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2 Business Times October 30 2011TOP 100 C O M PA N I E S

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100

Assore

Capitec Bank

Kumba Iron Ore

Howden Africa

Shoprite

Coronation Fund Managers

Mr Price Group

Clicks Group

Pinnacle Technology

Famous Brands

Palabora Mining

EOH Holdings

Truworths International

Woolworths

Spar Group

Oceana Group

ELB Group

Naspers -N

Massmart

Capital Property Fund

Brimstone Investment Corp -N

Santam

Invicta

Cashbuild

Resilient Property Income Fund

African Rainbow Minerals

Aspen Pharmacare

Anglovaal Industries*

Vukile Property Fund

Advtech

ConvergeNet

PSG Group

Premium Properties

The Foschini Group

Acucap Properties

Growthpoint Properties

Remgro

Clientéle Life Assurance

MTN

Tiger Brands

Hyprop Investments

Hudaco Industries

Redefine Properties

Capevin Investments

Octodec Investments

African Bank Investments

SABMiller plc

MMI Holdings

JSE

Metair Investments

Spur

Lewis Group

Emira Property Fund

Sanlam

Discovery

Rainbow Chicken

Fountainhead Prop. Trust

Sycom Property Fund

Medi-Clinic

Hosken Consolidated Invest.

Compagnie Fin Richemont

Petmin

Illovo Sugar

Astral Foods

BHP Billiton plc

Wilson Bayly Holmes - Ovcon

Mvelaphanda Group

Liberty Holdings

RMB Holdings

SA Corporate Real Estate

Datacentrix

Kagiso Media

Absa

FirstRand

Tongaat-Hulett

Hospitality Property - A

Gold One International

Basil Read

Bidvest Group

Merafe Resources

Pick n Pay Stores

Trencor

UCS Group

Sasol

Metrofile

Bowler Metcalf

Zurich Insurance

Nedbank Group

Adcorp

Winhold

Aveng

Metmar

Omnia

Nampak

City Lodge Hotels

AECI

Standard Bank Group

Cipla Medpro SA

Datatec

Value Group

3 002

3 040

13 200

340

2 443

600

1 900

1 010

258

1 275

3 600

665

2 331

1 370

3 635

1 580

750

11 960

5 691

425

520

7 550

2 030

4 200

1 600

6 855

3 480

1 591

836

259

10

2 379

866

4 600

2 452

1 090

15 400

569

6 300

14 150

3 270

4 700

535

4 725

1 150

2 210

14 428

1 225

3 800

960

880

4 750

920

1 710

2 230

1 061

516

1 620

2 040

4 500

3 715

145

1 590

8 650

13 366

6 390

850

6 150

2 700

304

345

1 250

9 950

1 770

8 900

1 200

265

980

11 300

64

2 880

2 660

230

25 600

157

705

16 000

11 420

2 325

130

2 750

241

5 700

1 820

5 300

5 900

7 781

474

3150

310

19 700

19 200

42 688

1 421

11 350

2 000

6 729

3 764

949

4 249

11 100

2 265

7 050

3 500

9 629

3 745

1 999

35 097

13 870

855

690

13 800

4 590

10 294

3 260

17 350

9 125

3 233

1 435

555

26

4 650

1 519

8 492

3 900

1 774

11 074

1 020

13 250

21 000

5 400

7 770

800

7 998

1 690

3 300

26 079

1 698

6 424

1 590

1 300

7 000

1 167

2 705

3 959

1 625

670

2 114

3 361

8 240

3 605

265

2 520

11 700

21 425

10 400

334

8 000

2 539

325

425

1 660

13 434

1 960

9 200

1 255

417

1 350

14 970

98

3 650

3 400

54

33 482

238

890

22 000

13 674

2 500

139

3 451

284

7 600

2 087

6 260

7 425

9 279

673

3 802

365

73 751

71 851

66 747

54 254

53 935

52 423

44 793

44 065

43 593

40 556

39 862

39 171

37 230

35 288

32 533

31 676

30 973

30 593

29 846

29 505

29 294

29 196

28 973

28 960

28 695

27 557

27 497

27 388

26 825

26 026

26 000

25 549

25 414

24 179

23 813

23 743

23 682

23 470

23 442

23 391

23 089

22 101

21 987

21 671

21 620

20 892

20 404

20 320

20 097

19 893

19 752

19 724

19 702

19 684

19 535

19 295

19 269

19 220

18 955

18 913

18 803

18 661

18 604

18 464

18 373

18 024

17 506

17 379

17 258

17 230

16 975

16 944

16 942

16 757

16 138

16 046

15 736

15 720

15 716

15 708

15 631

15 593

15 557

15 363

15 324

15 241

15 193

15 145

14 985

14 961

14 745

14 742

14 658

14 649

14 640

14 507

14 428

14 424

14 134

14 061

49.13%

48.35%

46.18%

40.24%

40.08%

39.29%

34.97%

34.53%

34.24%

32.32%

31.86%

31.40%

30.07%

28.68%

26.61%

25.93%

25.37%

25.06%

24.44%

24.16%

23.98%

23.90%

23.71%

23.70%

23.47%

22.47%

22.42%

22.32%

21.82%

21.08%

21.06%

20.64%

20.51%

19.31%

18.95%

18.88%

18.82%

18.60%

18.58%

18.52%

18.22%

17.19%

17.07%

16.73%

16.67%

15.88%

15.33%

15.24%

14.98%

14.75%

14.58%

14.55%

14.53%

14.50%

14.33%

14.05%

14.02%

13.96%

13.64%

13.59%

13.46%

13.29%

13.22%

13.05%

12.94%

12.50%

11.85%

11.69%

11.53%

11.50%

11.16%

11.12%

11.12%

10.88%

10.04%

9.92%

9.49%

9.47%

9.46%

9.45%

9.34%

9.29%

9.24%

8.97%

8.91%

8.79%

8.72%

8.66%

8.43%

8.39%

8.08%

8.07%

7.95%

7.93%

7.92%

7.72%

7.61%

7.60%

7.17%

7.05%

Share nameOpen (cents)

Close (cents)

Final value (R)

Compoundgrowth 5

yrsShare name Open

(cents)Close (cents)

Final value (R)

Compoundgrowth 5

yrs

TOP 100 COMPANIES OVER FIVE YEARS

Graphic: FIONA KRISCH Source: I-NET BRIDGE * denotes where a dividend due at period end has been accrued.

THE winner of the Sunday Times Top 100Companies is Assore, a mining companylargely involved in base metals and minerals.It is ranked first based on its extraordinarygrowth in value over the five years to end-S e p t e m b e r.

A R10 000 investment in Assore five yearsago would now be worth R73 751.

In conjunction with the award for the bestcompany, we also recognise the BusinessLeader of the Year, Lifetime Achiever and thecompany that has made a meaningfulcontribution to South Africa throughcorporate social investment. These awardsare in line with our belief that it is peoplewho drive corporate and economic growth,and that companies have a role to play indeveloping society.

Business Leader of the Year is a prestigiousaward, not least because it is one of a fewdecided by the winner’s peers, namely theCEOs of the Top 100 companies.

This year’s winner is Shoprite CEO WhiteyBasson, who follows in the footsteps ofAdrian Gore, Phuthuma Nhleko, JohannRupert, Brian Joffe, Graham Mackay, MariaRamos, Jacko Maree, Sean Summers andPatrice Motsepe.

This year Business Times gave the LifetimeAchievement award, which goes to someonewho has made a significant difference duringhis or her career, to Brian Joffe, founder andCEO of Bidvest.

Joffe has previously been a winner of theBusiness Leader of the Year award.

Previous winners of the LifetimeAchievement Award include Allan Gray,Stephen Koseff, Richard Maponya, NelsonMandela, Bill Venter, Nthato Motlana,Donald Gordon, Sam Motsuenyane, KoosBekker, Raymond Ackerman and AntonRupert.

The decision was made in consultationwith a panel that included David Shapiro,director of Sasfin Securities, Futhi Mtoba,chair of the African board of Deloitte &Touche and president of Business UnitySouth Africa, and Andrew McGregor,managing director of Who Owns Whom.

The winner of the Corporate SocialInvestment award is Impala Platinum. It haswon for the second consecutive year — anaccomplishment that demonstrates itscommitment to helping the communitiesliving around its mines.

This decision was made in consultationwith a panel that included RorisangTshabalala, principal of Chapter OneInnovation Brokerage, Vincent Mnisi,communications officer of Joint AidManagement of South Africa, andindependent adviser Marc van Olst.ý This year we have increased the

minimum value traded to R20-million in allfive years. There had been some concern inthe past that the Top 100 recognised fast-growing companies and that the growthmight not necessarily be sustainable,particularly for small companies. By raisingthe minimum value, the list does excludesome smaller-cap companies that previouslywould have been on the list.

THE Business TimesTop 100 Companiesawards acknowledgethose listed companies

which have earned the most fo rtheir shareholders.

The share-price performanceof every company listed on theJSE is calculated on the basisof R10 000 invested over fiveyears — from October 1 fiveyears ago to the end ofSeptember 2011.

The winner is the companythat earns the most for itsshareholders in terms of shareprice growth, after taking intoaccount normal and specialdividends and bonus sharesreinvested. Where there is anunbundling, the proceeds of theunbundled company aretreated as a special dividend.

Apart from being an accurate

measurement of shareholderfortunes, the share price, plusthe amount of income returnedto shareholders, is an indicatorof the soundness of ac o mp a ny ’s operations — if oneaccepts that share-priceperformance is generally anaccurate barometer.

All calculations are carriedout by I-Net Bridge, thefinancial services informationcompany that is part of Avusa,the owner of Business Times.

We exclude suspendedcompanies (although they areincluded in some one-yeartables), preference shares andcorporate debt. If pricesdeclined at the end ofSeptember as companies went

ex-dividend, we have accruedthe dividend.

Companies with a secondarylisting on the JSE are included.

In previous years, we haveexcluded companies which didnot meet the minimum value

traded of R10-million a year.We have increased theminimum value to R20-millionthis year due to higher tradingvolumes over the years, and toexclude penny stocks. This

How we calculate theTop 100 companies

Winner is the one earning the most for its shareholders

We have increased

the minimum value

to R20-million

qualification does not apply tothe Top 100 one-year tables,which have a minimum valuetraded of R100-million.

As the Top 100 is oftendominated by smallercompanies that have the abilityto show strong growth, we havealso included a Top 40 table toshow the performance of theblue-chip companies in theJSE’s Top 40 index. We alsoinclude a Top 100 over 10 yearsto reflect the performance ofcompanies that have shown atrack record for investors witha long-term view.

Certain information usuallycontained in the Top 100 surveycan be found in this week’sBusiness Times.

Re c o g n i s i n gSouth Africa’stop hats


Business Times 3October 30 2011 TOP 100 C O M PA N I E S

Assore goes on striking it rich

Share price, weekly (cents)

Graphic: FIONA KRISCH Source: I-NET BRIDGE

ASSORE2006: R10 000 | 2011: R73 751

TOP 100 COMPANIES

Number

1

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5000

10000

15000

20000

25000

20112010200920082007

2010

2009

2008

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Capitec Bank

Basil Read Holdings

Basil Read Holdings

Distribution & Warehousing Network

Mittal Steel SA

Grindrod

Grindrod

Mvelaphanda Resources

Mvelaphanda Resources

East Daggafontein

Dimension Data

Adcorp Holdings

Profurn

Nu-World

Dimension Data

Q Data

Ellerine

Investec

Investec

Investec

M & A Investment Corp.

M & A Investment Corp.

National Bolt

Waltons

Waltons

Metair Investments

Metair Investments

Toyota SA

Toyota SA

Toyota SA

Gold Fields of SA

Otis Elevator Co.

Metro Cash & Carry

Metro Cash & Carry

Metro Cash & Carry

PREVIOUS WINNERS


GUIDO Sacco was not yet 30when he arrived in SouthAfrica from Italy in 1929and headed for the remote

Kalahari. There, camped in thewilderness, he made the find of a life-time — one on which to build what isthis year’s Top 100 company.

Just over 80 years since Sacco’sdiscovery of one of the largest man-ganese fields in the world, diversifiedminer and marketer Assore takes t opspot in the Business Times Top 100Companies survey.

It boasts a 49.13% compound an-nual growth in its share price per-formance over five years.

This means that if an investorbought R10 000 worth of shares atR30 a share in 2006, that investmentwould have grown to R73 751 or R197a share. Assore’s shares were firstlisted on the JSE in 1950.

Guido’s son and Assore chairmanDesmond Sacco said the company’ssuccess was built on its good-qualitydeposits and long-term relation-ships.

The company’s main investment isa 50% interest in Assmang, which itcontrols jointly with Patrice Mot-sepe’s African Rainbow Minerals(ARM).

The group is involved in the miningof manganese, iron ore and chromeamong other industrial minerals, andthe manufacture of manganese andchrome alloys.

Assore is responsible for market-ing its products, the bulk of which areexported to Asia, but also to Eu-ropean and US markets.

Sacco said high commodity priceshad underpinned the strong growthseen by investors, mainly bolsteredby demand from resource-hungryChina and other rapidly growingEastern countries.

In its latest financial results, As-sore boasted earnings of R3.2-billion,a 117.6% increase, or double the earn-ings achieved the previous year. As-sore declared a 450c dividend for its2011 financial year.

The company is investing heavilyin the expansion of its Khumani ironore mine, as well as the upgrade of itsmanganese and chrome furnacesand the development of undergroundchromite mines.

The estimated R6.7-billion expan-sion of the Khumani mine will seeoutput capacity increase to 16 milliontons of iron ore a year, with pro-

duction ramp-up expected to begin inJanuary 2012.

Assore CEO Chris Cory said thecompany could potentially exportsignificantly more manganese than itdoes, if greater export rail capacitycould be secured. Despite strong lo-cal and international market demandfor iron ore and manganese, logisticsconstraints significantly curtail ex -port growth.

“We are working together with

Transnet and would like to see themachieve some of their stated goals,”said Sacco.

Transnet is raising the rail andport capacity on the iron ore channelfrom Sishen to Saldanha to 60 milliontons a year and aims to increasemanganese exports to 5.5 milliontons through Port Elizabeth, but thestate-owned entity has been slow tounlock this potential.

“This country could benefit greatlyby increasing its participation in the

Assore, a mining holding company largely involved in basemetals and minerals, has over the past five years delivered themost value to shareholders among JSE-listed companies.Loni Prinsloo looks at how it became this year’s SundayTimes, Business Times Top 100 Company

Company is investing

heavily in its Khumani

iron ore mine

global commodity market based up-on an infrastructure expansion pro-gramme,” said Sacco.

Cory said rising electricity priceswe r e a serious challenge to the in-dustry, and the company had beenlooking into co-generation possibil-ities to ensure security of supply.

Sacco said the company had beenable to come through the global re-cession by being cost conscious andsticking to what it was good at, name-ly focusing on solid, long-term or-ganic growth.

“But nothing keeps forever,” saidCory, noting that manganese priceshad already stabilised, while iron oreprices were weakening.

Analysts predict that growth inChinese steel production will easeover the next few years and that theiron ore supply side will catch up andmove into oversupply, and that pricesmay fall.

Sacco agreed, saying that thesustainability of the recovery in themarkets in which Assore trades wasnot clear, adding that the companymight see economic and trading con-ditions become more challenging.

Assore was ranked fourth in theTop 100 Companies list in 2009 and2010.

PAYING DIVIDENDS: Assore chairman Desmond Sacco and CEO Chris Cory

AS SO R E



LUCKY BIYASE

IT IS a confirmation of Impala Plat-inum’s commitment to corporate so-cial investment that it has won the Top100’s Corporate Social Investment

award for the second year running.The judges of the award were impressed

that Implats sought a return on investmentwith a project that has a significant socialeffect on its participants.

They felt that Implats was ambitious inits aims and achievements and provided asuperior example of interventions alignedto its business. It also equipped the ben-eficiaries not only to sustain themselvesbut to develop a business.

Implats has won the award for variouseffective projects in Limpopo’s g r e at e rSekhukhune district, which is economi-cally underdeveloped, developed largelythrough Marula Platinum.

The Makgomo Chrome joint venture, runwith communities, has developed achrome-processing plant through a com-pany that is 50% owned by the community.

Construction of the plant started inOctober 2009 and it is now fully op e r at i o n a l .The project has already declared substan-tial dividends and more are expected toflow to the community.

Marula Platinum has renovated twoschools. At Makgamathu Secondary Schoolin Driekop, the new facilities — and a newprincipal — resulted in the matric pass rateimproving from 4% in 2008 to 43% in 2010.

Another project is under way to bringelectricity and water to 1 500 households.

Marula Platinum believes that thecommunity should be informed aboutdevelopments in its environment. Despiteoperational challenges at Marula becauseof low metal prices, the company has re-mained committed to funding communitydevelopment projects.

“Marula Platinum currently operates atbreakeven. Despite these difficult condi-tions, we still delivered on commitmentsmade to the communities affected by ourop e r at i o n s , ” said Leon van Wyk, managingdirector at Marula.

The Makgomo Chrome project hasdeclared dividends of R20-million in its firstyear of operation — R10-million in Apriland R10-million in October — and 70% ofthe money will be utilised for the up-liftment of the communities around MarulaMine. The project has empowered the com-munity to generate its own funding forenhancing its e nv i r o n m e n t .

“It is our conviction that by doing this forour employees, we make them bettercitizens who in turn become betteremployees. We want to do more, but con-ditions at Marula make it difficult,” saidVan Wyk.

More than 90 000 people have benefitedfrom the company’s socioeconomic devel-opment spending this year. Projects im-plemented around Marula Platinumreached 21 000 people in the Limpopo re-gion.

The judges said Implats’ corporate socialinvestment initiatives were felt directly incommunities and were also done in con-sultation with them. The company madeuse of its natural business assets andfollowed through with community projects.They said among the candidates for theaward, not many had made i nve st m e n t sthat added value to their own businesses.

They commended I mp l at s for corporatesocial investment that was aimed at h av i n ga sustained effect so that projects wo u l dleave a lasting legacy in communities.

CSI AWARD

Projectst h atm a kesenseImplats’ community invest-ments are perfectly alignedwith its business

B E N E F I TS :Th eM a kg o m oC h ro m ep ro j e c td e c l a re dR20 -millionin dividendsin its firstye a r

We salute our CEO, Brian Joffe,

and congratulate him on recieving the

Sunday Times Lifetime Achiever 2011 award!

We are Proudly Bidvest!

“A leader is one who knows the way,

goes the way and shows the way.”



PERHAPS the most impres-sive thing about Brian Joffeis not that he built one ofSouth Africa’s most suc-

cessful conglomerates, but that hedid it in the teeth of conventionalwisdom when other conglomerateswere going in the opposite direc-tion.

It was the era of focus, and con-glomerate was a dirty word.

While others were disinvestingand spinning off businesses, Joffebought them — across an array ofsectors and geographies. Apartfrom the fact that they were all inservices and distribution, the onlycommon thread was that they werein trouble and about to go under.

“There were many sceptics,”says Joffe, “among them, some ofthe more famous business schoolsof the world, including Harvard andthe like, who didn’t believe youcould have our kind of model.”

He started Bidvest in 1988 withthe purchase of a catering supplycompany called Chipkins as a cashshell. It was owned by Old Mutual,but such was their confidence in hisbusiness plan that they did notke e p a single share.

“They became investors in later

“very involved in setting the strat-egy of how Bidvest is run, in termsof what are the drivers, what arethe measurables for our company”.

The important measurables arenot profitability, but returns.

“The businesses we’ve acquiredhave had a focus of making thebusiness bigger, adding more sales,employing more assets. In our par-ticular world, we don’t mind havingsmaller businesses, having less as-sets employed and making higherr e tu r n s . ”

Bidvest is divided into 3 500 en-trepreneurial-size business unitsmanaged on as decentralised abasis as possible.

“We ’ve tried to make our busi-nesses as small and focused aspossible, run by entrepreneurs whoare as near to running their ownbusinesses as they can get.

“Th ey ’re running Bidvest busi-nesses with Bidvest money as if itwas their own.”

He lets them get on with it anddoes not interfere, but keeps a closewatch. “We measure them based onreturns. We allocate to them assets,and they manage those assets. Weadjudicate them by return. It’s avery transparent organisation, soeverybody knows how everybody isdoing.”

It is an arrangement that en-courages managers to ship up orship out. They’re seldom fired.

Although the businesses Joffeacquires are failing businesses, hegenerally retains their old man-agement teams and gives them thespace and time to come right. Hedownplays his own role in theirtransformation. They perform bet-ter because they have the clout ofBidvest, the economies of scalewhich are so key to its success,behind them, he says.

“And a lot of entrepreneurs, a lotof good business people, a lot ofpeople, have made a lot of moneyalong the way. And many peoplegot a lot of education. To me, that’sprobably my biggest singleachievement. I don’t think you canonly measure it in money, but insome intangibles as well. Howmany people did you really makehappy along the way?”

Joffe grew up in Greenside, Jo-hannesburg, and went to Green-side High. The “greatest driver” inhis life was his mother, and shewanted him to be a medical doctor.

He wanted to be a school teacher,more particularly, a sports master.

He was talented at sport, and itwas pretty much all he lived for atschool. “It’s probably best that Imissed that career,” he says. “I’mvery impatient and strive for a lot ofperfection. I’m not sure many peo-ple would have liked to have been inmy team.”

His results weren’t good enoughfor medical school, where his moth-er was determined he would go,even if he had to do a BSc first to getthere. He enrolled, but lasted only acouple of weeks.

After teaching, his plan B was tobecome a cafe owner. His motherwa s n ’t keen on that either, so hesigned up for a BCom and, in 1971,qualified as a chartered accoun-tant.

Joffe believes “raw entre-preneurship, the raw knowledge of

buying for a penny and selling for apound”, is not something that canbe taught. “It is inbred; it is part of agrowing-up experience.”

It was certainly part of his. Hisfather ran a small grain and millingbusiness, where the young Joffeused to pack birdseed in return forpocket money. His uncle had apharmacy business, and when Joffewa s n ’t packing birdseed, he wascounting tablets.

“I learnt you only make a profitby meticulously managing your as-sets, down to the last pill. I neverforgot it.”

After becoming a CA, he bor-rowed R39 000 and bought half of asmall pet-food company. Two yearslater, a competitor bought him out,and he was a millionaire at 32, twoyears later than he’d planned.

After a short stay in the US, heworked at Standard Chartered andMerchant Bank before joining Man-ny Simchowitz’s industrial group,W&A Holdings. He took theturnover of W&A subsidiary E WTarry from R5.5-million in 1984 toR204.7-million in 1987. When Sim-chowitz emigrated to London, heran the show, but left after what hecalls “a difference of opinion” withthe subsequently infamous JeffLiebesman, who bought control.

“We had a totally different busi-ness philosophy,” says Joffe. “Hewas far too aggressive in the quan-tum of debt that he was prepared tolive with, and I was a lot moreconservative. We didn’t reconcilethose differences and went our ownways. Fortunately for me, I guess.”

By the time Joffe started Bidvest,he had already made his mark as ano-nonsense businessman and out-standing operator.

The fact that he still struggled toget financing is a measure of justhow out of synch with the times hisbusiness model was.

Core to his achievements withBidvest has been an uncanny abil-ity to see value no one else can indying companies, get them cheapand extract operational profits, notjust value, from them.

The supreme example was autogroup McCarthy, which had beendriven into the ground and wasowned by the banks, which weredesperate to sell. Twenty-eight pos-sible buyers were wooed, and nonewas interested.

McCarthy CEO Brand Pretoriusbumped into a Bidvest director atthe airport and half-jokingly asked

if Bidvest wanted to buy. Two dayslater, he was meeting with Joffe todiscuss the takeover. Withinweeks, the deal was done.

He paid just over R900-million forit, and there were howls of protestfrom people who called it a steal.

How much of his deal-making isstrategy and how much gut feel?

“Gut feel is important for us; it’sbeen very good for us. We’ve mademistakes along the way, but gut feelis an important part of en-trepreneurship. Without it, you’rejust an accountant, I guess.”

Could he have done it all again int o d ay ’s circumstances?

“I don’t think so. I have to con-cede that it was a lot easier then.We had sanctions, which made iteasier. We didn’t have internation-al competitors. Timing was defi-nitely on my side.”

He makes the point, however,that Bidvest is now competing in-ternationally and doing “we l l ”against some of the best corpo-

TOP 100 C O M PA N I E S

TU R N I N G

PIG S ’ EA RS

INTO SILK

P U RS E S

LIFETIME ACHIEVER: BRIAN JOFFEThe successof Top 100lifetimeachieverBrian Joffe isa reflection ofhis ability tomarch to hisown tune,writes C hris

Barron

‘We ’re very,

very active in

the businesses

that we own’

ye a r s , ” he comments drily, “but, inthe beginning, it was quite difficultto find backers.”

His only real support at the timecame from Investec, which gavehim R12-million. Some believe thiswas the making of Investec.

“They made hundreds of millionsout of it,” s ays Joffe when asked hisop i n i o n .

Today, Bidvest has an annualturnover of more than R100-billionand employs 106 000 people. Al-though everyone calls it a conglom-erate, Joffe is not happy with thelabel because its connotation of pas-sive investment doesn’t do justice tothe active role played by Bidvest inthe businesses it acquires.

“A conglomerate is made up of aholding company with a great de-gree of passive activity.” B i dve st ,he says, is not that at all.

“We ’re very, very active in thebusinesses that we own. We’revery, very decentralised and man-age the businesses in a very de-centralised fashion, which is drivento some degree by the fact that wedo have diversified activities.”

His business philosophy is that asuccessful business should be man-aged by entrepreneurs on a verydecentralised basis.

“This has been one of the keydrivers of our success.”

While no micro-manager — thedays of him “opening the doors inthe morning and standing at thetill” are over and he misses them,he says — he personally has been

‘Gut feel is

important for

us; it’s been very

good for us’

rations in the world.By no means the least of his

achievements was piloting Bid-ve st ’s BEE deal in 2004. It created“real money for real people” and is,says an analyst, “a shining exam-ple”. Joffe says he pulled it off “witha great deal of difficulty and criti-cism at the time”.

His reservations about BEE arethat “if it is just white managerscontinuing to create money just forthe purposes of BEE, then it doesn’tachieve anything. That’s not trans-fer of wealth at all.”

Although Joffe commands hugerespect, he has some detractors.One analyst refers scathingly tohim as “an opportunist”, whichJoffe takes as a compliment.

“I’m more opportunist thanst r at e g i st , ” he says. “Entrepreneur-ship is about opportunity-taking.Sometimes if you analyse too much,you don’t get what you want.

“You have to buy some tickets.And we bought lots of tickets in lotsof lotteries and won lots of prizes.”

‘I’m more opportunist

than strategist.

Entrepreneurship is

about opportunity-

taking. You have to

buy some tickets. And

we bought lots of

tickets in lots of

lotteries and won lots

of prizes’



CA PI T EC

KUMBA



CAPITEC BANK2006: R10 000 | 2011: R71 851

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KUMBA IRON ORE2006: R10 000 | 2011: R66 747

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THEKISO ANTHONY LEFIFI

CAPITEC Bank has lost outon its top spot in the 2010Business Times Top 100companies survey: this

year it came second in the annualappraisal — but its figures remaini mp r e s s ive .

With 3.2 million active clients, thegroup has increased its customerbase by 30% from last year, makingit South Africa’s third-largest bankin client numbers, overtaking Ned-bank with its 2.9 million customers.

But as Peter Mushangwe, head ofresearch at stockbrokers Legae Se-curities said, assets and depositswere more important measures ofsize. Capitec’s transaction fee in-come has surged by 54%, despite thebank not increasing its fees.

Net loans and advances grew to

R13.4-billion from R7.2-billion yearon year.

With 472 branches nationwide,the bank is still on an “ag g r e s s iveacquisition drive,” said CEO RiaanStassen. Capitec planned to launch55 new branches before the end ofthis fiscal year.

“Complacency is not part of ourvo c ab u l a r y , ” Stassen said.

If you had bought R5 000 worth ofCapitec shares in early 2002, theywould be worth R830 000 today, ex -cluding dividends paid. The bank’sshare price has soared by 10 000%since 2002.

Capitec listed on the JSE at R1.20on February 18 2002, and by the end

of the week it had plunged to 80c.Today it trades at around R190.

Most analysts bemoan the fact thatthey cannot get their hands on theshares — Cap i t e c ’s parent com-pany, the investment company PSGGroup, owns 35% of the country’syoungest bank.

Carl Fischer, the bank’s head ofmarketing and corporate affairs,said PSG held on to the shares toavoid a hostile takeover during thesmall-bank crisis of 2001.

A takeover would have d e st a -bilised the company but “o bv i o u s ly ,as we are growing, share owner-ship has to grow wider simply be-cause we have to acquire morecapital as we grow”, Fischer said.

Mushangwe said the share’s lack

of liquidity could result in pricinginefficiencies. Given the high price-to-book and price-to-earnings ra-tios, he said most investors feltCapitec was ove r - va l u e d .

Stassen prided himself onbeing able to list all of the bank’sservices and fee structures in undertwo minutes: the traditional big fourare so complicated, this would bei mp o s s i b l e .

This is how he did it: “R4.50monthly fee; R2.75 for a debit order;R3.75 for a cash withdrawal and fora returned debit order; R1 if youwithdraw cash at a retailer andzero fees on purchases.’’

Stassen didn’t see the logic insegmenting the market based onincome: “The need for banking is

the same for a [wealthy] i n d iv i d u a las for a blue-collar worker.”

While focusing on increasing itsfootprint in South Africa, Capitec isinvestigating replicating its modelin other African countries.

No time forc o mp l a c e n cyat Capitec

Despite huge growth,bank slips to second

DRIVEN: CEO Riaan Stassen hasoverseen 20 000% growth

TINA WEAVIND

DESPITE slipping one placeto third position in the Top100 companies rankings thisyear, things are still tooth-rottingly sweet for Kumba.

Iron ore has been by farthe best performing com-modity since the markethit bottom in 2009, frombelow $100 a ton toaround $170 a ton, sup-ported by demand from

Ch i n a , Korea andJap a n .

Rhynhardt Roodt,an analyst at Investec,said Kumba outper-formed other ore-ironproducers because itsproduction costs we r eamong the lowest inthe world.

While the world was

slowing down during 2008/2009,Kumba management kept up produc-tion and stockpiled the ore that wasn’tbeing sold. This proved a dva n t ag e o u sbecause the beginning of 2011 wasunusually wet in many parts of theworld, severely affecting the alluvialmining used in most ore extraction.Kumba simply dug into its stockpilesto feed the m a r ke t .

During the global economic crisis,Kumba management also continuedpreparing the Kolomela Mine in theNorthern Cape, which is coming online just in time to take advantage ofsoaring ore prices.

Because Kumba generates so muchcash and doesn’t need to spend it onanything else, dividends have in-creased 61% year on year by June. Ataround 80% of earnings being paid outin dividends, Kumba shares had by farthe best yield in the sector, Roodtsaid.

On a total return basis — in whichdividends are reinvested — R10 000 in-vested in Kumba in 2006 would be worthR66 747 today. The share price had gone

from R132 five years ago to R426.88.So Kumba was attractive to fund

managers, especially those in low-in-terest yielding economies. Roodt saidthat, despite all this good news beinglargely priced into the share, there wasprobably still going to be some upwardprice movement with demand for ironore, especially from China, expected toremain high for some time.

According to Kumba’s interim re-sults, which came out in June, theminer anticipated that Chinese crudesteel production would increase by

about 8% on 2010 levels during the restof the financial year.

However, many more iron ore projectswere expected to come on line around2015/2016, so the increased supply isforcing a price adjustment, Roodt said.

Workers who have been with theminer since it listed in 2006 are due fora pre-tax payout of around R500 000each next month as a result of theEnvision empowerment deal, saidChris Griffith, CEO of Kumba.

Employees have been given financialeducation to help them spend w i s e ly .

Turning iron into gold

PRETTY SMART: ChrisGriffith, CEO of Kumba



Ta k i n g

Shoprite

on the

up and

up

BUSINESS LEADER: WHITEY BASSON

The Business Leader of the Year is chosen by his peers, CEOs of SouthAfrica’s Top 100 companies. Shoprite CEO Whitey Basson is creditedwith taking his group to the forefront of the retail sector in SouthAfrica and on the continent, writes Adele Shevel

WHEN Whitey Bassonpresents results toShoprite investors,he dresses casually

and jokes about business and any-thing else that tickles his fancy.

But underneath the light-heart-ed appearance is unflinching dedi-cation and seriousness about thebusiness he’s been running for 30ye a r s .

Basson, the Top 100 BusinessLeader of the Year, manages boththe details and the grand objec-tives like a hawk.

“I have to give as much att e n t i o nto the guys who make the bread asI do to the guys who make thedecisions as to where it’s made,”says Basson. “I manage by tryingto sleep on weekends. I sleep withone eye open.”

Shoprite has dominated the re-tail industry in the past five years,and Basson, a colourful characterwho speaks his mind, has becomesynonymous with the successfulretailer.

He has been a trailblazer onseveral fronts. Shoprite was thefirst South African retailer to gointo Africa, long before it wasfashionable to do so, giving it first-mover advantage on a continentsaid to be the biggest untappedconsumer market in the world.

He was first to invest millions incentralised distribution, makingthe group more efficient than com-petitors early on.

Despite the group’s size, Bassonfocuses on detail each time thegroup goes into a new country orregion.

With effective systems, he caninstantly determine the grossprofit margins of a tin of food inNigeria, market share in Ghana orprovide the right products for theright target market in any region.

“There was always a saying thatretailers can’t cross borders. To-day it’s possible to manage a retailbusiness across the globe,” s aysBasson.

It has been a long hard slog,particularly in Africa, where near-ly every aspect of doing businesshas unanticipated challenges.Getting food to stores is difficult,products can languish at ports forweeks and it is hard to determinewho owns the right to land goodsearmarked for a store.

“At the end of the day it was hisdrive and vision that achievedt h at , ” says Shoprite’s chairman,its biggest single shareholder andBasson’s longtime friend, ChristoWi e s e .

Wiese says Basson’s success ispartly due to his down-to-earth

style and the fact that he r e a l lyenjoys people.

“His leadership style is that heis one of the men. He’s happy toget his hands dirty, he’s verydetail conscious.”

Wiese says Basson is a strongpersonality who holds strongviews and is not afraid to engagein robust debate.

“He’s not an easy baby. Butwe ’re very close friends and ove rthe years we’ve learned to livewith each other’s eccentricities.”

Wiese defends Basson’s exces-sive share options, saying it is his

employs 95 000 people.Basson qualified as a char-

tered accountant in 1970. PepStores, owned by Wiese, was oneof his clients. He became thegroup’s financial manager and in1979 was appointed managing di-rector of Shoprite.

“It wasn’t a very glamorousjob. My wife’s friends used tothink I worked in a fruit andvegetable store.”

He prides himself on having aloyal staff. The group has morethan 2 000 graduates from storemangers to senior executives in

keting department. “I think Ihave reasonable insight into con-sumer behaviour and how to getit into a form I feel comfortablewith. You can’t screw that up.”

Basson is legendary for hiscost-cutting, although Shopritepays its executives well.

“We took a view we should letour people share in the wealthcreation of the company,” s aysBasson.

“It’s probably the company inSouth Africa that’s made themost wealth for shareholdersand employees.”

He expects senior manage-ment to know their hourly cost tothe company, and to make surethey make more for the groupthan they cost.

He shifted a weekly manage-ment meeting from seven on aMonday morning to 4pm afterwo r k i n g out that having the ex-ecutives at the meeting cost thegroup R23 000 an hour.

By shifting it, he can eat intotheir private time at no cost tothe group — “and the only peo-ple who get cross are the wives”.

Meeting rooms have large eggtimers to ensure they use timee f f i c i e n t ly .

Basson loves the business. “Ihave very few friends outside mybusiness. I’m with them at aparty 12 hours a day.”

Brought up in Porterville nextto Tulbagh in the Western Cape,Basson acquired his nickname atschool when boys found it dif-ficult to say his given name,“We l lwo o d ”. His nickname re-ferred to his blond hair.

Basson’s father was a farmer,a businessman and a politician.“My dad was an exceptionallyintelligent man. I spent most ofmy young life with a man with anunbelievable brain and an un-believable way of analysingproblems. I was very close tohim. I was fortunate I could livein a small town and live with afather who was way out — hewa s n ’t a good farmer, he was tooclever to work.”

Basson, however, has beenworking flat-out for decades andhas no plans to slow down.

“He drives and steers thisb o at , ” a colleague says of him,“and we all row with him.”

Retailers can’t cross borders?

‘It ’s possible to manage a retail

business across the globe’

leadership that helped grow thecompany so successfully.

Along with a huge amount ofhard work, Basson says, a lot ofluck has been involved.

“I was fortunate that MarinusDarling offered Checkers toShoprite and not anyone else. Iwas fortunate that the chairman[Wiese] thought it a good idea tobuy OK Bazaars before Pick nPay did.’’

Shoprite bought Checkers in1979 for R55-million and Bassonwas made managing director.

Today the Shoprite Group’smarket cap is R60-billion and it

training to become senior ex-ecutives 10 to 15 years from now.

“We have at least 20 peoplewho could take on the top role,”says Basson.

Graduates are brought in andafter two or three years are givenspecial projects. They work un-der pressure. Every year thegroup opens close to 100 stores,the equivalent of an entire JSE-listed company.

All senior executives have du-ties at the coalface and need to beinvolved in stores — Basson isstill directly involved in adver-tising and looks after the mar-

“

ROAD MAP: In this 2002 photo, Whitey Basson, then MD of the ShopriteCheckers group, points out Shoprite's planned expansion into Africa



HOWDEN AFRICA

RENÉ VO L LG RA A F F

HOWDEN Africa has beenin the top 20 of the Busi-ness Times Top 100 Com-panies for the past four

years, consistently offering valueto shareholders.

This year the company ranked asthe fourth-best investment on theJSE — an investment of R10 000 fiveyears ago would be worth R54 254n ow .

CEO Thomas Bärwald said How-den Africa was a long-term busi-ness, with life-long c u st o m e r s .

“We are not like a fast com-modity, we can count our cus-tomers and we have known themfor a lifetime. So it is important forus to supply very good customerservice and to supply very goodtechnology.”

Howden Africa is part of the in-ternational Howden group. Ch a r t e rInternational, the owner of How-den, holds an interest of about 55%in the group.

Howden designs, manufacturesand markets specialised air andgas-handling solutions to the pow-er generation, petrochemical, min-ing, construction, refrigeration andwater treatment industries.

While chairman Bob Cleland re-ferred in the 2010 annual report tolast year’s “challenging” economicconditions, Bärwald said condi-tions had improved. Howden Africaposted strong half-year results forthe six months to June, with rev-enue 2.5% up and headline earnings54.4% up compared to the first halfof last year. The group declared aninterim dividend of 20c a share.

According to Bärwald, businessis shifting more towards environ-mental business and environmen-tal control.

“We have very good products in

that industry, which we have notreally had a chance to sell, but weare positive the new environmentallegislation in South Africa willbring in more work for us,” he said.

Bärwald said while the slowdownin the economic recovery had af-fected Howden Africa, the localpower and mining industries andthe mining industry in the rest ofAfrica were still in good shape.

The group compensated for theslowdown in South Africa by con-centrating more on the rest of thecontinent, he said.

Although Howden Africa doesnot have offices in other Africancountries, it supplies equipment tomost of the mineral-rich countrieson the continent.

Bärwald said the spike in demandfor commodities over the past twoyears has thus helped HowdenAfrica. One example is the buoyantcoal industry, to which H owd e nAfrica supplies a lot of equipment.

The company also su p p l i e sequipment for the construction ofMedupi and Kusile, the two newpower stations Eskom is building inLimpopo and Mpumalanga. It alsodoes maintenance on Eskom’s ex-isting power plants.

Bärwald, who is originally from

Germany and has worked for How-den in Australia and China, saidwhile business conditions in SouthAfrica could improve a lot, therewere advantages.

“Compared to other countries,where we sometimes have labourshortages, at least in South Africawe have sufficient labour and a bigwo r k fo r c e , ” he said.

“The big challenge in the en-gineering industry is the shortageof skilled people. So we try to main-tain staff. We have succession plan-

ning and talent-management pro-grammes.”

But labour issues in South Africacould be better, Bärwald said. Theprolonged strike in the engineeringindustry in July affected HowdenAfrica negatively. “No one won(during the strikes),” Bärwald said.

“We could not produce and theworkforce went on strike and gotno money. It might have been man-aged better. But it is somethingoutside our company’s control. Itwas a national thing.”

Over the past five years, HowdenAfrica’s share price rose from justover R3.40 a share to R14.21 at theend of September this year, a rise ofalmost 318%. The shares trade at aprice:earnings ratio of between 10and 11.

But Bärwald said share price per-formance was not something thegroup focused on specifically.

“We do not want to talk ourselvesup or down. We focus on companyperformance and the rest willcome. The industry (engineering)that we are in is quite small. A lot ofour investors know us, and theyknow the industry and market.They probably want to see solidcontinued performance, with us op-erating efficiently and effectively.That is what we try to do.”



HOWDEN AFRICA2006: R10 000 | 2011: R54 254

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ADELE SHEVEL

IN line with a strong operationalperformance, Shoprite is again thetop-performing retailer in the Top100 Companies survey, achieving acompound annual growth in va l u eof 40.24% for its shareholders overfive years. It was fifth overall, fromninth position a year ago.

An investment of R10 000 in 2006would be worth R53 935 today. Aninvestment in its competitor Pick nPay would be worth R15 631, SparR32 533 and Massmart R29 846.

Under difficult circumstances inthe economy, Shoprite has contin-ued to outperform many of its com-petitors, both in terms of its op-erational and its share price er-fo r m a n c e .

Expansion beyond SA is essentialfor fast-growing Shoprite to con-tinue its trajectory. The country’sbiggest retailer operates in 15 othercountries in Africa.

Shoprite has committed to 16new supermarkets outside SA, itsbiggest rollout yet in Africa in asingle year. By June next year thereshould be six stores in Nigeriaalone.

During the year to June it opened78 stores. Shoprite employs morethan 95 000 people and has created

7 000 new jobs in the past financialyear, and more than 30 000 jobs inthe past five years.

Usave, its store which caters forthe lower-income market, wasS h op r i t e ’s top performer with 19.1%growth. Checkers continued to at-tract more upper-LSM consumersand Shoprite dominated the middleclass.

Shoprite CEO Whitey Bassonwas financial manager of Pep in the’70s and when Pep (owned by Chris-to Wiese) went into food and gro-ceries, Basson was made managingdirector.

S h op r i t e ’s first acquisition wassix Ackermans food stores in 1984.

In 1990 Shoprite bought GrandBazaars for R43.3-million and thefollowing year it bought Ch e c ke r s .

At the end of 1997 S h op r i t ebought the troubled OK Bazaarsfor R1.

In 2001 the decision was taken tomarket its major brands separatelyas Shoprite and Checkers and toreposition Checkers to appeal to amore affluent customer — a strat-egy that continues to improve itsmarket share.

The group has benefited fromspending millions on systems, ex-panding into Africa before otherretailers did so, and investing incentral distribution.

Basson said prices at Shopriteare the lowest across the 250 most-demanded products and it intendsto stay the cheapest, although itcould be at the expense of sig-nificant increases in its tradingmargin.

In its latest reporting period forthe year to June, diluted headlineearnings a share rose 12.4% on a7.3% rise in turnover. This was inthe context of a rise of 3.4% inc o n su m e r s ’ disposable income and

a slight drop in Shoprite’s foodprices of 0.1%.

“Shoprite has been very focusedand at the forefront of the biggest-growing segment of the marketwhich has benefited from hugegrants from government,” saidEvan Walker of Momentum AssetManagement, referring to socialgrants to poor people.

“Th ey ’ve pushed the hardest inthat space, much harder than any-

one else. They still have huge first-mover advantage in Africa overWalmart in food which will last along time. Whitey always stood outand said they’re not going to Aus-tralia.

“He said we’re a mass marketretailer for the African continent,and kept to that strategy and didn’tdeviate, building infrastructureand IT as the backbone of thebusiness.”

Consis tentvalue to theshareholder

MANAGING TALENT: Howden AfricaCEO Thomas Bärwald

Shoprite thrust into Africa pays off



SHOPRITE2006: R10 000 | 2011: R53 935

TOP 100 COMPANIES

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Howden Africa ranksas fourth-bestinvestment on JSE

DEPENDABLE: Based in Booysens, Johannesburg, Howden Africa is a manufacturer of components for mines andpower stations Picture: KATHERINE MUICK-MERE

SHOPRITE

STUCK TO HIS GUNS: Shoprite CEO,Whitey Basson



C O RO N AT IO N



CORONATION FUND MANAGERS2006: R10 000 | 2011: R52 423

TOP 100 COMPANIES

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TSHEPO MASHEGO

CORONATION Fund Managers hasconsistently been a top performer,both in terms of the assets itmanages and its own share price.

The company shot to sixth place in theTop 100 Companies list, based on its shareperformance from September 2006 to theend of September 2011. Over this period,the value to shareholders rose at an annualcompound rate of 39.3%.

The company, headed by Hugo Nelson, isthe only listed fund manager in the top 10l i st .

Nelson said: “At Coronation we seek toemphasise the investment profession overthe investment business, which means thatour key goal is to generate outperformanceof any given client benchmark overmeaningful [long] periods.

“This is the cornerstone of our strategy,and the accrual of business value as aresult is a consequence of the successfulimplementation of this objective overtime.”

The company’s fund managers havedominated the latest top 10 performingunit trusts list compiled by investmentresearch firm M o r n i n g st a r .

In the 10 years ending September 30, theCoronation Resources fund returned 650%followed by Coronation Top 20A fund

(643%) and theCo r o n at i o nIndustrial (632%).

“We have nodoubt benefitedfrom the risingtide of the JSE,”said Nelson. “Th eextent to whichwe have exceededthe returngenerated by theJSE is acombination ofthe relativeundervaluation ofour share price atthe inception ofthe five-yearperiod to endSeptember(against which weare beingmeasured) as wellas thephenomenal

performance delivered across all our clientp o r t fo l i o s .

“Having a long-term view is crucial inour business because a short-term horizonis enduring market inefficiency,” Ne l s o nsaid.

“I have been with Coronation since 1999,having started as a member of theinvestment team. I believe that successfulinvestment environments are enabledwhen investment professionals believethat they are plying their craft in a ‘small”company environment.

“So much of my effort goes into ensuringthat very experience of working in a smallstaff-owned company, while in realitybeing a listed entity which is in the Top 10of the Business Times Top 100.

“This means that my style is collegiateand collaborative. I seek to encouragepartnership-like contribution from mycolleagues and appreciation of the need forthis from all our stakeholders.”

Although the company is in a closedperiod — and therefore can’t talk about itsstrategy — due to the imminent release ofits annual results for the year endedSeptember 30, Nelson said he was notabout to veer from the winning pathCoronation was on.

“We plan to stick to our knitting. Weacknowledge that returns in excess of themarket accrue in a lumpy fashion, whichmeans that hard times lie in wait. Thosehard times, however, only sow the seedsfor the next big alpha accrual.”

SA ’s crowning fund

ON A ROLL: HugoNelson of CoronationFund Managers

‘We acknowledge that returnsin excess of the market accruein a lumpy fashion’

Real Mining. Real People. Real Difference.

MARTHA SEKOBOANE

Thabazimbi Mine

FROM MINER TO MINERALOGIST,

GEOLOGIST TO ENVIRONMENTALIST,

EVERYONE AT KUMBA IRON ORE

HAS THE SAME UNITY OF PURPOSE.

WITH A 70 YEAR HISTORY OF MINING

IN SOUTH AFRICA, OUR FOCUS

HAS BEEN CONSISTENT: TO CREATE

VALUE FOR OUR EMPLOYEES,

OUR COMMUNITIES, OUR SHARE-

HOLDERS AND, ULTIMATELY, OUR

COUNTRY THROUGH RESPONSIBLE

MINING.

WE WOULD LIKE TO BELIEVE

THAT IT IS BECAUSE OF THIS WAY

OF DOING BUSINESS THAT WE HAVE

BEEN RANKED IN THE TOP THREE

OF THE SUNDAY TIMES TOP 100

COMPANIES FOR THE THIRD

CONSECUTIVE YEAR IN 2011.

WHICH GOES TO SHOW THAT

WITH BETTER THINKING,

BETTER RESULTS FOLLOW.

FIND OUT MORE AT

GETTHEFULLSTORY.CO.ZA

MINING OUR WAY

SHARE VALUE FROM

SHARED VALUES

:

KUMBA IRON ORE



MR PRICE



MR PRICE GROUP2006: R10 000 | 2011: R44 793

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price, weekly (cents) 2006: R10 000 | 2011: R44 793

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Clicking with health, beauty

C L IC KS

THEKISO ANTHONY LEFIFI

MR PRICE Group, likemany companies, doesnot want to miss the bigrush in expanding its

footprint across Africa. By the endof this year it will have opened astore in Nigeria.

CEO Stuart Bird be-lieves there is big poten-tial in the long term, butinitial growth will be slowdue to the present short-age of retail space.

The Durban-based re-tailer, which has beenmaking a habit of show-ing high up in the Top 100ranking and is rankedseventh this year, hasabout 67 stores across thecontinent — 43 company-owned stores in Botswana, Lesotho,Swaziland and Namibia, and 24franchised stores in Kenya, Zam-bia, Mauritius, Uganda, Tanzania,Malawi and Mozambique.

Bird, a media-shy executive whotook over from Alastair McArthurin August, said the group will focuson fewer, large markets rather thanspread itself too thin.

Mr Price, which listed on the JSE

in 1952 as John Orrs, has gainedloyal investors who are attracted bythe fact that 83% of its sales are forcash.

Its clothes are relatively cheap,leading to speculation that morethan 90% of its merchandise issourced from China — something

Bird refutes. “This figureis way off the mark. Wesource a significantamount of merchandiselocally and ideally wouldlike to increase this fur-ther, however we are af-fected by a lack of com-petitiveness in the localmanufacturing industry.”

The business model en-tails lower mark-ups andselling large volumes, soacceptable pricing andon-time deliveries and

quality are “critical” to success.Mr Price employs 18 000 people, a

number that has grown “d r a m at -i c a l ly ” over the years, says Bird.

The largest business for thegroup is Mr Price Apparel, whichconstitutes about 55% of groupsales, has a 13.4% market share inclothing and a 8.5% market share infootwear as per the Retail LiaisonCommittee (RLC).

RENé VOLLGRAAFF

CLICKS Group is unique on theJSE. Listed under retailers, it is theonly specialist health and beautycompany on the local exchange —and those who invested in it in 2006would not have been disappointed.

Clicks is eighth on this year’s listof Top 100 companies — an in-vestment of R10 000 five years agowould have been worth R44 065 bythe end of September 2011, rep-resenting compound growth in val-ue of 34% a year. And although atthe end of last month Clicks’s shareprice was down from a year before,it still was 272% higher than fiveyears ago.

So far, 2011 has been a toughyear, specifically from a retail per-spective, said Clicks CEO DavidKneale.

“Last year included the WorldCup, so there was a strong base inthe sense that South Africa hadmore visitors last year, the countryhad more jobs and there was ageneral feel-good factor, bothin anticipation of the WorldCup and after the World Cupbecause it went so well.”

According to Stats SA,growth in retail spendinghas been volatile since thebeginning of the year as con-sumers react to the generaluncertainty in the econ-omy. Kneale saidClicks has noticed adrop in consumersp e n d i n g .

“Although theconsumer faces alot of pressure inrelation to fuelcosts ande l e c t r i c i tycosts and rates,retail inflationhas actuallybeen pretty mutedthis year, which hasbeen helped until

now by the strength of the rand,”he said.

“But consumers are feeling theirgeneral living standards are underpressure, therefore they are verycareful about when they go to theshops and what they spend their

money on.”The group sells everything

from toothbrushes in Clicks,DVDs at Musica and luxurybeauty products in B o dyS h op . Kneale said the busi-nesses in the group showed

that the more discretionary thespend, the less likely the

consumer was tobuy it.

But everydayitems weren’tunder so muchp r e s su r e .

“P e op l estill cleantheir teethand theystill get

headaches.So health andbeauty, broadly,are resilientm a r ke t s , ”Kneale said.

Stats SA re-ported thatsales inpharmaceu-tical and

medical goods, cosmetics and toi-letries grew by 6.1% year on year inthe three months to July, althoughthe total growth in retail sales forthe three months was only 5.1%.

Kneale said that with sharehold-ers being the ultimate owners ofthe group, the objective was alwaysto improve shareholder value.

“We are very clear that share-holder value is created by motivatedand committed people working forthe group,” he said.

“So we delight our customersand keep our people motivated andcommitted and then shareholdervalue will be created.”

Kneale said retailing was ulti-mately a “simple business”.

“Customers come into your shopbecause they want to buy some-thing they think you sell. They willcome back if they found the prod-uct, the price was right and theyenjoyed the experience.

“So we focus on making sure wehave got the products available andthat we innovate.”

Kneale said: “The rise in theshare price is attributed to ourperformance . . . and our potentialprospects are good because we arefocused on health and beauty,which in our view are long-termgrowth markets.”

Clicks reported an 18.1% in-crease in diluted headline earningsfor the year to August.



CLICKS2006: R10 000 | 2011: R44 065

TOP 100 COMPANIES

Number

8

500

1500

2500

3500

4500

20112010200920082007Mr Price goes intoAfrica for growth

STUART BIRD

RESILIENT: ClicksCEO David Kneale



PINNACLE TECHNOLOGY

BRENDAN PEACOCK

ACONSISTENT finisher inthe upper echelon of theTop 100 Companies rank-ings and ninth this year,

Pinnacle Technology Holdings hasprovided a compound annual re-turn of 34.24% in shareholderwealth over the last five years.

Government spending on IT in-frastructure has helped buoy thenumbers, but Pinnacle’s next boostlooks set to come from the wide-spread migration to cloud comput-ing.

Providing hardware, softwaredistribution, network hardwareand infrastructure solutions, aswell as office automation productsand high-end telephony, Pinnaclemade some acquisitive growth overthe last two years to maintain itsleading position in the tech sector.

“Growth has come organicallyand we’ve acquired brands to reselltier-one products,” said CEOArnold Fourie, the group’s founderwho has been at the helm since 1998when it l i st e d .

“The last five years have beengreat for us,” Fourie said. “We ’veachieved compound growth of justover 34% per annum. I can ascribethat to discipline in the company,enjoying a healthy balance sheetand having enough capital on hand.We run an efficient business andwe ’ve lowered our operating costsevery year, which keeps us com-p e t i t ive .

“We have good people and theythink on their feet. We take op-portunities when we see them. It is afast-moving industry and productsthat are winners can come up quick-ly, so we need to act fast to buy theagency (for those products).

“Products, sales drive and cus-tomer support — I think thesethings make us the leader in oursector,” he added.

Thanks to being relatively in-sulated from tough times in thesector, Fourie felt Pinnacle couldstill “buy smart” when the chancearises.

“The economic environment andthe state of the market will play arole in how well we do. We haven’t

suffered too much so far, and welike a slightly weaker rand. We areaware of the obligation to createjobs and we aim to keep growingorganically, acquiring companiesthat make sense.”

Fourie said there were no deals inthe immediate offing, but Pinnaclewas always preparing for the nextbig thing. “In terms of technologythat will drive profits in the future, Ithink the new market for tabletcomputers is interesting.

“People want to be connectedeverywhere, and falling connectiv-ity costs is the game-changer, forboth personal and business users,”he said.

“In the next five years cloud com-puting will be important. To enabletransactions anywhere there willbe a need for good storage andback-up systems, and we’re posi-tioned to take advantage of this. Wealso intend to migrate up the valuechain to begin selling services.”

RENÉ VOLLGRAAFF

INVESTORS who held retailshares over the past five yearswould have received a good return— but this is set to change asc o n su m e r s ’ disposable incomecomes under pressure.

Three retailers — Shoprite, MrPrice, and Clicks — are in the top 10of this year’s Top 100 companies.

An investment of R10 000 inthese companies five years agowould have given an investor areturn of R53 935, R44 793 andR44 065 respectively at the end ofSeptember. This represents com-pound annual growth in the valueof the investment of between 34%and 40% a ye a r .

Truworths, Woolworths, Sparand Massmart are in the top 20 ofthe Top 100 list. A R10 000 in-vestment in these companies fiveyears ago would have been worthbetween R37 000 and R29 000 bySeptember, as the investment

would have grown by between 30%and 24% a year.

And close on their heels areCashbuild and Foschini with com-pound annual growth in value of23.7% and 19.31% a year.

Diane Laas, retail analyst at In-vestec Asset Management, said astructural change in the economy,where a lot of wealth was created byhigher wages, had helped retailers.

“Consumers in higher LSMbrackets tend to spend more onretail and they usually shop more,”she said. The management teamsof retailers in South Africa areprobably some of the best in theworld, so they have driven the busi-nesses very well operationally.”

At R113.50, Shoprite’s sharerose by 364%. Mr Price’s shareprice increased by 254% and that

of Clicks by 272%.Laas said the share prices of

retailers started increasing fromJuly 2008, thanks to the belief thatinterest rates would begin to godown — meaning that consumershad more money to spend.

climb at the start of 2010.Laas said: “At that time a lot of

foreigners decided the retail val-uations in South Africa lookedrelatively cheap. Foreigners likedthe South African retail sectorbecause they bought into thestructural change story. So since2010 foreigners have been drivingour retail share prices.”

Massmart and Truworths havea foreign shareholding of between60% and 70%.

But just as foreigners had helpeddrive up retail share prices, theywere the reason share prices haddeclined in September, Laas said.

“The rand suddenly went fromabout R7 to R8 to the US dollar, soforeigners started to get a littleworried about their investmentsin dollar terms,” she said.

“If you are very bearish aboutthe rand and think it will go backto R10 to the dollar, then retail isprobably not the sector where youshould be investing.”

Chris Gilmour, an investmentanalyst at Absa Asset Manage-ment Private Clients, said: “Th eprice:earnings ratios of retailersare quite high relative to the rest ofthe market, so the attraction is notnearly as big as a few years ago.”

Gilmour said Mr Price wouldstill be a good investment as it hada good formula and was i mp r ov i n gits stock control system.

And Massmart and Shopritewould also do well because theirtarget market was mostly the low-er LSM groups who received so-cial grants that increased at a rateabove i n f l at i o n .

Pinnacle soaringinto the clouds



FAMOUS BRANDS2006: R10 000 | 2011: R40 556

TOP 100 COMPANIES

Number

10

1000

2000

3000

4000

5000

20112010200920082007



PINNACLE TECHNOLOGY2006: R10 000 | 2011: R43 593

TOP 100 COMPANIES

Number

9

0

250

500

750

1000

20112010200920082007

ADELE SHEVEL

FAMOUS BRANDS has trans-formed itself into a R4-billion com-pany on the JSE — a far cry fromthe first Steers opened by the Ha-lamandaris family in 1951 in thesouth of Johannesburg.

It has achieved compound annualgrowth in its share value of 32.32%over the past five years. An in-vestment of R10 000 five years agowould be worth R40 556 today.

The business that established thesteakhouse concept in South Africagrew steadily, and in 2000 thefounding family sought to unlockfurther value. Kevin Hedderwickwas appointed managing directorof the Steers brand. He had spent 11years at SA Breweries before join-ing Keg Franchising as a partnerand managing director.

Today, under Hedderwick asCEO, Famous Brands has 18 brandsin its portfolio — from Steers andDebonairs Pizza to Wimpy andMugg & Bean — and manufacturesand supplies franchisees with prod-ucts that include meat, sauces, fruitjuice and minerals.

Last year alone, the group boughtsix well-known food brands. Th i smonth it opened its 2 000th store, aWimpy in Durban North. Hedder-wick said there are no plans tobecome a global business. Fa m o u sBrands is comfortable with grow-ing its footprint in Africa, he said.

Between now and February nextyear, 90 restaurants will open inSouth Africa and another 30 inother African countries, primarilyin Zambia, Nigeria, Botswana andM au r i t i u s .

Part of its strategy is to buy a

controlling stake in a business ofwhich it has little or no experience,and letting the founding en-trepreneur keep a 49% stake as anincentive to drive growth. Thestrategy scared investors for awhile, but Hedderwick said the im-pressive track record of businessessuch as Tashas and Vovo Telo al-layed their concerns.

Before their acquisition, many ofthe established brands bought by thegroup had lost their lustre — M i l kyLane, Juicy Lucy, and O’H ag a n ’s hadseen better days. They were re-vamped and integrated into the Fa-mous Brands supply chain.

Recently, Mugg & Bean andMilky Lane were each integratedwithin three months.

Earlier this year, Famous Brandsestablished a pub-and-restaurantdivision. In line with the advent inthe US and UK of “gastro pubs”, thegroup will transform dark anddingy bars into attractive and safee nv i r o n m e n t s .

At the centre of the FamousBrands engine is “brand steward-ship”, which Hedderwick learntabout at his “alma mater”, SAB.

“You won’t find a better trainingground than SAB,” he said.

ORGANIC GROWTH: Arnold Fourie, CEO of Pinnacle Technology HoldingsPicture: SIMON MATHEBULA

Going retail to make a profit

A compound annual

growth of between

34% and 40% a year

The first interest-rate cut camein December 2008 and interestrates are still at a historical low,with the repo rate at 5.5% and theprime lending rate at 9%.

After a downturn during thefinancial crisis of 2008 and 2009,retail share prices resumed their

The R4bnhouse builtbrand byb ra n d

FIREBRAND: Kevin Hedderwick

FAMOUS BRANDS

Technology companywell positioned fornew computing trend



1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

42

43

44

45

46

47

48

49

50

Chrometco

Blue Financial Services

Nutritional Holdings

Gold One International

Fortress Income Fund - B

Metorex

Sekunjalo

Pinnacle Technology

Universal Industries

Morvest Business Group

ISA Holdings

Country Bird

EOH

Rolfes Technology

Metair Investments

Pan African Resources plc

Cons Infrastructure Group

Taste Holdings

Litha Healthcare Group

Bell Equipment

Metrofile

Exxaro Resources

ELB Group

Coronation Fund Managers

Invicta

Capital & Counties Prop plc

Howden Africa

Optimum Coal

Mvelaphanda Group

Mustek

Onelogix

Trustco

UCS

Super Group

Life Healthcare Group

Verimark

British American Tobacco plc

African Media Entertainment

Woolworths

Vodacom Group

Fairvest Property

Cashbuild

Beige

Clientéle Life Assurance

Micromega

Afrimat

Palabora Mining

Seardel Investment - N

Transpaco

Amalgamated Electronic

12

12

2

202

240

418

30

545

145

14

53

263

1 400

141

1 025

94

560

75

165

990

161

12 030

1 390

1 478

3 250

1 456

1 000

2 600

505

389

101

55

195

60

1 440

120

25 858

3 300

2 650

6 950

106

7 750

6

800

149

331

9 440

65

1 119

150

39

35

5

417

473

798

55

949

247

23

83

430

2 265

216

1 590

146

900

115

250

1 480

238

17 050

1 999

2 000

4 590

2 109

1 421

3 750

334

535

135

74

54

84

1 930

153

34 239

4 550

3 500

9 036

135

10 294

8

1 020

200

425

11 100

86

1 400

188

32 500

29 167

25 000

20 644

20 485

19 091

18 333

17 878

17 357

17 143

16 971

16 848

16 598

16 354

16 262

16 122

16 071

15 828

15 152

14 949

14 943

14 907

14 798

14 758

14 725

14 657

14 594

14 423

14 381

14 199

14 188

14 108

14 003

14 000

13 918

13 849

13 825

13 788

13 784

13 760

13 759

13 705

13 667

13 432

13 423

13 421

13 238

13 231

13 166

13 160

225.00%

191.67%

150.00%

106.44%

104.85%

90.91%

83.33%

78.78%

73.57%

71.43%

69.71%

68.48%

65.98%

63.54%

62.62%

61.22%

60.71%

58.28%

51.52%

49.49%

49.43%

49.07%

47.98%

47.58%

47.25%

46.57%

45.94%

44.23%

43.81%

41.99%

41.88%

41.08%

40.03%

40.00%

39.18%

38.49%

38.25%

37.88%

37.84%

37.60%

37.59%

37.05%

36.67%

34.32%

34.23%

34.21%

32.38%

32.31%

31.66%

31.60%


Close (cents)

Final value (R)

Compoundgrowth 1

year


Close (cents)

Final value (R)

Compoundgrowth 1

year

TOP 50 COMPANIES OVER ONE YEAR


RENÉ VOLLGRAAFF

MOST companies that offered good share-holder returns over the past five years wouldhave rewarded shareholders over a longerterm as well.

Three of the top 10 Sunday Times Top 100Companies, compiled according to the growthof investments in companies over the past fiveyears, are also among the top 10 performersover the past 10 ye a r s .

The top company on this year’s Top 100 l i st ,Assore, was the fourth-best performer on theJSE over 10 years.

An investment of R10 000 10 years ago wouldhave been worth R295 638 by the end of Septem-ber, representing compound annual growth of40.31% in the investment.

Shoprite and Mr Price are also on the top 10list over five years and 10 years. An investmentof R10 000 10 years ago in one of these c o mp a n i e swould have been worth R258 586 and R220 897,respectively, by the end of September.

The top performer over 10 years was Cash-build, where a R10 000 investment would havegrown by 46.81% annually and be worthR465 235 by the end of last month. Cashbuild’sshare price rose by a staggering 3 220.65% over10 ye a r s .

Cashbuild would also have rewardedinvestors who came aboard only five years ago.The company was 24th on the Top 100 Com-panies list with compound annual growth of23.7% over five years.

PSG Group was the second-best performerover the past 10 years, as a R10 000 investmentwould have grown to R361 558 by the end ofSeptember.

But some 10-year performers did not evenmake it onto this year’s Top 100 list, whereperformance is measured over five years.

These include construction group Grindrod,

I nve sto r s

s c o re d

over the

long term

But some 10-ye a r

performers did not even

make it onto this year’s

Top 100 list

the third-best performer over 10 years, mininggroup ArcelorMittal, which performed eighth-best over 10 years and Wilson Bayly Holmes-Ovcon, which was 14th.

While mining and construction companiesoffered good value over the past 10 years, andretailers over the past five years, the topperformers over the past year were a mixedbatch of companies.

A R10 000 investment a year ago in Chromet-co, an AltX-listed minerals and commoditiesexploration company, would have grown toR32 500 by the end of September.

Microlender Blue Financial Services, whichhad a turbulent 2010 and went through someradical changes, would have delivered com-pound growth of 191.67% on a R10 000investment, giving a final value of R29 167.Blue’s share price rose from 12c to 35c, still a farcry from the high of R6.90 it reached in 2008.

The third-best performer over the past yearwas Nutritional Holdings, formerly known asImuniti. The pharmaceutical and nutritionalfoods manufacturer made some negative head-lines since it listed on the AltX in 2006, whichincluded poor results, a court battle with itsBEE shareholders and a raid by SARS. But overthe past year, an investment of R10 000 wo u l dhave grown to R25 000 as the company’s shareprice rose from 2c to 5c.

Takeover talks seemed to be good for share-holder value over the shorter term. Both GoldOne International and Metorex, fourth andsixth on the list of top companies over one year,were targets of takeovers by Chinese com-panies over the past year, which helped toboost their share prices.

Of the top 10 companies on the Top 100 list ofperformance over the past five years, onlyHowden Africa was among the top 50 per-formers over the past year. Howden Africa,which is fourth on the Top 100 Companies list,delivered compound growth of 45.94% over thepast year, making it the 27th-best company tohave been invested in over this time.

Sunday Times 30/10/2011 01 01bt3010BusinessTimes 16 AL 28/10/2011 09:06:53 PM

16 Business Times October 30 2011Sunday Times

Business, 30-Oct-2011-Page 16, Cyan Business, 30-Oct-2011- Page 16, MagentaBusiness, 30-Oct-2011-Page 16, Yellow Business, 30-Oct-2011- Page 16, Black

Business

B-1 JDCP

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Super Group

Sanyati Holdings

Simmer & Jack Mines

Sentula Mining

Sappi

Trans-Hex Group

Capital Shop Centres plc

Uranium One Inc

Lonmin plc

Morvest Business Group

DRD Gold

Amalgamated Appliance

Sovereign Food

Miranda Minerals

Argent Industrial

Distribution & Warehousing Network

Iliad Africa

Astrapak

Metorex

Vox Telecom

1 170

160

315

925

10 029

1 025

17 800

5 701

37 400

65

1 065

550

1 060

66

1 485

970

1 153

1 375

1 245

70

84

25

3

235

2 385

324

3 990

1 597

13 140

23

420

205

445

29

690

466

506

780

798

45

764

1 563

1 991

2 610

2 610

3 240

3 462

3 496

3 655

3 692

4 124

4 241

4 390

4 394

5 060

5 183

5 342

6 246

6 410

6 429

-40.21%

-31.01%

-27.59%

-23.56%

-23.56%

-20.18%

-19.12%

-18.96%

-18.23%

-18.07%

-16.23%

-15.76%

-15.18%

-15.17%

-12.74%

-12.32%

-11.79%

-8.98%

-8.51%

-8.46%


Close (cents)

Final value (R)

Compoundgrowth 5

yrs

WORST 20 OVER FIVE YEARS


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Central Rand Gold

Africa Cellular Towers

1time

Huge Group

First Uranium

Buildmax

Firestone Energy

Jubilee Platinum plc

Miranda Minerals

Evraz Highveld Steel & Vanadium

Wescoal

Interwaste

Sanyati

Chemical Specialities

Keaton Energy

Eastern Platinum

Control Instruments

Murray & Roberts

Raubex

Platmin

33

30

105

219

608

30

30

390

63

8 400

125

67

45

81

430

970

72

4 470

2 282

640

4

8

33

80

240

12

13

177

29

3 990

65

37

25

47

250

565

42

2 600

1 312

400

1 212

2 667

3 143

3 653

3 947

4 000

4 333

4 538

4 603

4 750

5 200

5 522

5 556

5 802

5 814

5 825

5 833

5 884

6 050

6 250

-87.88%

-73.33%

-68.57%

-63.47%

-60.53%

-60.00%

-56.67%

-54.62%

-53.97%

-52.50%

-48.00%

-44.78%

-44.44%

-41.98%

-41.86%

-41.75%

-41.67%

-41.16%

-39.50%

-37.50%


Close (cents)

Final value (R)

Compoundgrowth 1

year

WORST 20 COMPANIES OVER ONE YEAR


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

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40

41

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48

49

50

Conduit Capital

Uranium One Inc

Purple Capital

Indequity

PSV

Bonatla Property

Lonrho plc

Buildmax

Taste

Silverbridge

Esorfranki

Brimstone

Alert Steel

Basil Read

Beige

Redefine Properties

Raubex

Sanyati

Cipla Medpro SA

Orion Real Estate

EOH

Pinnacle Technology

Micromega

Amalgamated Electronic

OneLogix

Stratcorp

Grindrod

South Ocean

SA Corporate Real Estate Fund

Medi-Clinic

SacOil

The Don Group

Santova Logistics

Aspen Pharmacare

York Timber

Resilient Property Income Fund

Growthpoint Properties

Discovery

MTN Group

JSE

HCI

Netcare

Awethu Breweries

Acucap Properties

Country Bird

Oasis Crescent Property Fund

Rolfes Technology

Famous Brands

Transpaco

Sovereign Food

2010.08

2010.12

2010.08

2010.09

2011.02

2010.12

2010.09

2011.02

2011.02

2011.06

2011.02

2010.12

2010.06

2010.12

2011.03

2010.08

2011.02

2011.02

2010.12

2011.06

2011.07

2011.06

2010.12

2011.03

2011.05

2011.02

2010.12

2010.12

2010.12

2011.03

2011.02

2010.06

2011.02

2011.06

2011.06

2010.12

2011.06

2011.06

2010.12

2010.12

2011.03

2010.09

2010.06

2011.03

2011.06

2011.03

2011.06

2011.02

2011.06

2011.02

168.53%

167.68%

154.46%

126.93%

110.25%

93.83%

79.91%

67.27%

63.86%

62.79%

61.24%

56.94%

54.35%

54.24%

50.31%

48.22%

47.61%

42.71%

42.64%

38.44%

37.00%

36.14%

33.76%

33.44%

33.11%

32.81%

32.31%

32.27%

32.22%

31.58%

30.90%

30.54%

29.91%

29.13%

27.56%

27.52%

27.44%

26.00%

25.88%

25.20%

24.75%

24.43%

24.24%

23.99%

23.86%

23.07%

22.95%

22.92%

22.87%

22.80%

Share name YearCompound

growth 5 years

TOP 50 GROWTH IN TURNOVER


TINA WEAVIND

AN INVESTMENT of R10 000 insupply chain manager SuperGroup in 2006 would be worthR764 today. It was the worst

performer of all JSE-listed companies inthe Top 100 Companies survey.

Its share price fell from R11.70 to R0.84.In 2008, Super Group posted a R1-billionloss and had debt of R4-billion withinterest rates at their highest. To get itsbalance sheet in order, it got rid of assetsand had two rights issues.

But, as Absa analyst Craig Pheiffersaid, if you had bought when SuperGroup bottomed at R0.45, you wouldalmost have doubled your money byn ow .

Miners dominate the list of shockingperformers. A tough economy ex p o s e dexecutive decisions to pile up debt.

Power prices soared and unionsdemanded inflation-plus pay rises.

Investec analyst Rhynhardt Roodt saidunprofitable miners had weak balancesheets that were exposed in the down-turn. Many had rights issues, dilutingreturns and sinking share prices. Othersmade promises they did not keep.

Gold and uranium miner Simmer &Jack Mines is a case in point. If youbought R10 000 of Simmers shares in2006, you would have only R1 327 today.The share price fell from 315c to 2c.

Like most local gold miners, Simmershad to go deeper underground to finddeposits, a costly exercise as it takesexorbitant amounts of electricity.

Its investment in First Uranium was adisaster, with the mine u n d e r p e r fo r m i n gm a n ag e m e n t ’s promises and failing togenerate enough cash flow to fund c ap -ital expenditure. From 2006 to 2009,shareholders agreed to a series of rightsissues to keep the company afloat.

Last December, Simmer & Jack sold itsassets to Village Main Reef. The Villageshares were unbundled to shareholders,which accounted for the fall in the shareprice in the past six months.

Sentula Mining had additional prob-lems that helped put it on the worst-performer list. In June 2008, executivesdefrauded the company to the tune ofR242-million. That September the com-pany suspended its shares. Results forthe year to March 2007 had to be restated.As a result of the corporate fraud, Sen-tula lost important contracts in its op e n -cast mining business Megacube.

Sentula went into the 2008 downturnover-leveraged and could not cope withthe downturn in the construction andmining sectors. As a result, the companyhad to do a dilutive rights issue to ensureits solvency, with shares in issue dou-

bling from 2007 to last year. Your R10 000in 2006 would be worth R2 610 today asthe share price fell from R9.25 to R2.35.

A R10 000 Trans Hex investment wouldbe worth R3 240. The diamond minermade a disastrous move into Angola totake over the Fucauma and Lauricamines. Both were placed on care andmaintenance in mid-2009 after h e av ylosses forced impairment charges ofnearly R800-million on Trans Hex.

However, Trans Hex shares are nowpricing in a far more conservative out-look — perhaps too conservative, saidRoodt. Trans Hex dramatically turnedaround its South African operations inthe second half of financial 2011 when itgenerated a profit of R116-million.

Copper and cobalt miner Metorex alsodid an enormous rights issue after thefinancial crisis, with copper prices col-lapsing and the company highly geared.Shares in issue more than doubledbetween 2008 and last year. From 2006 tothis year Metorex fell from R12.45 toR7.98, turning your R10 000 into R6 410.

M e t o r ex ’s remaining core assets are

Miners lead the way indisastrous investments

How to turn a small fortune into a misfortune

Power prices soared and

unions demanded

inflation-plus pay rises

very valuable, especially the undevel-oped Kinsenda and Lubembe mines nearthe Zambian border. This is why Chineseresources heavyweight Jinchuan hopesto acquire the company.

But it was not just mining companiesthat diluted shareholders’ r e tu r n s .

Pulp and paper maker Sappi paid forthe $1.1-billion acquisition of strugglingFinnish paper maker M-Real’s graphicpaper business with a rights issue in2009. Unfortunately this coincided with atough operating environment and pricerises did not cover costs.

The paper industry is also ove r - su b -scribed, particularly in Europe. Contin-ued rand and euro strength has nothelped, and pressure has intensified inthe past six months. Your R10 000 in 2006would be worth R2 610 today as the shareprice fell from R100.29 to R23.85.

In construction, government spendingslowed after the pre-World Cup flurry.Civil engineering group Sanyati listed in2006 for R1 and found favour ahead of2010. But in the past two years con-struction business fell dramatically.Your initial R10 000 investment would beworth R1 563. The share price rose fromR1 to R1.60 in 2006 and fell to R0.25 lastmonth.

TOP 100 COMPANIES

A reminder to

HR Directors

PAYE Interim

Reconciliation

Deadline

31 October 2011

M7325/2011/4/E

Annual Revenue - Company

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4,000

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2010/11

2009/10

2008/09

VALUE ADDED STATEMENTFOR THE YEAR ENDED 31 MARCH 2011

The value added statement measures performance in terms of value added by the Group through the

collective efforts of management, employees and the providers of capital.

The statement shows how the value added has been distributed to those contributing to its creation.

Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

Revenue 10 821 890 8 623 259 10 761 756 8 440 627

Paid to suppliers for material and services (8 526 203) (8 251 913) (8 143 021) (8 531 445)

Income from investments 859 887 971 939 974 810 1 176 522

Wealth created 3 155 574 1 343 285 3 593 545 1 085 704

Wealth distributed as follows:

Management and employees

�� 991 871 954 713 975 230 940 233

Providers of capital

Dividends – – – –

Interest on borrowings net of foreign loan revaluations 2 565 105 259 2 561 104 986

Government

Taxation (308 519) (348 634) (312 897) (349 173)

Other payments 5 715 7 952 5 715 7 952

Total distributions 691 632 719 290 670 609 703 998

Retained for reinvestment

Depreciation 1 240 014 753 258 1 238 121 751 285

Income retained in the business 1 223 928 (129 263) 1 684 815 (369 579)

3 155 574 1 343 285 3 593 545 1 085 704

STATEMENT OF FINANCIAL POSITIONAS AT 31 MARCH 2011

Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

Assets

Non-current assets

Property, plant and equipment 7 240 534 6 657 675 7 238 126 6 653 384

Intangible assets 80 273 81 694 1 111 2 532

Deferred tax – 72 478 – 72 478

Investments in subsidiaries – – 6 279 5 787

Investments in associates – – 23 490 23 490

�� 116 975 135 402 1 323 655 896 330

Amounts held by holding company 489 021 537 648 489 021 537 648

7 926 803 7 484 897 9 081 682 8 191 649

Current assets

Inventories 1 575 827 1 415 751 1 510 043 1 352 360

Current tax receivable 413 157 286 566 413 157 284 851

Trade and other receivables 2 070 344 1 788 367 2 072 184 1 754 863

Deferred tax – 286 – –

Cash and cash equivalents 11 852 498 10 027 026 11 795 852 9 979 415

15 911 826 13 517 996 15 791 236 13 371 489Non-current assets held for sale and assets of disposal

groups 1 167 772 988 186 – –

TOTAL ASSETS 25 006 401 21 991 079 24 872 918 21 563 138

EQUITY AND LIABILITIES

Equity

Share capital 2 755 936 2 755 936 2 755 936 2 755 936

Reserves (87 004) (54 845) 142 (1 951)

Retained income 13 975 837 13 144 482 14 643 933 13 373 372

16 644 769 15 845 573 17 400 011 16 127 357

Liabilities

Non-current liabilities

Loans from Group companies – – 1 –

Provisions 5 649 819 3 913 618 5 623 427 3 888 901

5 649 819 3 913 618 5 623 428 3 888 901

Current liabilities

Loans from Group companies – – – 1 292

Loans from shareholders – 17 991 – 17 991

Current tax payable 2 880 37 – –

Provisions 363 128 95 242 362 601 94 751

Trade and other payables 1 626 409 1 471 322 1 486 878 1 313 420

Bank overdraft – 119 426 – 119 426

1 992 417 1 704 018 1 849 479 1 546 880

Liabilities of disposal groups 719 396 527 870 – –

Total liabilities 8 361 632 6 145 506 7 472 907 5 435 781

TOTAL EQUITY AND LIABILITIES 25 006 401 21 991 079 24 872 918 21 563 138

STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 31 MARCH 2011

Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

CONTINUING OPERATIONS

Revenue 10 565 385 8 090 168 10 565 042 8 088 421

Cost of sales (8 854 583) (7 580 057) (8 846 840) (7 571 866)

GROSS PROFIT 1 710 802 510 111 1 718 202 516 555

Other income 256 505 533 091 196 714 352 206

Operating expenses (1 903 505) (2 379 814) (1 509 532) (2 653 057)

OPERATING PROFIT (LOSS) 63 802 (1 336 612) 405 384 (1 784 296)

Investment income 859 887 971 939 974 810 1 176 522

Finance costs (422 534) (397 532) (422 530) (397 259)

PROFIT (LOSS) BEFORE TAXATION 501 155 (762 205) 957 664 (1 005 033)

Taxation 308 519 348 634 312 897 349 173

PROFIT (LOSS) FROM CONTINUING OPERATIONS 809 674 (413 571) 1 270 561 (655 860)

DISCONTINUED OPERATIONS

�� 21 681 57 120 – –

PROFIT (LOSS) FOR THE YEAR 831 355 (356 451) 1 270 561 (655 860)

OTHER COMPREHENSIVE INCOME:

Exchange differences on translating foreign operations (32 159) (131 719) 2 093 5 767

TOTAL COMPREHENSIVE INCOME (LOSS) 799 196 (488 170) 1 272 654 (650 093)

NET PROFIT (LOSS) ATTRIBUTABLE TO:

Owners of the parent:

�� 809 674 (413 571) 1 270 561 (655 860)

�� 21 681 57 120 – –

Exchange differences on translating foreign operations (32 159) (131 719) 2 093 5 767

799 196 (488 170) 1 272 654 (650 093)

STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 MARCH 2011

Foreign

Total currency

Share Share share translation Retained Total

capital premium capital reserve income equity

R’000 R’000 R’000 R’000 R’000 R’000

GROUP

Balance at 1 April 2009 2 2 755 934 2 755 936 76 874 13 500 933 16 333 743

Changes in equity

Total comprehensive loss for the year – – – (131 719) (356 451) (488 170)

Total changes – – – (131 719) (356 451) (488 170)

Balance at 1 April 2010 2 2 755 934 2 755 936 (54 845) 13 144 482 15 845 573

Changes in equity

Total comprehensive income for the year – – – (32 159) 831 355 799 196

Total changes – – – (32 159) 831 355 799 196

Balance at 31 March 2011 2 2 755 934 2 755 936 (87 004) 13 975 837 16 644 769

COMPANY

Balance at 1 April 2009 2 2 755 934 2 755 936 (7 718) 14 029 232 16 777 450

Changes in equity

Total comprehensive loss for the year – – – 5 767 (655 860) (650 093)

Total changes – – – 5 767 (655 860) (650 093)

Balance at 1 April 2010 2 2 755 934 2 755 936 (1 951) 13 373 372 16 127 357

Changes in equity

Total comprehensive income for the year – – – 2 093 1 270 561 1 272 654

Total changes – – – 2 093 1 270 561 1 272 654

Balance at 31 March 2011 2 2 755 934 2 755 936 142 14 643 933 17 400 011

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 31 MARCH 2011 Group Company

2011 2010 2011 2010

R’000 R’000 R’000 R’000

CASH FLOWS FROM OPERATING ACTIVITIES

Cash generated (utilised) by operations 862 967 (1 069 883) 1 183 924 (208 537)

Interest income 859 886 971 939 973 087 1 176 522

Dividends received 1 – 1 723 –

Dividend paid – (375 000) – (375 000)

Finance costs (2 561) (18 713) (2 561) (18 440)

Tax received (paid) 257 536 (11 429) 257 069 (9 315)

�� 33 621 503 478 – –

NET CASH FROM OPERATING ACTIVITIES 2 011 450 392 2 413 242 565 230

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (197 071) (1 274 583) (196 922) (1 273 036)

Sale of property, plant and equipment 1 866 976 1 728 72

Purchase of other intangible assets – (19) – (19)

��!�� – (355) 35 402 (1 234 488)

Loans (advanced to) paid by Group companies – – – 3 206

�� 18 427 (1 474) (427 325) 704 651

Repayment of amounts held by holding company 48 627 – 48 627 –

�� – – (492) (135)

NET CASH FROM INVESTING ACTIVITIES (128 151) (1 275 455) (538 982) (1 799 749)

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of shareholder’s loan (17 995) (193 186) (17 991) (193 186)

NET CASH FROM FINANCING ACTIVITIES (17 995) (193 186) (17 991) (193 186)

CASH AND CASH EQUIVALENTS MOVEMENT FOR THE YEAR 1 865 304 (1 468 249) 1 856 269 (1 427 705)

Cash and cash equivalents at the beginning of the year 9 907 600 11 314 712 9 859 989 11 226 557

Effect of exchange rate movement on cash balances 79 594 61 137 79 594 61 137

CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 11 852 498 9 907 600 11 795 852 9 859 989

HIGHLIGHTS - COMPANY Revenue 31% ��

Cash & Cash Equivalents 18%

��

sunday times combined metros 1 - 2011/10/31...

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