA PUBLIC
RELATIONS
SA Giants: Sasol (7)
Top Performers: Sasol (132)
■ MARKETING CONCEPTS
SA Giants: Growpnt (100),
Octodec (228), Premium
(237)
Top Performers: Growpnt
(134), Premium (137),
Octodec (167)
■ MAXXMEDIA
SA Giants: Afrimat (167)
Top Performers: Afrimat (15)
■ MINDSHARE SA
SA Giants: Zurich SA (122)
Top Performers: Zurich SA
(202)
■ MORTIMER HARVEY
SA Giants: Absa (16), Altron
(47)
Top Performers: Absa (177),
Altron (210)
■ NINETY9CENTS
SA Giants: Shoprit (13),
Capitec (86), Spurcorp (215)
Top Performers: Capitec
(26), Spurcorp (67)
■ OGILVY & MATHER
SA Giants: Adcock (104),
Itltile (138)
Top Performers: Itltile (86),
Adcock (181)
■ OGILVYONE WORLDWIDE
SA Giants: SAB (6),
OldMutual (30), Sunint (75)
Top Performers: OldMutual
(43), SAB (68), Sunint (212)
■ ONE KINGDOM CREATIVE
STUDIO
SA Giants: BCX (98)
Top Performers: BCX (138)
■ OVEREND OUTSOURCE
SA Giants: M&R Hld (35)
Top Performers: M&R Hld
(271)
■ PHD
SA Giants: Capitec (86)
Top Performers: Capitec (26)
■ PATON TUPPER
ASSOCIATES
SA Giants: Tongaat (64),
Santova (130)
Top Performers: Santova
(116), Tongaat (182)
■ PRIMA PLUS
SA Giants: Acucap (218)
Top Performers: Acucap
(166)
■ PRIME MEDIA
SA Giants: Poynting (292)
Top Performers: Poynting (8)
■ PURPLE FROG
COMMUNICATIONS CC
SA Giants: Andulela (163),
Wildrness (168), Verimark
(239)
Top Performers: Verimark

(62), Andulela (256),
Wildrness (275)
■ RED ROCKET DESIGN &
ADVERTISING
SA Giants: Taste (230)
Top Performers: Taste (4)
■ REDLINE
SA Giants: Anggold (25),
Nampak (53)
Top Performers: Nampak
(93), Anggold (280)
■ ROOTS COMMUNICATIONS
SA Giants: Chemspec (238)
Top Performers: Chemspec
(270)
■ SMART STRATEGIC
MARKETING
SA Giants: Dcentrix (149)
Top Performers: Dcentrix
(157)
■ STUDIO 5
SA Giants: Litha (164)
Top Performers: Litha (55)
■ SWITCH BRANDING &
DESIGN
SA Giants: MTN Group (9),
Aspen (54), Invprop (247),
Invltd (345)
Top Performers: Aspen (33),
Invltd (127), MTN Group
(139), Invprop (152)
■ TBWA\HUNT\LASCARIS
SA Giants: Sasol (7),
Stanbank (12), Spar (31),
Tigbrands (43), JDGroup (45),
Illovo (73), Cityldg (190)
Top Performers: Spar (114),
Sasol (132), Tigbrands (141),
Cityldg (162), Stanbank (172)
■ TERRANOVA
SA Giants: Cargo (207),
Torre (299)
Top Performers: Cargo (79)
■ THE AGENCY FOR
ADVERTISING & MARKETING
SA Giants: Telkom (39)
Top Performers: Telkom
(218)
■ THE FIRE TREE DESIGN
COMPANY
SA Giants: Gooderson (285)
Top Performers: Gooderson
(242)
■ THE FIREHOUSE
ADVERTISING
SA Giants: Beige (209), Blue
(339)
Top Performers: Beige (287)
■ THE FLAGSHIP
COMMUNICATIONS CO SA
SA Giants: IFA* (307)
■ THE HARDY BOYS
SA Giants: Rainbow (76)
Top Performers: Rainbow
(226)
■ THE IDEA WORX
MARKETING & DESIGN
SA Giants: Wearne (242)
Top Performers: Wearne
(297)
FINANCIAL MAIL • TOP COMPANIES • 2014

■ THE JUPITER DRAWING
ROOM (JOHANNESBURG)
SA Giants: Absa (16)
Top Performers: Absa (177)
■ THE JUPITER DRAWING
ROOM (SA)
SA Giants: Medclin (48),
PPC (89)
Top Performers: Medclin
(80), PPC (229)
■ THE KASHAN GROUP
SA Giants: Argent (152),
Wescoal (213)
Top Performers: Wescoal
(104), Argent (274)
■ THE LOOKING GLASS
SA Giants: William (276)
■ THE MEDIASHOP
SA Giants: Mustek (110)
Top Performers: Mustek (70)
■ THE NEW BLACK
SA Giants: Growpnt (100)
Top Performers: Growpnt
(134)
■ THE RED PHONE
SA Giants: Nampak (53),
AECI (63)
Top Performers: Nampak
(93), AECI (100)
■ TROIKA IMAGINEERING
WORKS
SA Giants: Sappi (26)
Top Performers: Sappi (174)
■ VISIONEERS
SA Giants: Pergrin (162)
Top Performers: Pergrin (74)
■ VISUAL COMMUNICATIONS
Top Performers: Hwange
(314)
■ VISUAL IGNITION
SA Giants: Faritec (206)
■ WPP GROUP
SA Giants: SAB (6)
Top Performers: SAB (68)
■ WISDOM AND YOUTH
ADVERTISING AGENCY
SA Giants: Mr Price (68)
Top Performers: Mr Price
(21)
■ WORDS’ WORTH
SA Giants: Metair (106)
Top Performers: Metair (9)
■ YOUNG & RUBICAM SA
SA Giants: Picknpay (22),
Pikwik (23), JDGroup (45)
Top Performers: Pikwik (158),
Picknpay (170), JDGroup
(239)
■ ZONKE IGNITION
ADVERTISING
SA Giants: Sasol (7)
Top Performers: Sasol (132)
■ ZOOM RETAIL MARKETING
& ADVERTISING SOLUTIONS
SA Giants: Cashbil (97)
Top Performers: Cashbil
(146)
*Delisted

Capability
is no
longer a
luxury
As firms flock into Africa,
competitive offerings are
becoming important

I

n the past couple of years numerous global
PR networks have flocked to the continent,
buying agencies and launching offices, particularly in SA, to lead their African communications. This has been either through
acquisitions (Burson-Marsteller, Edelman) or
start-ups (Waggener Edstrom and Weber Shandwick).
Waggener Edstrom Worldwide expanded its
global presence to SA with a new, wholly owned
office in Johannesburg in 2010. The agency was
appointed to drive pan-African corporate and
technology PR for Microsoft Corp’s West, East,
Central Africa and Indian Ocean Islands business.
Weber Shandwick opened up shop in SA in
August 2011. It has its own offices in Cairo,
Casablanca and Tunisia, with representation in
major hubs such as Nigeria, Senegal and Kenya.
Burson-Marsteller acquired a majority stake
in local consultancy Arcay Communications last
year, marking the firm’s first ownership position
in Africa. Arcay has been its exclusive affiliate
partner on the continent since 2007. The fullservice firm is now known as Arcay BursonMarsteller.
Edelman entered Africa by acquiring SA
affiliate Baird’s Renaissance last year. The agency
was renamed Edelman SA, following the deal
that resulted in the US firm taking majority
ownership. Baird’s had been Edelman's affiliate
for 20 years.
Francois Baird told the Holmes Report that the
firm’s capabilities across the continent — it
services 29 countries — would prove pivotal to
Edelman SA’s success. “There is enormous
opportunity to leverage the strength of the entire

✥

Edelman network, intellectual capital and talent
to benefit this dynamic continent and to deploy
our Africa expertise and network to the benefit
of Edelman clients,” he said.
Other international PR firms that own
operations in SA include Fleishman-Hillard, Text
100, Ogilvy PR and FTI Consulting.
FTI Consulting Strategic Communications MD
Max Gebhardt says the agency’s multinational
clients need the business to have a presence in
Africa, and SA in particular.
“As more companies look north for growth
opportunities, they are looking towards us to join
them on that journey and provide them with
on-the-ground support in those countries where
they are operating. In that light a pan-African
footprint is becoming an imperative. At FTI
Consulting we have spent years on building an
affiliate network with representatives in 29
African countries,” he says.
Gebhardt says though some strategies can be
developed here and adapted for the rest of Africa,
it is important that local agencies that
understand their markets and local issues are
used. “I think there is a need to be careful not to
be seen as knowing it all and rather listening to
what local agencies have to say about how to
approach a specific industry or country,” he says.
“One of the key competitive offerings of FTI
Consulting is that it has in place a global network
of highly skilled communication practitioners
and an ability to share and draw on that knowledge. Our affiliates in Africa have access to this
network to ensure that we offer our clients the
levels of service they are used to, whether it is in
New York or Lagos.
“For an agency to be successful it needs to
provide the same consistent level of service and
strategic advice, no matter where the project or
contract might be. Clients want to be able to
receive good advice that helps them achieve
their objectives. Key to that is having the right
people who understand the local markets.”
Sconaid McGeachin is CE of Middle East,
Africa & Turkey for Hill + Knowlton. She agrees
that they also aim to provide the same level of
service on all platforms, irrespective of the
country in which they operate. The agency
bought into Corporate Communications
Consultants in SA, with whom they were already
affiliated, but opted to establish its own branch in
Kenya, building it up from scratch as opposed to
entering an existing partnership in that country.
“Most international firms have started in SA,
being the most developed market [on the
continent], and then moved north. But we
established our own East African operation in
Nairobi five years ago and now also have fully
fledged H+K offices in Kampala and Kigali,” she

FINANCIAL MAIL • TOP COMPANIES • 2014

SERVICES

SERVICES

ADVERTISING AGENCIES AND CORPORATE CLIENTS

PR AGENCIES

117

Financial Mail Page 118-119 -13/06/14 05:45:14 PM

PR AGENCIES

says. “H+K also has an office in Ghana and the
firm hopes to establish another West African
office in Nigeria by year-end. Even so, building a
pan-African network has a lot of complexity and
uncertainty about how best to do it, but we
found that doing our own thing and building
capacity from the ground works best.”
Most SA agencies have strong affiliate
networks, but McGeachin says an African PR hub
could be run out of any country. “What’s important is the track record and experience of the
agency managing the hub, its systems and, most
importantly, the quality of people it has on the

✥

✥

account. We also believe that our network is just
as strong as our weakest link, so co-ordination
and knowledge sharing between team members
are imperative. We could move staff from one
hub to another without any disruption to
operations,” she says.
For global networks and local firms alike, it
seems clear that a cohesive pan-African capability is no longer a luxury they cannot afford.
As the PR industry in East and West Africa
matures, perhaps the idea of a single African hub
(in SA) is under threat, but not SA’s prospective
role.
Ruan Jooste

PUBLIC RELATIONS AGENCIES AND CORPORATE CLIENTS
■ ALL BRAND NO FLAKES
SA Giants: Vividend (273)
Top Performers: Vividend
(201)
■ APRIO STRATEGIC
COMMUNICATIONS
SA Giants: Trnshex (204),
Wesizwe (337)
Top Performers: Trnshex
(118), Wesizwe (272)
■ ARIEL ASSOCIATES
SA Giants: Cafca (269)
Top Performers: Cafca (191)
■ ATMOSPHERE
COMMUNICATIONS
SA Giants: Sanlam (5),
Truwths (79), Capitec (86),
Comair (105)
Top Performers: Capitec
(26), Sanlam (71), Truwths
(111), Comair (160)
■ BAIRD’S RENAISSANCE
SA Giants: EHSV (116)
Top Performers: EHSV (311)
■ BISHOPSGATE
COMMUNICATIONS (UK)
SA Giants: Jubilee (303)
Top Performers: Jubilee
(295)
■ BRIAN GIBSON ISSUE
MANAGEMENT
SA Giants: Rangold (354)
Top Performers: Rangold
(265)
■ BROOKE BROWDE
COMMUNICATIONS
SA Giants: B&W* (243)
Top Performers: B&W* (289)
■ BRUNSWICK (SA)
SA Giants: Anglo (3), MTN
Group (9), Imperial (14), Absa
(16), Massmart (19), Sappi
(26), Gfields (32), Implats
(42), Tigbrands (43), Omnia
(66), lliad (114), Advtech
(158), Invltd (345)
Top Performers: Imperial
(60), Omnia (61), Invltd (127),
Advtech (131), MTN Group
(139), Tigbrands (141),
Massmart (147), Sappi (174),
Absa (177), Anglo (189), lliad
118

(219), Implats (253), Gfields
(278)
■ BRUNSWICK GROUP
SA Giants: SAB (6),
ArcMittal (40), Invprop (247)
Top Performers: SAB (68),
Invprop (152), ArcMittal
(285)
■ CALIBRO
COMMUNICATIONS
SA Giants: Shoprit (13)
Top Performers: Shoprit (87)
■ CARDEW CHANCERY (UK)
SA Giants: Lonmin (65)
Top Performers: Lonmin
(298)
■ CHILLIBUSH INVESTOR
RELATIONS
SA Giants: Rolfes (200),
Sacoil (329)
Top Performers: Rolfes (45),
Sacoil (235)
■ CLEAR DISTINCTION
COMMUNICATIONS
SA Giants: Astrapak (131)
Top Performers: Astrapak
(248)
■ CORALYNNE &
ASSOCIATES
SA Giants: Torre (299)
■ CORPORATE
COMMUNICATIONS
CONSULTANTS
SA Giants: JSE (160),
ResGen (366)
Top Performers: JSE (126),
ResGen (255)
■ CORPORATE IMAGE
CONSULTANTS INC
SA Giants: Vodacom (15),
Picknpay (22), Pikwik (23),
Mr Price (68), Oceana (109),
Granprade (234)
Top Performers: Mr Price
(21), Oceana (48), Vodacom
(77), Granprade (102), Pikwik
(158), Picknpay (170)
■ DINATLA INDUSTRIES
SA Giants: Howden (346)
Top Performers: Howden (13)
■ DU PLESSIS ASSOCIATES
FINANCIAL MAIL • TOP COMPANIES • 2014

SA Giants: Alert (208)
Top Performers: Alert (320)
■ ENVISAGE INVESTOR &
CORPORATE RELATIONS
SA Giants: Esorfrank (135),
Hyprop (136), Afrimat (167),
Morvest (192), B&W* (243)
Top Performers: Afrimat (15),
Hyprop (121), Morvest (240),
B&W* (289), Esorfrank (291)
■ EPIC COMMUNICATIONS
SA Giants: Metrofile (222)
Top Performers: Metrofile
(32)
■ FCB REDLINE
SA Giants: MMI (38),
Rainbow (76)
Top Performers: MMI (95),
Rainbow (226)
■ FD BEACHHEAD
SA Giants: Mondi (20),
Woolies (37)
Top Performers: Woolies (19),
Mondi (30)
■ FTI CONSULTING
SA Giants: Anglo (3),
Lonrho* (129)
Top Performers: Anglo (189)
■ GABLE COMMUNICATIONS
(UK)
SA Giants: PanAfric (157)
Top Performers: PanAfric
(52)
■ GECKO COMMUNICATIONS
SA Giants: Micromega (205)
Top Performers: Micromega
(6)
■ GRAPHICULTURE
SA Giants: Primeserv (216)
Top Performers: Primeserv
(236)
■ GRAY CORPORATE &
INVESTOR RELATIONS
SA Giants: Emira (189),
Iquad* (297)
Top Performers: Emira (163)
■ HG STRATEGIC
COMMUNICATIONS
SA Giants: Group 5 (72),
Litha (164), Jasco (181),
Protech (187)

PR AGENCIES

✥

PUBLIC RELATIONS AGENCIES AND CORPORATE CLIENTS
Top Performers: Litha (55),
Group 5 (192), Jasco (247),
Protech (276)
■ HUDSON SANDLER (UK)
SA Giants: Intuprop (91),
Capco (154)
Top Performers: Capco (20),
Intuprop (213)
■ INCE
SA Giants: Spar (31),
Santova (130), Erbacon (172)
Top Performers: Spar (114),
Santova (116)
■ INSTINCTIF PARTNERS
SA Giants: Barworld (18),
Datatec (34), Assore (67),
Illovo (73), AVI (82), Intuprop
(91), Clover (92), Raubex
(102), Metair (106), Zurich SA
(122), Coronat (123), Sentula
(139), Capco (154), Brimston
(155), Atlatsa (191), Delprop
(282), Vunani (287)
Top Performers: Coronat (1),
Metair (9), Capco (20),
Brimston (35), Assore (41),
AVI (66), Datatec (69),
Barworld (78), Clover (113),
Zurich SA (202), Raubex
(209), Intuprop (213), Illovo
(231), Atlatsa (252), Vunani
(307), Sentula (315)
■ INVESTOR
COMMUNICATIONS
SA Giants: Fambrands (134),
Itltile (138)
Top Performers: Fambrands
(17), Itltile (86)
■ JENNI NEWMAN PUBLIC
RELATIONS
SA Giants: Cenrand (277)
Top Performers: Cenrand
(321)
■ KEYTER RECH INVESTOR
SOLUTIONS CC
SA Giants: Suprgrp (71),
Afgri* (77), Stefstock (81),
Astral (87), ARB (147),
Afrimat (167), Wescoal (213),
PSV (233), Accent (258)
Top Performers: Afrimat (15),
Suprgrp (54), ARB (64),
Wescoal (104), Stefstock
(193), Astral (222), Accent
(243), Actowers (272), PSV
(288)
■ LANGE STRATEGIC
COMMUNICATIONS
SA Giants: Foschni (69)
Top Performers: Foschni
(109)
■ MACMILLAN
COMMUNICATIONS
SA Giants: Cityldg (190)
Top Performers: Cityldg
(162)
■ MAGNA CARTA PR
SA Giants: Stanbank (12),
Miranda (348)
Top Performers: Stanbank
(172), Miranda (306)

■ MAKINSON COWELL (UK)
SA Giants: OldMutual (30)
Top Performers: OldMutual
(43)
■ MARKETING CONCEPTS
SA Giants: Growpnt (100),
Vukile (178), Octodec (228),
Premium (237)
Top Performers: Vukile (44),
Growpnt (134), Premium
(137), Octodec (167)
■ MARTINA NICHOLSON
ASSOCIATES (MNA)
SA Giants: Netcare (44)
Top Performers: Netcare
(94)
■ MEDIAVISION
SA Giants: Curro (252)
Top Performers: Curro (23)
■ MEROPA
COMMUNICATIONS
SA Giants: Tigbrands (43)
Top Performers: Tigbrands
(141)
■ MICHAEL KERKHOFF &
ASSOCIATES
SA Giants: Truwths (79)
Top Performers: Truwths (111)
■ MORTIMER HARVEY
SA Giants: Trustco (220)
Top Performers: Trustco
(194)
■ MOTIV INVESTOR
COMMUNICATIONS
SA Giants: HCI (90), Sanyati
(161), Erbacon (172), Rare
(278), Ansys (290)
Top Performers: HCI (76),
Ansys (254), Rare (318)
■ NORTHERN GRAPHICS CC
SA Giants: Cashbil (97)
Top Performers: Cashbil
(146)
■ OGILVY & MATHER
SA Giants: Adcock (104)
Top Performers: Adcock (181)
■ OGILVY PUBLIC
RELATIONS WORLDWIDE
SA Giants: Discovery (56),
PPC (89)
Top Performers: Discovery
(83), PPC (229)
■ PR CONNECTIONS
SA Giants: Dcentrix (149)
Top Performers: Dcentrix
(157)
■ PR WORX
SA Giants: Taste (230)
Top Performers: Taste (4)
■ PELHAM BELL POTTINGER
(LONDON)
SA Giants: Richmont (11)
Top Performers: Richmont
(27)
■ PROOF COMMUNICATION
AFRICA
SA Giants: Petmin (198)
Top Performers: Petmin
(184)
FINANCIAL MAIL • TOP COMPANIES • 2014

■ PURPLE FROG
COMMUNICATIONS CC
SA Giants: Andulela (163)
Top Performers: Andulela
(256)
■ RLM FINSBURY
SA Giants: OldMutual (30)
Top Performers: OldMutual
(43)
■ RUSSELL & ASSOCIATES
SA Giants: Implats (42),
Northam (115), Aquarius
(124), RBPlat (125), Village
(127), DRDGold (140), Wits
Gold (338), Afeagle (369),
Diamondcp (371)
Top Performers: Northam
(205), Village (223), RBPlat
(238), Implats (253),
DRDGold (279), Diamondcp
(296), Wits Gold (301),
Aquarius (302), Afeagle
(310)
■ SERENDIPITY CC
SA Giants: Afrox (103)
Top Performers: Afrox (217)
■ SHA-IZWE/CHARLESSMITHASSOCIATES
SA Giants: Control* (351)
Top Performers: Control*
(97)
■ SHAUNEEN BEUKES
COMMUNICATIONS
SA Giants: Aspen (54)
Top Performers: Aspen (33)
■ SIGNATURES INVESTOR
RELATIONS
SA Giants: Merafe (132)
Top Performers: Merafe
(203)
■ STONE CONSULTING
SA Giants: Medclin (48)
Top Performers: Medclin
(80)
■ STRATEGIC PUBLIC
RELATIONS GROUP
SA Giants: Tsogo Sun (78)
Top Performers: Tsogo Sun
(198)
■ TERRANOVA
SA Giants: Cargo (207)
Top Performers: Cargo (79)
■ TEXT100
SA Giants: Faritec (206)
■ THE FIRE TREE DESIGN
COMPANY
SA Giants: Gooderson (285)
Top Performers: Gooderson
(242)
*Delisted

SERVICES

SERVICES

✥

119

Financial Mail Page 120 -17/06/14 02:38:46 PM

✥

INDEX

A,B,C
AdaptIT . . . . . . . . . . . . . . . . . . . . . . 82,87
Afrimat . . . . . . . . . . . . . . . . . . . . . . 14,19
Alert Steel . . . . . . . . . . . . . . . . . . . . . 43
Altron . . . . . . . . . . . . . . . . . . . . . . . . . 82
Anglo American . . . . . . . . . . . . 22,25,95
Anglo American Platinum . . . . . . . . . . 50
AngloGold Ashanti . . . . . . . . . . . . . . . 49
Annuity Property Fund . . . . . . . . . . . . 83
Aquarius Platinum . . . . . . . . . . . . . . . 95
ArcelorMittal SA . . . . . . . . . . . . . . . . . 42
Arrowhead Properties . . . . . . . . . . . . . 84
Ascension Properties . . . . . . . . . . . 83,83
Aspen . . . . . . . . . . . . . . . . . . . . . 14,19,25
BAT . . . . . . . . . . . . . . . . . . . . 22,55,58,61
BHP Billiton . . . . . . . . . . . . . . . 22,43,95
Barloworld . . . . . . . . . . . . . . . . . . . . . 55
Bidvest . . . . . . . . . . . . . . . . . . . 26,25,54
Brait . . . . . . . . . . . . . . . . . . . . . . . . 13,17
Business Connexion . . . . . . . . . . . . 71,82
Capitec . . . . . . . . . . . . . . . . . . . . 14,19,88
Caxton . . . . . . . . . . . . . . . . . . . . . . . . 70
Clicks . . . . . . . . . . . . . . . . . . . . . 12,16,69
Clientele . . . . . . . . . . . . . . . . . . . 12,16,77
Coal of Africa . . . . . . . . . . . . . . . . . . . 95
Compagnie Financière Richemont . . 25,61
Consolidated Infrastructure Group . 14,18
Coronation . . . . . . . . . . . . . . . . . . . 16,97
Coronation Fund Managers . . . . . . . 12,86
Cullinan . . . . . . . . . . . . . . . . . . . . . 14,18

✥

Investec . . . . . . . . . . . . . . . . . . . . . 83,97
Invicta . . . . . . . . . . . . . . . . . . . . . . . . 54
Italtile . . . . . . . . . . . . . . . . . . . . . . . . . 69

J,K,L
JSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Kumba Iron Ore . . . . . . . . . . . . . 14,19,43
Labat Africa . . . . . . . . . . . . . . . . . . . . 88
Liberty . . . . . . . . . . . . . . . . . . . . . . . . 77
Life Healthcare . . . . . . . . . . . . . . . . . . 64
Lonmin . . . . . . . . . . . . . . . . . . . . . . . . 95

M,N,O
MMI . . . . . . . . . . . . . . . . . . . . . . 25,77,78
MTN . . . . . . . . . . . . . . . . . . 25,26,71,107
Massmart . . . . . . . . . . . . . . . . . . . . . . 68
Mediclinic . . . . . . . . . . . . . . . . . . . . . . 65
Metair . . . . . . . . . . . . . . . . . . . . . . . . . 88
Micromega . . . . . . . . . . . . . . . . . . . . . 87
Mix Telematics . . . . . . . . . . . . . . 13,17,87
Mr Price . . . . . . . . . . . . . . . . . 13,17,67,88
Murray & Roberts . . . . . . . . . . . . . . . . 20
Naspers . . . . . . . . . . . . . . . . . 13,17,25,70
Netcare . . . . . . . . . . . . . . . . . . . . . . . . 64
Nu-world Holdings . . . . . . . . . . . . . . . 61
Old Mutual . . . . . . . . . . . . . . . . . . . 25,77
Onelogix . . . . . . . . . . . . . . . . . . . . . . . 87

D,E,F

P,Q,R

Datacentrix . . . . . . . . . . . . . . . . . . . . . 82
Delta Property Fund . . . . . . . . . . . . . . 83
Dipula Income Fund . . . . . . . . . . . . . . 83
Discovery . . . . . . . . . . . . . . . . . . . . 77,78
Distell . . . . . . . . . . . . . . . . . . . . . . . . . 60
EOH . . . . . . . . . . . . . . . . . . . 12,16,82,87
Eqstra . . . . . . . . . . . . . . . . . . . . . . 55,100
Evraz Highveld Steel & Vanadium . . . . 42
FirstRand . . . . . . . . . . . . . . . . . . . . . . 25

PSG Group . . . . . . . . . . . . . . . . . . . 14,19
Pan African Resources . . . . . . . . . . . . 95
Pick n Pay . . . . . . . . . . . . . . . . . . . 12,66
Pinnacle Holdings . . . . . . . . . 14,18,82,99
Pioneer Foods . . . . . . . . . . . . . . . . . . . 60
Poynting . . . . . . . . . . . . . . . . . . . . . . . 87
Protech Khuthele . . . . . . . . . . . . . . . . 99
RCL Foods . . . . . . . . . . . . . . . . . . . . . 55
RMB . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Rebosis Property Fund . . . . . . . . . . . . 84
Redefine . . . . . . . . . . . . . . . . . . . . . . . 83
Remgro . . . . . . . . . . . . . . . . . . . . . . 25,55
Reunert . . . . . . . . . . . . . . . . . . . . . . . 71
Rockcastle . . . . . . . . . . . . . . . . . . . . . 83

G,H,I
Gijima . . . . . . . . . . . . . . . . . . . . . . . . . 82
Glencore . . . . . . . . . . . . . . . . . . . . . . . 20
Gold Fields . . . . . . . . . . . . . . . . . . . . . 49
Growthpoint Properties . . . . . . . . . . . . 83
Harmony . . . . . . . . . . . . . . . . . . . . . . . 49
Hospitality Property Fund . . . . . . . . . . 83
Howden Africa . . . . . . . . . . . . . . . . . . 54
Hudaco . . . . . . . . . . . . . . . . . . . . . . . . 55
Hyprop . . . . . . . . . . . . . . . . . . . . . . . . 25
Imperial . . . . . . . . . . . . . . . . . . . . . . . 25
Impala Platinum . . . . . . . . . . . . . . . . . 51
120

COMPANIES

S,T,U
SABMiller . . . . . . . . . . . . . . 22,25,58,107
Sanlam . . . . . . . . . . . . . . . 13,17,22,25,77
Santam . . . . . . . . . . . . . . . . . . . . . . . . 78
Sasol . . . . . . . . . . . . . . . . . . . . 25,26,40
Seardel . . . . . . . . . . . . . . . . . . . . . . . . 61
Shoprite . . . . . . . . . . . . . . . . 13,18,25,66
FINANCIAL MAIL • TOP COMPANIES • 2014

Sibanye . . . . . . . . . . . . . . . . . . . . . . . . 49
Standard Bank . . . . . . . . . . . . . . . . 25,97
Steinhoff . . . . . . . . . . . . . . . . . . 25,26,61
Supergroup . . . . . . . . . . . . . . . . . . . 14,18
Sycom Property Fund . . . . . . . . . . . . . 84
Taste Holdings . . . . . . . . . . . . . . . . . . 87
Telkom . . . . . . . . . . . . . . . . . . . 20,71,99
Tiger Brands . . . . . . . . . . . . . . . . . . . . 60
Times Media Group . . . . . . . . . . . . . . 70
Truworths . . . . . . . . . . . . . . . . . . . . . . 66

V,W
Vividend Income Fund . . . . . . . . . . . . 84
Vodacom . . . . . . . . . . . . . . . . . . . . . . . 71
Vukile . . . . . . . . . . . . . . . . . . . . . . . . . 83
Vunani Property Investment Fund . . . . 84
Woolworths . . . . . . . . . . . . . . 12,16,66,88

X,Y,Z
Zurich SA . . . . . . . . . . . . . . . . . . . . . . 78

Financial Mail Page 121 -13/06/14 02:35:17 PM
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Financial Mail Page 122 -17/06/14 02:39:01 PM

✥

ADVERTISERS

✥

INDEX

CLIENT

PAGE NO

Accenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Accenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Accenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Accenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Accenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Accenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Altron . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Anglo American . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bowman Gilfillan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Datatec . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Grant Thornton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4&5
Glyn Marais . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Imperial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68&69
INET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
INET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Mix Telematrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16/17/18/19
Marsh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PWC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Redefine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
RAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Saica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62/63
Santam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Sanlam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Sasol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Webber Wentzel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103

THESE EXCITING
ANNUALS COMING
TO YOU THIS 2014:

The
has a series of annuals that
give deeper business insight
into specific industries, sectors
and topics
For122
more information contact: Nigel Twidale - (011) 803 6084FINANCIAL
- [email protected]
MAIL • TOP COMPANIES • 2014

FM Budget Edition
Little Black Book
Ranking the Analysts
Top Companies
SA’s Infrastructure Report
Business Schools
Property Handbook
Motor Industry Annual
Ranking the MBA’s
Green Report
AdFocus
SA in 2015

Financial Mail Page 123 -13/06/14 02:36:40 PM

Financial Mail Page 124 -13/06/14 02:36:52 PM