Sunday Times Top 100 (2019 edition)

Sunday Times TOP 100 COMPANIES

METHODOLOGY

12 Capitec rated the best bank in the world

Contents 6 8 10 12 14 18 19 20 21 24 26 29

. . . . . . . . . . . Removing the complexities for clients pays off big . . . . . . . . . . . Keeping those transactions squeaky clean . . . . . . . . . . . Top health, beauty retailer of choice . . . . . . . . . . . Under Fourie, Capitec has risen to become SA’s largest bank . . . . . . . . . . . Bringing in SA’s courageous public sector leaders . . . . . . . . . . . A specialist logistics property owner in a league of its own . . . . . . . . . . . In search of the next Tencent . . . . . . . . . . . Perfect solutions for mobile assets . . . . . . . . . . . A home-grown success story of beating the odds . . . . . . . . . . . Robust overhaul sees platinum producer bouncing back . . . . . . . . . . . Long-term game plan pays off for Oz-focused property fund . . . . . . . . . . . Steady and deliberate: building blocks for a winning formula

29

14 Public sector leaders who displayed leadership

3

Cashbuild has established itself as a force in SA

● The Sunday Times Top 100 Companies Awards acknowledge those listed companies that have created wealth and value for shareholders.

The methodology for choosing the Sunday Times Top 100 Companies was changed this year to focus on larger enterprises. This year, companies with a minimum market capitalisation of R5bn at August 31 2019 and a track record of five years of trading from September 1 2014 were included. Selected companies that met these criteria but are no longer listed on the JSE, or their share was suspended at August 31 2019, were excluded from the analysis. The executive management of Tiso Blackstar Group also considered certain subjective qualifying criteria relating to the Top 100 Companies’ perceived compliance with good governance and ethical conduct.

The share performance analysis assumes an initial investment of R10,000 at the closing price on August 30 2014 and held for a period of five years from September 1 2014 to August 31 2019, and the companies are ranked based on the compound annual growth rate (CAGR) over the five-year period. This analysis assumes that a fraction of a share can be purchased. Corporate actions during the review period were adjusted for as follows: ● Ordinary and special dividends: The gross dividend per share is assumed to be reinvested in the company on the dividend payment date at that date’s closing share price. ● Scrip dividends: Assumed that the cash option was elected and that the gross dividend is reinvested in the company as described above. ● Capitalisation issue: Shares received are held until the end of the review period. ● Unbundling: The shares in NewCo received are assumed to be received on the last date to trade and are tracked separately. The compound annual growth rate is calculated based on the basket of shares held at the end of the period as a result of the original R10,000 investment. ● Share split/consolidation: Share price data was adjusted for these corporate events.

Companies that undertook this corporate action did not declare any form of dividend during the review period, and therefore no further adjustment was required. ● Rights issue: Assumed that rights are not taken up and lapse, therefore no adjustment made. *The data has been sourced through IRESS and the calculations have been verified by Deloitte.

November 10 2019

4

Sunday Times TOP 100 COMPANIES

TOP 100 COMPANIES OVER FIVE YEARS Share name

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

Capitec Bank Holdings Transaction Capital Clicks Group Equites Property Fund Naspers -NMiX Telematics PSG Group Anglo American Platinum Investec Australia Property Cashbuild Mondi plc Bidvest Group Anglogold Ashanti Gold Fields Fortress REIT -AStenprop Northam Platinum Harmony Gold Mining Co Telkom SA Soc Italtile AVI FirstRand Kumba Iron Ore Vukile Property Fund Standard Bank Group The Foschini Group RMB Holdings Santam Spar Group Limited JSE Astral Foods Advtech Investec Property Fund BHP Group plc KAP Industrial Holdings Anglo American plc Exxaro Resources PSG Konsult Reunert Emira Property Fund Growthpoint Properties Sanlam Pan African Resources plc Barloworld Assore African Oxygen Absa Group Nedbank Group Financiere Richemont Clientele

Market cap as at 30 Aug 2019 (Rbn)

126.60 13.57 52.15 11.54 1,518.16 5.24 46.56 250.95 8.45 5.95 143.35 60.59 144.23 75.29 25.12 5.83 40.09 30.06 40.69 18.39 27.83 336.51 126.57 17.90 287.03 35.63 100.87 32.81 33.48 11.21 6.82 6.06 10.65 691.22 14.17 452.86 48.85 11.06 11.93 6.71 68.33 170.48 5.92 23.57 42.92 6.86 130.29 112.33 617.84 5.36

Total return (%)

55,491 38,757 31,684 27,747 26,634 24,338 22,884 22,207 21,124 21,046 19,821 19,786 19,405 19,053 18,801 18,481 18,415 17,806 17,699 17,553 17,523 17,288 17,190 16,923 16,363 16,127 15,998 15,979 15,850 15,582 15,501 14,949 14,239 14,157 14,048 14,013 13,716 13,653 13,599 13,530 13,412 13,327 13,301 13,161 12,876 12,767 12,690 12,688 12,619 12,538

454.9 287.6 216.8 177.5 166.3 143.4 128.8 122.1 111.2 110.5 98.2 97.9 94.0 90.5 88.0 84.8 84.1 78.1 77.0 75.5 75.2 72.9 71.9 69.2 63.6 61.3 60.0 59.8 58.5 55.8 55.0 49.5 42.4 41.6 40.5 40.1 37.2 36.5 36.0 35.3 34.1 33.3 33.0 31.6 28.8 27.7 26.9 26.9 26.2 25.4

Graphic: Ruby-Gay Martin.

The executive management of Tiso Blackstar Group SE have also considered certain subjective qualifying criteria, relating to the Top 100 Companies’ perceived compliance with good governance and ethical conduct.

*Final Compound value annual growth (R) rate (%)

40.9 31.1 25.9 22.6 21.6 19.5 18.0 17.3 16.1 16.0 14.7 14.6 14.2 13.8 13.5 13.1 13.0 12.2 12.1 11.9 11.9 11.6 11.4 11.1 10.3 10.0 9.9 9.8 9.6 9.3 9.2 8.4 7.3 7.2 7.0 7.0 6.5 6.4 6.3 6.2 6.0 5.9 5.9 5.6 5.2 5.0 4.9 4.9 4.8 4.6

Share name

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100

Market cap as Total at 30 Aug 2019 return (Rbn) (%)

Discovery 75.82 Adcock Ingram Holdings 10.15 Datatec 7.15 Redefine Properties 45.48 Resilient REIT 25.19 African Rainbow Minerals 36.79 Anheuser-Busch Inbev SA 2,440.22 Vodacom Group 211.66 Old Mutual 87.88 Grit Real Estate Income Group 5.36 Pick n Pay Stores 28.52 Liberty Holdings 31.38 Fortress REIT -B11.76 Sappi Limited 24.78 Distell Group Holdings 28.91 Oceana Group 9.49 Pioneer Foods Group 23.40 British American Tobacco plc 1,314.84 Investec 25.54 Hyprop Investments 16.84 AECI 11.09 Reinet Investments S.C.A. 49.66 Investec plc 54.82 MAS Real Estate Inc 10.25 Rand Merchant Investment Holdings 45.37 Mr Price Group 44.13 Allied Electronics 9.51 Hospitality Property Fund 5.14 Impala Platinum Holdings 69.08 Super Group 10.63 Truworths International 23.33 Sibanye Gold 55.72 Zeder Investments 8.06 Tiger Brands 39.66 Shoprite Holdings 66.82 Tharisa plc 5.87 Famous Brands 7.89 Imperial Logistics 11.08 Tsogo Sun Gaming 14.66 Curro Holdings 7.93 Hosken Consolidated Investments 8.72 Woolworths Holdings 57.85 Glencore plc 642.52 Wilson Bayly Holmes-Ovcon 6.00 Alexander Forbes Group Holdings 6.74 Remgro 90.87 Momentum Metropolitan Holdings 24.62 RCL Foods 9.60 Capital & Counties Properties 32.36 Life Healthcare Group Holdings 33.47

PREVIOUS WINNERS

25.0 24.7 24.5 24.3 23.9 22.9 22.5 19.3 18.9 16.2 15.5 14.0 13.7 10.0 9.8 7.2 6.1 4.9 3.8 3.2 2.7 2.3 2.2 2.0 1.4 -2.1 -2.9 -7.2 -8.4 -8.6 -8.9 -10.2 -10.7 -12.7 -13.0 -13.4 -13.6 -14.5 -14.5 -15.0 -15.2 -15.3 -15.6 -16.5 -20.9 -21.5 -22.5 -28.7 -34.0 -38.1

*Final Compound value annual growth (R) rate (%)

12,502 12,468 12,448 12,426 12,389 12,293 12,247 11,929 11,895 11,619 11,550 11,402 11,375 11,003 10,983 10,720 10,613 10,493 10,377 10,320 10,269 10,230 10,215 10,201 10,136 9,792 9,714 9,284 9,158 9,140 9,111 8,980 8,934 8,726 8,702 8,659 8,638 8,553 8,553 8,503 8,476 8,469 8,438 8,353 7,912 7,848 7,751 7,131 6,601 6,187

4.6 4.5 4.5 4.4 4.4 4.2 4.1 3.6 3.5 3.0 2.9 2.7 2.6 1.9 1.9 1.4 1.2 1.0 0.7 0.6 0.5 0.5 0.4 0.4 0.3 -0.4 -0.6 -1.5 -1.7 -1.8 -1.8 -2.1 -2.2 -2.7 -2.7 -2.8 -2.9 -3.1 -3.1 -3.2 -3.3 -3.3 -3.3 -3.5 -4.6 -4.7 -5.0 -6.5 -8.0 -9.2

* Return over five years from September 1 2014 to August 30 2019, on a theoretical R10,000 investment.

The data has been sourced through IRESS and the calculations have been verified by Deloitte.

2018

Capitec Bank Holdings

2013

Coronation Fund Managers

2008 Basil Read

2003 Mvelaphanda Resources

2017

Finbond Group

2012

Capitec Bank

2007 DAWN

2002 Mvelaphanda Resources

2016

Calgro M3 Holdings

2011

Assore

2006 Mittal Steel SA

2001

2015

Fortress Income Fund - B -

2010

Capitec Bank

2005 Grindrod

2000 Dimension Data

2014

Coronation Fund Managers

2009 Basil Read

2004 Grindrod

1999

November 10 2019

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Sunday Times TOP 100 COMPANIES

Removing the complexities for clients pays off big Capitec’s market share has grown with cuttingedge technology — and keeping things simple

By TJ STRYDOM ● Capitec Bank’s winning approach is to keep things simple and be transparent, says André du Plessis, who has been chief financial officer since the company was founded 19 years ago.

Originally a micro-lender focused on lower-income groups, Capitec has grown into one of SA’s largest banks measured by accounts, boasting 13-million clients, and the third-largest financial institution by market capitalisation, valued at more than R160bn.

By comparison, Absa is worth R130bn and Nedbank R117bn.

“Our job has always been to take out the complexity,” says Du Plessis.

Though the bank employs cutting-edge technology to analyse client behaviour, branch performance and call-centre speed, the part users interact with is simple.

This has helped Capitec distinguish itself from the other banks, which often rely heavily on selling a host of products at different price points, says Du Plessis.

“Being offered so many ‘solutions’ can be incredibly confusing, especially with the relatively low levels of financial literacy in SA,” he says. And the past five years have been a time of spectacular growth for the Stellenbosch-based bank.

Weak economic growth has forced many consumers to be thriftier, helping the bank to attract more than 100,000 new clients a month with its combination of low banking fees and a relatively high interest rate on a current balance.

The company’s market value increased sixfold since 2014 as the bank’s steady push into middle- and higher-income groups gained momentum.

The scale allowed Capitec to boost the contribution of transactional income — the November 10 2019

Capitec CFO André du Plessis

fees clients pay for transferring, withdrawing or depositing money — in its overall revenue.

That was the plan from the start, says Du Plessis. Capitec was never going to be merely a micro-lender.

And it had the good fortune to be able to design its systems from scratch at a time when the internet was becoming indispensable to banking and mobile phones were disrupting age-old methods of transacting.

“They launched a cheaper transactional account, but thanks to their lower costs structure they were able to extract a good return from their transactional income, which was more problematic for banks with legacy

systems,” says Sanlam Investments head of equities Patrice Rassou.

These “legacy systems” are the paperbased hangover that the big four banks — Standard Bank, First National Bank, Absa and Nedbank — had to deal with.

“Legacy systems and existing products negatively affect your time to market and the price at which you can deliver new products,” says Investec Asset Management sector head of financials Chris Steward.

“And this gives Capitec a cost advantage and an execution advantage,” he says. ● Continued

on Page 7

We will keep it simple.

And we will aim to be the best

Sunday Times TOP 100 COMPANIES

From Page 6

Compound that advantage over a decade, and the result is rapid growth. Over the same period Capitec also benefited from a boom in unsecured lending. In the wake of the global financial crisis, and after the adoption of SA’s National Credit Act, banks tightened their lending criteria, especially when it came to mortgage lending — a secured, long-term form of credit. The result was the quick uptake of loans not backed by assets — unsecured credit.

Rival African Bank collapsed in 2014, initially giving the market jitters over Capitec’s business model too. This was only a year after Gerrie Fourie took over as CEO from longtime boss Riaan Stassen.

Capitec has proven their competence in pricing the risk of these loans.

And despite the steady growth of their book in recent years, Capitec’s management has actually been conservative in their approach, targeting lower risk clients, maintaining very strong capital adequacy ratios and extremely conservative liquidity policy, never risking the bank’s future for shortterm gain, says Steward. Capitec had a different funding model from African Bank, preferring deposits from clients to wholesale funding.

Eventually Fourie and Du Plessis’ bank won through, and African Bank’s troubles ended up boosting the size and the quality of Capitec’s book.

And it still has plenty of runway in lending and transactional banking.

In the upper-middle income market, Capitec is growing fast, but it is still significantly under-represented, says Steward.

The bank’s management is now pressing on with a few bold plans that could further change the SA financial services landscape.

Three years ago, Capitec launched a credit card, which has since helped it gain more clients in higher income groups, says Rassou.

“And over the past year their entry into the funeral market is disrupting the lower end of the insurance market too,” he says.

He believes the traditional “big four” banks should be concerned about Capitec’s entry into the business banking market after their purchase of Mercantile Bank.

Fourie has indicated that he will waste no time in integrating the acquisition, which only got the nod from regulators last month.

And Du Plessis hints that they are not going to deviate from its proven recipe.

“With Mercantile, we are going to apply exactly the same principles. We will keep it simple. And we will aim to be the best,” he says.

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Sunday Times TOP 100 COMPANIES

Keeping those transactions squeaky clean Transaction Capital has carved a niche in the debt-recovery and capital-finance sector

By ASHA SPECKMAN ● If you have ever received a call about your unpaid TV licence, arrears with the taxman or your store card account, chances are that you have been found by Transaction Capital’s debt-recovery business.

The JSE-listed company is thriving in the debt-recovery market in addition to its niche focus on financing the purchase of minibus taxis for owners who on the strength of their credit record would otherwise be turned away by banks.

Featuring among the top 10 in the Sunday Times Top 100 Companies is no fluke for the business, which has had a compound annual growth rate for earnings of 19% a year over the past five years. For dividends, that growth rate was 35% annually over the same period.

This for a group that has only been listed on the JSE since June 2012, although its underlying businesses are nearly two decades old.

Transaction Capital CEO David Hurwitz attributes the company’s operational and financial performance to its diversified portfolio. “We’ve been lucky to have well-established businesses which have been around for almost two decades and have had a very good track record. We’ve had really good growth over the five years.”

This is despite SA being in its longest downward business cycle since apartheid days.

Hurwitz says: “All of our budgets and all of our plans don’t assume an improvement in the environment. We assume the environNovember 10 2019

Transaction Capital CEO David Hurwitz

For the recoveries business, the competitive advantage is diversification ment remains the same, not better, not worse.”

The advantage is that Transaction Capital’s businesses are defensively positioned.

Its credit business collects debt on behalf of banks and retailers but also focuses on the rehabilitation of the consumer, which allows lenders to keep their balance sheets clean

and provides them with the leverage to extend credit further.

But a tough economic climate has seen a reticence by banks and retailers to easily extend credit.

“If we only collected for those types of people [banks and retailers], our business would have shrunk,” Hurwitz says.

So Transaction Capital added institutions that do not rely on credit extension to its client base. Sars and collection for SABC TV licences, debt to mobile communication companies and insurers are part of the services it offers.

Consumer credit extension has lifted recently. As at March this year unsecured credit, according to the National Credit Regulator, ● Continued

on Page 10

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10 Sunday Times TOP 100 COMPANIES

●

From Page 8

grew by 21% year-on-year, and banks’ unsecured credit rose by 10% in July compared with a year earlier. Although this is off a low base, it is growth that might play into Transaction Capital’s hands in about 18 months when some consumers find themselves in arrears, Hurwitz says.

Phillipe Welthagen, Transaction Capital’s investor relations executive, says: “For the recoveries business the competitive advantage is diversification. We don’t have one concentration risk to any asset class, portfolio client, sector or geography.”

The strength of this business also lies in its analytics technology, high-level data scientists and a 2,000-strong call-centre workforce, where those with a matric qualification can enter the job market.

In SA the risk business boasts about 80 clients, and it has grown to 45 clients in Australia, where Transaction Capital has focused on debt recovery of non-performing loans across the public and private sector since entering that market three years ago.

The group has also turned its attention to the fragmented European market, where it is executing a strategy to partner with a few existing recovery businesses by jointly purchasing debt books and providing the necessary support to grow those collection ventures.

Hurwitz says: “In Europe it’s a huge market, and even if we can take a tiny position there we’d be very excited about it.” But he adds that the company does not intend to make acquisitions in that market yet. “We think that’s too risky. You are going to pay for goodwill and start managing the business.

Geographically, that’s difficult.”

Transaction Capital’s SA taxi division is perhaps the most prominent of its two businesses. This venture provides financing, insurance, parts and repair work services for minibus taxis — a mainstay of the SA public transport system —and is 25% owned by the SA National Taxi Council.

Hurwitz says while Transaction Capital has received invitations to expand its taxi services business to other African countries including Kenya, Nigeria and Egypt, the company has opted to rather focus on large growth opportunities in SA, where it has also gathered swathes of data on the industry.

And as the company looks to the future, an e-hailing service is not yet on the cards.

However, Transaction Capital continues to finance a selection of Uber driver vehicles while also building behavioural scores on Uber operations that may inform a new venture further down the line.

November 10 2019

Top health, beauty retailer of choice Clicks Group’s offering has made it a consumer favourite, rapidly growing its footprint in SA

By ADELE SHEVEL ● While many other listed retail companies have been spending money and time expanding offshore, Clicks Group has been laser-focused on the domestic market, and the returns have been stellar.

Widely regarded as among the most wellmanaged companies around, Clicks has set itself apart in a dour environment where retailers are struggling to maintain margins and market share, let alone grow.

Over the past few years Clicks took over Netcare’s Medicross pharmacies, rapidly grew its retail footprint and increased health and beauty sales.

The group has shown above-inflationary earnings growth, with its UPD division benefiting from new distribution contracts and improvements in group working capital.

Half of South Africans live in a 5km radius of a Clicks store and 6km from a Clicks pharmacy.

The brand has more than 660 stores locally, of which 81% have pharmacies, and with this footprint the group has 24.9% of the retail pharmacy market.

The ambition is to grow to 900 stores in SA without cannibalising the existing store base. And if the expected 25 to 30 stores are opened a year, this should be achieved in eight to 10 years.

Part of the winning formula for the group is an extensive range of beauty products, and it has been a market leader in the sale of small electrical appliances for years.

Clicks Group CEO Vikesh Ramsunder says the group has remained true to the strategy of the business, differentiating their product offering. “Our heritage has always been as a value-based retailer and we continue to offer value to consumers,” he says.

They are focused on driving private label

Clicks CEO Vikesh Ramsunder

Younger people are being taught about saving the planet and are more considered in their purchase behaviour and exclusive brands, expanding from existing brands such as The Body Shop, and have brought in other top brands such as GNC and Claire’s.

“We wanted an accessories brand devel● Continued

on Page 11

Sunday Times TOP 100 COMPANIES

●

From Page 10

oped on our behalf. And we developed the Sorbet brand within Clicks.”

The Clicks ClubCard has 8.1-million members, having grown by about half a million a year. Card membership accounts for 77.6% of the brand’s sales.

“We haven’t changed the scheme for over 20 years. It’s simple and it’s generous,” says Ramsunder. In the past year R504m was paid to customers in cashback rewards.

In tough economic times, customers are trading down, and Ramsunder says the hope is customers trade down into the Clicks product offering.

The group is investing in data analytics, but he says they’ve taken some time to go that route.

“We were very concerned about customer privacy. We want to manage this in a way that doesn’t intrude on customer privacy. We won’t include pharmacy data; rather what you buy in the front shop.”

Private label now accounts for about 22% of group sales, and the ambition is to get to 25%.

Five years ago this stood at about 18%.

Pharmacy is 7% and front shop 29% of private-label sales.

Nearly one-third of everything customers buy is private label or exclusive brand.

“That in itself differentiates yourself”.

Over the next five years the group will continue to drive convenience, open more stores and focus on online. It’s using technology to enhance the customer experience, so customers can now take a ticket when waiting at the pharmacy and walk around and shop instead of wasting time in a queue.

Clicks will focus more on eco and earthfriendly products, so consumers will be able to buy sensitive, vegan-based skin care, for instance.

“It may be deemed as niche but younger people are being taught about saving the planet and are more considered in their purchase behaviour,” says Ramsunder.

Clicks has been working for the past 10 years to ensure all private-label packaging is recycled plastic and within the next year all Clicks products will be in recycled plastic.

The group’s black-empowerment employee share scheme has proved defining and hugely successful for employees and the group in that it has achieved the objective of attracting and retaining scarce skills.

Over the past two years Clicks has paid out over R2.8bn on the scheme, which was set up in 2011 to attract scarce pharmacists and black managers, but was open to all employees, excluding executives participating in the longterm incentive scheme.

The group is also the first corporate to offer 100% employer-funded primary health-care funding for all staff.

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12 Sunday Times TOP 100 COMPANIES

Business leader of the year

Living and delivering on a dream to build something big Under the leadership of CEO Gerrie Fourie, Capitec has risen to become SA’s largest bank based on client numbers

By ADELE SHEVEL ● One would be hard-pressed to think of another company growing as rapidly as Capitec, hiring where others are shrinking, opening new branches where others are closing and gaining new clients at a startling rate.

Capitec has turned traditional banking on its head with its affordable, client-focused model. And in the five years CEO Gerrie Fourie has been leading the highly awarded bank, it has grown from the sixth-largest bank in the country to the largest based on client numbers, which now total over 13million. It’s been named the ‘‘Best Bank in the World’’ by international banking advisory group Lafferty more than once and recognised by Forbes as the best bank in Africa.

Capitec started 19 years ago, first launching into the low-income segment of the consumer market, and has since shifted into the middle- and upper middle-income segments as these clients also sought out a simplified banking solution. It is now the largest digital bank in SA, with more than 6.5-million digital clients. Six million of its clients also make use of their branch networks monthly.

Fourie joined the bank at the start when founder Michiel le Roux asked him to come on board. Fourie had never considered going into banking, let alone a corporate bank.

What he did know from an early age was that he wanted to build something big, meaningful and purposeful.

Le Roux says they were looking for a young person to build a new bank. “We November 10 2019

Capitec CEO Gerrie Fourie

thought that person should be clever and creative, young but with management experience and not a banker.” Somebody mentioned that Gerrie Fourie was an impressive new manager at the old Stellenbosch Farmers’ Winery. “I met him and knew within minutes that this is the guy.”

Fourie grew up in an entrepreneurial environment where his mom and dad had their own family-owned building businesses. “We always had those debates … how to grow a business, what the clients want, what we can do differently,’’ says Fourie.

“I learnt a lot from my parents. What I learnt from my dad was to have a very positive outlook on life. I believe that if you think negatively you will be negative and miss opportunities. If you think positively you will look for opportunities and do things differently.

“My whole drive in life was to be an entrepreneur, to build something. It was never to be a CEO or a banker, but when Le Roux asked me to join and help build a bank, that was an ideal opportunity to live and deliver

on my dream. When you’re young, you can’t define exactly what you want but you need to know what drives you and that you want to do something great. You can only do something great if it inspires you, and everyone must determine that for themselves.”

Fourie has an honours degree in financial management and an MBA. He started his career with the Stellenbosch Farmers’ Winery in its financial planning division, followed by five years managing the winery’s sales, marketing, production and distribution in various parts of the country.

In fact, a number of Capitec’s senior team members come from the liquor business.

“We always joke that we’re a team of liquor people who understand the retail market,” says Fourie.

He focuses on the positive, but there have been hefty challenges. When African Bank was going down in 2014, Capitec was tarnished for a time with the same brush. “And last year we had the onslaught of Viceroy that had a lot of credibility from the Steinhoff saga, and we had to defend that … It was a good team effort and we also saw our clients come out to rally support for the bank.”

The banking group has had some perception challenges. Some viewed it as a microlender, rather than a bank, and it was for years perceived as a bank for lower-income earners.

Capitec markets and engages with clients differently to its competitors. They’re found near retailers rather than banks in shopping centres and trade retail hours, 300 of their branches operate on Sundays, and the product and pricing is the same for everyone.

“There is no reason for clients to pay more just because they earn more,” says Fourie.

From the outset they wanted to be the bank for 95% of all South Africans. And the initial business plan from 19 years ago remains the same — it’s about simplicity, accessibility, service and affordability.

“The biggest achievement has been brand acceptance, where people are accepting of the brand and saying that it’s a South African ● Continued

on Page 13

Sunday Times TOP 100 COMPANIES

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From Page 12

brand and one that resonates with them,” says Fourie. “We’ve always said we don’t see ourselves as a bank. We see ourselves as a retailer. What are the needs of the client, what does the client want?”

To Fourie, leadership is about working together as a team in order to unlock full potential. “For me it’s important to have robust debates and discussion. And when we decide on something we go flat out, and if it’s wrong we quickly correct it and go into the right direction.”

He adds: “I always say people make leadership very complicated. For me it’s very important that people understand the ‘why’. If people are crystal clear on the ‘why’, then they deliver.”

It’s also about having employees make their own decisions. “I like our people to think they don’t work for a big company, they are owners and act as if they’re the CEO of their division.”

In their business they hold the mindset that CEO stands for Client, Energy and Ownership, to inspire staff, Fourie says.

We’ve always said we don’t see ourselves as a bank. We see ourselves as a retailer The group is building a new head office in Stellenbosch, bringing together 12 buildings.

“I feel strongly about teamwork and cohesiveness. There are great opportunities to be in one building, including the prospect of sharing ideas and unlocking the potential of 14,000 people,” says Fourie.

About 60% of the people at head office are either in the IT, digital or data departments. But Fourie doesn’t see the company as a fintech company.

“I see it as focusing on client needs and delivering on them. Digital just happens to be a key way we are doing that.”

Capitec has expanded into transaction,

13

credit and insurance. It launched a funeral insurance product with Sanlam in May last year and has already sold over a million policies. Other products will follow. The purchase of Mercantile Bank, recently approved, sets it up for the plan to grow Mercantile into Capitec’s business bank.

There’s not a town in the country Fourie hasn’t walked through to better understand the local market and what its needs are.

“Even today senior management spends time in the market, which is changing all the time,’’ he says.

“We spend a lot of time in the market and in the townships engaging with people, and we learn a lot about the clients and markets.

However, we’ve also recently spent a lot of time in Sandton [Johannesburg] to understand their needs too, and have also opened a flagship branch there.”

Has his management style changed?

“Probably when you get older and more senior you develop more patience, you think through things in much more detail. You strategise and plan more,” he says.

Fourie is married to Irene (Reinie) and has a daughter, Micke, aged 27.

November 10 2019

14 Sunday Times TOP 100 COMPANIES

Bringing in SA’s courageous public sector leaders The Sunday Times Top 100 business leader award also recognises key players outside the private sector

By ASHA SPECKMAN ● The Sunday Times Top 100 business leader accolade has not been solely awarded to the private sector during the past five years.

Public sector leaders who have displayed courageous leadership have also been recognised.

2017

LESETJA KGANYAGO

metrics that international credit ratings agencies observe when assessing the sovereign rating.

He is also chair of the International Monetary & Financial Committee, the policy advisory committee of the International Monetary Fund (IMF). He succeeded Agustin Carstens, former governor of Mexico’s central bank, in this role in January last year.

Kganyago has been governor of the Reserve Bank since November 2014, succeeding Gill Marcus, who he was deputy to from 2011. The governor is a former director general of the National Treasury, where he steered several public finance and financial market reforms. He has previously chaired the IMF/World Bank Development Committee deputies and G20 working group on IMF governance reform. In July, President Cyril Ramaphosa announced that Kganyago’s term would be renewed for another five years from November 9.

2016

PRAVIN GORDHAN

SA’s 10th Reserve Bank governor is no stranger to receiving awards. Last year he scooped the Governor of the Year Award from the respected Central Banking journal for his defence of the SA central bank’s independence.

Kganyago is a foe of populist economic policy, choosing to maintain a sustained focus on containing inflation and the stability of SA’s volatile rand. This stance has enhanced the credibility of the Reserve Bank and has been critical in preserving SA’s institutional strength, which is one of the key November 10 2019

Public enterprises minister Pravin Gordhan has served in various roles in government and under various presidents.

Graduating in 1973 with a degree in pharmacy, Gordhan’s career took a decidedly political turn during the 1970s when he became involved in establishing grassroots organisations and underground activities linked to the ANC and later the SA Communist Party.

The minister was commissioner of the SA Revenue Service (Sars) from 1999 to 2009, and it was under his watch that the agency was modernised and evolved into a worldclass institution. This work was, however, dismantled in recent years when the capture of SA government institutions through corruption was rife.

Gordhan has twice served as minister of

finance — from 2009 to 2014 and from 2015 until 2017. He was also minister of cooperative governance & traditional affairs from 2014 until 2015.

In February 2018 he was appointed public enterprises minister.

During the previous administration under former president Jacob Zuma, Gordhan often fought valiantly against corruption, though his name became mired in the controversial early payment of retirement benefits for some former Sars senior employees. A unit apparently established to conduct surveillance on tax avoiders was allegedly established under his watch. But the minister denied the illegality of this unit.

Now serving under the Ramaphosa administration, Gordhan remains under frequent attack by so-called proponents of corruption in a “fight-back campaign”.

2015

CHRISTO WIESE Retail mogul Christo Wiese is synonymous with the rise of investment and holding company Pepkor, which was later absorbed by ● Continued

on Page 15

Sunday Times TOP 100 COMPANIES

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From Page 14

15

In March this year Wiese announced he was making a $4bn claim against Steinhoff.

2014

JOHAN VAN ZYL

2013

MICHAEL JORDAAN Steinhoff International.

A former graduate of Stellenbosch University, Wiese once practised law at the Cape bar before joining Pepkor — a discount clothing store his parents founded — as a director during the 1960s.

The astute Wiese was instrumental in the launch of supermarket chain Shoprite, which started off as eight stores in Cape Town and flourished into a multibillion-rand business boosted by acquisitions over three decades. He famously bought OK Bazaars from SA Breweries for R1 in 1997, adding 157 supermarkets and 146 furniture stores to the company.

Wiese has been chair of Invicta Holdings since 2006. His investment portfolio includes a game reserve in the Kalahari Desert and wine farm Lourensford Estate.

In 1991, he bought Lanzerac manor and winery and converted it into a five-star hotel with 48 rooms, but sold it in 2012.

Born in Upington in the Northern Cape, he also previously owned a diamond mine.

In 2015 Brait, an investment firm in which he is a shareholder, bought a large stake in the Virgin Active chain of gyms pioneered by Sir Richard Branson.

Wiese has received several awards in the past, including the Business Leader of the Year Award from the Cape Town Sakekamer.

The SA Council of Shopping Centres gave him its Pioneer of the 20th Century Award.

He has been quoted as saying his recipe for success is an endless love for cutting deals, a fearless appetite for risk and a keen eye for a bargain. But his gamble with risk failed with the collapse of Steinhoff, where he was chair, due to mismanagement.

Former Sanlam CEO Johan van Zyl’s name is now synonymous with African Rainbow Capital.

He remained chair of Sanlam after stepping down as CEO in 2015, a role he held since 2002. He became Sanlam chair when Patrice Motsepe vacated that position.

In September 2019, Sanlam announced that Van Zyl would step down as chair before mid-2020 following a disagreement over his multiple roles. He is co-CEO of African Rainbow Capital, which also has a stake in Alexander Forbes.

Van Zyl began his illustrious career as a bureaucrat, dipping his toe into academia and later venturing into the private sector. He originally trained as an agricultural economist and holds two doctorates — a PhD in economics and a doctor of science in agriculture.

At one stage he worked for the government and Nampo — the SA agricultural trade show — as an economist. He taught agricultural economics at Unisa from 1983-1994 and was then appointed dean of natural & agricultural sciences.

Van Zyl has also previously worked at the World Bank as co-ordinator of rural development.

In 1996 he became vice-chancellor and principal of the University of Pretoria.

He is also chair of Vumelana Advisory Fund and has authored more than 300 journal articles and several books.

His Twitter profile describes him as backing 25 start-ups, including 4G/5G telco company rain.co.za, fintech business BankZero SA and machine-learning investor NMRQL. Jordaan also describes himself to his 190,000 Twitter followers as a wine amateur and a lazy mountain biker with lame humour. One of his pinned tweets reads: “Someone told me the secret to a happy life: something to do, someone to love, something to look forward to’’. This is a philosophy Jordaan’s curriculum vitae attests to.

At the age of 36 he became CEO of FNB, leading it to be crowned the world’s most innovative bank in the 2012 BAI-Finacle Global Banking Innovation Awards. In 2011 Jordaan made the top five list of SA newsmakers of the year for FNB’s social media presence.

At 51, the entrepreneur is an alumnus of the faculty of economic & management sciences and the faculty of law at the University of Stellenbosch.

In a previous interview he was quoted as saying: “If you surround yourself with great people, you will achieve things you never thought possible.”

Jordaan sits on the boards of technology ventures CodeX and Invenfin as well as that of the JSE. In 2013 he launched venture capital company Montegray. He mentors small businesses and entrepreneurs, and invests in businesses with high growth potential.

He is also chair of Wines of SA and holds a PhD in economics and a degree in law from Stellenbosch University. *Last year the business leader of the year was not awarded.

November 10 2019

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18 Sunday Times TOP 100 COMPANIES

A specialist logistics property owner in a league of its own Equites Property Fund has carved a niche for itself in the high-end assets space

By LYNETTE DICEY ● One of the top-performing real estate investment trusts (Reits) in SA is Equites Property Fund, a fund which invests exclusively in prime logistics and hi-tech distribution centres both in SA and the UK. The only specialist logistics real estate owner on the JSE, Equites has grown its assets from R1bn in 2014 when it listed to more than R13.5bn in 2019.

Total return to shareholders since listing has amounted to 171%, comprising capital and distribution growth. This is a remarkable achievement in the current economy, when most property groups have only managed low single-digit growth.

Although demand in SA for logistics and warehousing properties has been affected by poor economic growth, the same cannot be said for high-end logistics assets, where demand is still buoyant.

The UK logistics market continues to enjoy robust growth, despite the uncertainty created by Brexit. Equites’s UK investments account for around 24% of its gross revenue.

Consistent double-digit growth for the past few years has resulted in Equites becoming one of the darlings of the stock exchange. The secret of the company’s success, says CEO Andrea Taverna-Turisan, is a culture of being single-minded and completely focused, coupled with excellence in execution.

Equites has optimised its cost of capital through the efficient management of both the cost of debt and equity.

Regarded as a market leader in this space, Equites has a proven in-house development expertise. Its properties have attracted A-grade tenants both in SA and the UK with its weighted average lease expiry increasing to 8.8 years and November 10 2019

Equites Property Fund CEO Andrea Taverna-Turisan

The right real estate is an essential part of the supply chain link.

Get it wrong and ... your business fails

vacancy rates falling to 0.2%, according to its most recent interim report.

Taverna-Turisan recognised the potential of quality logistics properties as far back as 2006. Many people thought he was crazy, but with hindsight his reasoning was sound.

“In the 1960s it was big retail malls that were the asset class to be in. Fast forward a few decades and it is distribution warehouses that are the most important property investment in terms of getting the supply chain right,” he says.

Growth in this sector has primarily been driven by demand from e-commerce and online retailers, a sector in which logistics and supply chains have become increasingly more important. As a result, the demand for high-quality logistics has grown in recent years. Investors have taken note of this trend.

In the current environment where rapid delivery has become essential, businesses are made and broken on the quality of the supply chain, says ●

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From Page 18

Taverna-Turisan.

“The right real estate is an essential part of the supply chain link. Get it wrong and there is a strong likelihood that your business fails.”

While online sales in SA are still relatively small, expectations are that it will follow global trends and grow its online market, providing scope for Equites to further grow its assets. A single-minded focus on investing only in prime logistics assets — currently the most sought-after property asset in SA and a sector which has significantly outperformed retail and commercial property — has stood Equites in good stead. “There is no doubt industrial property as an asset class has come of age,” says Taverna-Turisan.

In 2016 Equites expanded its investments into the UK both to provide a rand-hedge component to the business and in a quest to become a globally relevant logistics owner.

The UK arm of the business is probably quite well shielded from the turmoil surrounding Brexit, Taverna-Turisan says, adding that hedged debt largely takes shortterm volatility out of the equation. Clients in the UK consist of substantial global businesses, which are expected to be more resilient in the face of uncertainty.

It has been a busy past year for Equites. It has had two successful book builds, both of which were oversubscribed. In February the company raised R710m while its July book build raised an additional R750m, significantly more than the R500m it was targeting for both capital raises, indicating the interest that investors have in the company. The combined capital raises are intended to ease the company’s loan-to-value position and will also be used for future acquisitions.

Equites has carried out capital raises each year since listing on the JSE in 2014. TavernaTurisan says these annual capital raises help to maintain the fund’s strong balance sheet.

Earlier this year Equites listed on A2X, with its shares becoming available for trade on July 1. Taverna-Turisan says the A2X listing was an opportunity to attract potential new investors, deliver more value to shareholders and provide an opportunity for increased liquidity. “Liquidity in this business is very important,” he says.

In SA the company has a good pipeline of developments. “Most warehouses in SA that were built before 2002 and 2003 are technically obsolete, providing Equites with an opportunity to build new high-quality, modern and efficient logistics assets ideally suited to today’s logistics and supply chain demands,” says Taverna-Turisan.

19

In search of the next Tencent The Naspers story is one of success, tenacity and a calculated move that shot it onto the global stage

By TJ STRYDOM ● The staggering success of Naspers’s early investment in Chinese technology group Tencent has catapulted the Cape Townbased company to the global stage where it is now competing with the likes of Facebook, Uber, Amazon and Alphabet’s Google.

For most of the past five years, Naspers has had the enviable problem of not only outperforming the JSE, but of actually outgrowing it. While many of the other heavyweights on the bourse were destroying value with foreign acquisitions — think of Tiger Brands’s Dangote disaster in Nigeria or Steinhoff International’s Mattress Firm transaction — Naspers was sitting pretty with its 33% stake in the rapidly growing Tencent.

“Naspers’s investment in Tencent is one of the world’s most successful technology investments of all time and its success is hard to replicate. This investment is just one example of the investment formula that we use time and again,” says Naspers CEO Bob van Dijk.

Former chair Ton Vosloo refers to Tencent as the thoroughbred stallion in the stable.

Other commentators have taken the metaphor further, calling Naspers a onetrick pony.

Naspers CEO Bob van Dijk

Naspers, for us, remains a Tencent story — and the past five years was good for Tencent But even before Van Dijk took over as CEO from long-time boss Koos Bekker in 2014, the company had made moves to build a global portfolio of assets. Under Van Dijk, the investments became more focused on eclassifieds sites, online payments and food delivery businesses.

“Through our companies and investments we reach a fifth of the world’s population, and our ambition is to reach half of the world’s population,“ says Van Dijk. Names such as OLX, Letgo, Swiggy, PayU and iFood are now all in the stable.

“We are a long-term investor and allocate capital for the best returns above the cost of capital. If you look at the past five years, our current ●

Continued on Page 20 November 10 2019

20 Sunday Times TOP 100 COMPANIES

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portfolio excluding Tencent has achieved an internal rate of return of around 20%.”

But the bulk of Naspers’s value still lies in that one punt it took on a tech startup in the world’s most populous nation. The $32m it invested in Tencent nearly two decades ago is now worth more than $130bn.

“Naspers, for us, remains a Tencent story and the past five years was good for Tencent,” says Investec Asset Management portfolio manager Hannes van den Berg.

Strangely, that stake in Tencent is worth substantially more than the market capitalisation of Naspers.

Asset managers refer to this difference as the “discount”, and in simple terms it means the market sees the rest of Naspers — the socalled “rump” — as a drag.

Early last year the discount was as big as 45%. This was a serious problem, because it meant that all Naspers’s other investments — an impressive portfolio of e-classifieds sites, online payments businesses, a spread of food- delivery brands and a few media assets — in effect had a negative value.

But this clearly was not true. MultiChoice, for example, was a profitable pay-TV business on its own. Billions of dollars in value lay hidden in the shadow of Tencent.

Van Dijk and his team were under pressure to get the “discount” to a more acceptable level. And that is what they did.

“Management has taken quite decisive steps to reduce the discount,” says Neelash Hansjee, a portfolio manager at Old Mutual.

First, Naspers sold a sliver of Tencent, reducing its stake to 31% last year, and raised more than $10bn in the process. Part of the cash was used to ensure Naspers’s other investments had enough capital.

Then, earlier this year, MultiChoice was unbundled to shareholders.

And in September, Naspers listed all its international internet assets — the stake in Tencent along with the investments in eclassifieds sites such as OLX, payments giant PayU and the bets on food delivery — in Amsterdam as Prosus.

Naspers retains a 74% stake in the new company. The result, though it is still early days, has so far been a moderate narrowing in the discount.

With Prosus, Van Dijk has made his intentions clear from the start — it will be a vehicle for doing deals. Late in October, the company, which also has Van Dijk as CEO, announced a £4.9bn hostile takeover bid for Just Eat — the largest food-delivery business in the UK and with a presence in another 12 markets.

November 10 2019

Perfect solutions for mobile assets The company’s innovative strategies in vehicle monitoring propel its growth

By LYNETTE DICEY ● Fleet management and vehicle-tracking company MiX Telematics specialises in fleet and mobile asset management solutions.

One of the largest providers of fleet management solutions in SA, its products and services provide enterprise fleets, small fleets and solutions for increased safety, efficiency, compliance and security.

The company was founded in 1996 and manages over 750,000 mobile assets in more than 120 countries. Its solutions rely on proprietary technology platforms which collect, analyse and deliver data from customer vehicles and present it via an intuitive webbased interface.

Customers are able to access both historical and real-time data such as the location status of drivers and view reports and KPI dashboards. Its commercial fleet solutions are built on the basis of in-vehicle hardware, on-demand software services as well as accessories and applications that enhance overall performance.

Its commercial offering consists of stolenvehicle recovery products and services sold under the Matrix and Beame product brands in SA, as well as value-added personal ser-

MiX Telematics president and CEO Stefan Joselowitz

Its mobile apps allow customers on the move to keep track of their mobile assets vices such as Crash Alert, Road-Side Assistance, Internet Tracking and GPS Logbook.

In addition to providing tracking and fleet management solutions, the company also provides driver safety assistance, capitalising on technological advances such as mobility, the Internet of Things, cloud computing, artificial intelligence and machine learning.

Its purpose-designed mobile applications for consumers and fleet managers allow customers on the move to keep track of their vehicles, drivers and other mobile assets at all times.

The group’s primary revenue stream is derived from monthly subscription fees as well as from collecting, processing and delivering infor●

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mation and services to customers around the world.

The company is listed on the JSE as well as the New York Stock Exchange as American Depository Shares.

CEO Stefan Joselowitz says the company continues to enjoy double-digit subscription revenue growth, solid subscriber additions and continued earnings before interest, taxes, depreciation, and amortisation (ebitda) margin expansion and positive free cash flow.

For the three months ending September 2019, the company increased its subscription revenue by 12.2% to R471.2m, compared to the second quarter. Revenue benefited from a net increase of more than 75,500 subscribers from October 2018 to September 2019, an overall increase in the subscriber base of 10.6%.

Despite recently lowering its growth forecast, the company announced that it still expects double-digit subscription revenue growth for the year to end-March 2020.

Ebitda has risen 17% to R326m in the six months to end-September. In the same period the company’s free cash flow rose 35% to R50m.

The revised growth forecast, says Joselowitz, is a combination of increased investments in sales and marketing, and caution around macro issues which are resulting in elongated sales cycles in certain verticals.

However, he says he remains confident that the group’s diversified global footprint and the unmatched range and quality of its product portfolio would continue to support its growth and profitability objectives.

The company’s proven track record, global footprint, large subscriber base and history of operating successfully in international markets mean it is ideally positioned to take advantage of local and international growth opportunities.

In the past year the group has launched a range of new products and services including new-generation fleet hardware platforms, a plug ’n play self-service offering called Mix Now and an API platform for third-party integration called MiX Integrate.

In Australia, the company formed a partnership with Nunonic, a data analytics firm, to launch a solution allowing for easier calculation of tax fuel credits.

“We put our customers first,” says Catherine Lewis, executive vice-president of technology at MiX Telematics.

“We want to provide them with the best possible solution that addresses their safety, compliance and efficiency needs.”

21

A home-grown success story of beating the odds PSG’s performance in a low-growth environment has given it the edge over its peers

By PENELOPE MASHEGO ● The performance of key PSG Group investments has put a smile on CEO Piet Mouton’s face as the company is once again highly ranked in the Sunday Times Top 100 Companies list.

Mouton says he hopes SA’s current lowgrowth environment will improve and the government will make decisions that lead to growth and positive sentiment.

“Then we will be well-placed because the reality is, I think, we’ve invested ahead of the curve.”

The group appears to have made the right calls on its investments in Capitec, independent school network Curro, PSG Konsult and PSG Alpha, which have buoyed it in a tough economy.

Mouton says: “By far our largest investment from a value perspective is our stake in Capitec because they’ve got such a significantly better value proposition for clients. I think they’ve done extremely well in the last

PSG Group CEO Piet Mouton

couple of years.

“They’ve bucked the trend totally, for the half year they pushed up their headline earnings by 20%,” he says, referring to the bank’s interim results for the six months ending in August.

Capitec’s profit for the year rose to R2.9bn from R2.4bn in the previous reporting period.

Curro didn’t disappoint either, with its profit for the six months ending in June rising to R239m from R139m in the previous six months. ● Continued

on Page 22

November 10 2019

22 Sunday Times TOP 100 COMPANIES

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At the centre of Curro’s strategy is understanding the needs of its consumers, something that has seen the group successfully establish affordable schools in urban areas.

PSG Konsult, the group’s financial services business, increased the assets it manages by 8%, according to the interim results for the six months ending in August, despite an environment marked by flat growth.

Both Curro and PSG Konsult have been managed to find growth in challenging sectors.

Mouton says the results of retailers were affecting the independent school network, but had managed to increase its footprint.

Even though it has seen success in the more than 20 years since it was established, Mouton says the group will not be pursuing growth outside SA like some of its peers, who have come up against more challenges than those in SA. Mouton says: “You either have to go from the point of view where you believe SA is so broken that it will never recover again — and I think we are a long way away from that — or you’ve got to say sometimes your best investments are in tough periods.”

Some of the lessons Mouton has learnt as PSG’s CEO for the past 10 years include striving to employ people who are smarter than him and using their knowledge to benefit the organisation, and staying positive at all times.

His father Jannie Mouton, who is the founder and former CEO of PSG, always asked for solutions and opportunities, not problems — which is one of the biggest lessons he’s learnt.

Mouton says it is significantly easier to make money in SA than in the overseas market, for the most part, and that people should not underestimate the benefit of luck.

Since the company was established by Jannie Mouton in 1998, PSG has grown into one of SA’s biggest asset managers.

As for the group’s future, Mouton is looking forward to striking gold with more rewarding investments.

“We’ve had three good successes at PSG, being Capitec, Konsult and Curro. It would be nice if we could have three additional successes.

“Our model is obviously geared to try and build these new investments and make them into sizeable companies but it’s a difficult task especially when the market is as tough as it is at the moment. If we do reach success we create substantial additional value.”

David Talpert, speciality finance analyst at Avior Capital Markets, says the PSG’s earnNovember 10 2019

We believe PSG’s success can be attributed to a few early stage investment opportunities ings growth of 16% is impressive.

“We believe PSG’s success can be at-

tributed to a few early-stage investment opportunities. Once an opportunity is identified, PSG installs a high-quality management team and provides the necessary support and capital to scale the businesses. Unlike some other SA companies, PSG has made no disastrous investments or poor offshore investments. PSG has also focused on the SA market, where management believes it has a competitive advantage relative to global opportunities,” Talpert says.

However, he says management needs to find new ways to unlock value in smaller businesses because PSG is “becoming a proxy for Capitec’’.

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24 Sunday Times TOP 100 COMPANIES

Robust overhaul sees platinum producer bouncing back Amplats has managed to turn business around and is celebrating the return of value after a series of crippling industry setbacks

By NTANDO THUKWANA ● The world’s largest producer of platinum, Anglo American Platinum (Amplats), has begun to see sunnier days again after half a decade’s work of overhauling its operations.

Amplats has faced a slowdown in commodity prices, the lingering effects of a costly and protracted Amcu-led strike that went on for almost six months in 2014, as well as an oversupply of loss-making ounces by mineral producers into the market.

The wage dispute cost platinum miners Amplats, Impala Platinum and Lonmin more than R21bn in loss of revenue.

To compound its troubles, Amplats had a debt burden of almost R15bn. But the tide has turned.

In the first half “of this year we were at R6bn cash positive, so we had a swing of over R20bn over those five years. We changed our balance sheet by R20bn. We added R100bn of value to the market cap of the company,” says CEO Chris Griffith.

Now that the tide has turned, Amplats is celebrating the return of value, which was also helped by a continuous improvement in the price of platinum group metals in the past three years.

These positive factors have helped Amplats’s market cap rise from R119bn (at the start of 2014) to about R303bn at the end of October 2019.

This year, the platinum producer is ranked number eight in the Sunday Times Top 100 Companies.

The last time Anglo American got a seat at the top table was in 2009 when its subsidiary Kumba Iron Ore was ranked in the November 10 2019

Amplats CEO Chris Griffith

We shut down three mines in Rustenburg before we could make Rustenburg profitable top 10, when Griffith was still its CEO. Over the past five years, Amplats under Griffith has undergone robust restructuring efforts that included offloading some of its loss-making mines, rejigging its portfolio and improving the operations’ efficiencies.

It moved from being a volumes-orientated miner to one focused on producing more profitable ounces.

“We had to shut down loss-making production, we had to put some mines on care and maintenance and for other mines, once all the assets were now profitable, we could then consider selling some assets that were the top end of the cost curve, that didn’t match what we saw for the future of the company,” Griffith says.

For Griffith, shutting down three mines and readying some of Amplats’s Rustenburg mines to sell was one of the toughest tasks.

“We shut down three mines in Rustenburg before we could make Rustenburg profitable, and we needed to make Rustenburg profitable so that we could sell,” he says.

“And that was probably our biggest headache.”

At the end of the overhaul, Amplats now ● To

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sits with a much leaner portfolio of six mines from a previous 19. Some mines in the company’s portfolio were redesigned and methods mechanised and modernised.

At the time the company’s restructuring was announced, Amplats shares were fluctuating around R430. In recent months the share price breached the R1,000 mark.

Market commentators have lauded Amplats’s turnaround as successful, with Izak van Niekerk, a mining analyst at Mergence Investment Managers, saying Griffith could be complimented for steering and helping implement the recovery strategy.

Griffith says the company is forging ahead with its growth plans, with three areas of focus for the next five years.

The first is its capital investments in marketing PGMs. “If you use clever marketing you can create additional demand and the more [you get] demand, you benefit more than the money investment,” Griffith says.

A sentiment echoed by Rene Hochreiter, a mining analyst at Noah Capital Markets. Hochreiter says there is room for growth in the marketing aspect of Amplats operations that could help drive de-

mand in the market. The company is also looking at technological and digital solutions as part of its future-smart strategy.

“They are already trying to develop for platinum usage in fuel cells, in the jewellery sector — although that’s going to be a bit more difficult because jewellery is not very popular anymore, Hochreiter says.

“But also the line battery where you use platinum and palladium in the terminals. I think those types of start-ups, if you get one right you can make a fortune, you can make a lot more than you can out of mining.”

Van Niekerk says a growth area for Amplats could be adding life to their existing op-

erations by purchasing neighbouring resources and “swapping with other producers where it’s easier for them to mine without sinking a new shaft”.

“Mine into, for example, — using your existing infrastructure — further into your mine while you would’ve normally gone into the ground of the competitor,” Van Niekerk says.

Amplats is currently running a study looking at the possibility of expanding its Mokgalakwena operations as well as the Mototolo de Brochen project.

With much relief, Hochreiter says the company should now focus on returning shareholder value after a dividend-less period of seven years.

It was in March last year that the company started paying out dividends.

“Times are better now, but I wouldn’t like to see them expanding now and starting to buy things like Impala, who have bought North American palladium,” says Hochreiter.

“I think that was a really silly move. I would really like to see good dividends or shareholder returns coming from these companies, and Anglo has already done that.”

November 10 2019

26 Sunday Times TOP 100 COMPANIES

Long-term game plan pays off for Oz-focused property fund IAPF’s listing on the ASX gave it a competitive edge and the financial flexibilty to grow and diversify its portfolio

By LYNETTE DICEY ● The Investec Australia Property Fund (IAPF) is the only Australia-focused property fund trading on the JSE. The fund, which listed on the JSE in 2013, terminated its secondary listing in Bermuda and replaced it with a dual primary listing on the Australian Stock Exchange (ASX) in May this year.

IAPF CEO Graeme Katz says listing on the ASX was the result of a positive reception and strong investor interest during a nondeal roadshow conducted in Australia last year. The ASX listing has allowed the fund to access the pool of capital — where its assets are located — and provided it with the financial flexibility to grow and diversify its portfolio.

He says the dual listing was clearly well received by the market and enabled price discovery on the JSE, where the share price has re-based since the ASX listing.

“When we listed on the JSE some six years ago we provided SA investors with a unique proposition to get access to an established platform of sustainable income-producing assets in a first-world economy that had displayed 22 years of consecutive GDP growth,” says Katz.

“We sought assets that represented good value and affordable occupancy solutions for tenants located near critical infrastructure.”

What makes Australia and New Zealand so attractive, he says, is the fact that both countries are the beneficiaries of two major investment themes. Firstly, transaction volumes remain strong as new sources of capital have emerged seeking prime real estate.

The diverse range of capital sources, with varying degrees of risk tolerance, have been November 10 2019

Investec Australia Property Fund CEO Graeme Katz

We coined the phrase ‘boring is the new sexy’ in our communication with our investors actively competing for assets offered to the market.

Secondly, Australia offers sustainable growth, transparency and limited volatility compared with other destination markets in the Asia-Pacific region.

“This, together with the positive impact of population growth and the demand drivers

created by the expanding superannuation sector and its allocation to real estate, is underpinning demand,” he says.

The fund raised A$102m (R1bn) in May by issuing close to 80-million new units on the ASX. In September it raised more than R850m in its second capital raise of the year, the proceeds of which are being used to acquire three industrial properties in Adelaide, Darwin and Perth.

The fund’s portfolio is currently worth more than A$1.1bn and includes 31 assets in Australia and New Zealand, 72% of which consists of office space and 28% industrial space.

The fund has maintained disciplines around acquisitions where others may have chased growth for growth’s sake, says Katz. ● Continued

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28 Sunday Times TOP 100 COMPANIES

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From Page 26

“For us property is a long-term game, and if we can continue to provide a high level of service to our tenant base and focus on ‘the right asset at the right price’ we’ll continue to perform well for our unit holders.”

It’s a strategy which is paying off: IAPF has grown over eight times in size since listing and continues to perform with a good sectoral and geographic spread and limited vacancy.

The company’s greatest achievement, says Katz, has been to maintain its discipline and deliver on the company’s key objectives, particularly given all the ‘‘noise’’ around chasing growth.

“We coined the phrase ‘boring is the new sexy’ in our communication with our investors and our ability to match performance to guidance and deliver on our results in a competitive environment takes a focused effort by our team,” he says.

Katz says although the fund does have a mandate for retail shopping centres, it hasn’t yet found assets in this sector that meet its risk and return profile.

He concedes that there is probably more pain that needs to be felt in this sector November 10 2019

We sought assets that represented good value and affordable occupancy solutions before it enters it with confidence.

“While we’re not in the game of picking tops and bottoms of cycles, we need to be

comfortable that there is growth in the underlying income,” he says, adding that the fund is confident that its portfolio of highquality industrial and office assets in established major metropolitan markets will continue to perform.

While Australia remains an important destination for global investors seeking stable returns in a volatile investment environment, IAPF’s biggest challenge, says Katz, is to seek opportunities and value where it can enhance income or capital value — or both — through active asset management in a very competitive market.

Investec Property acts as an external manager of IAPF. Investec has a long history of playing in this space, with its genesis going back prior to the establishment of Growthpoint, says Katz.

“The disciplines and lessons learnt in managing portfolios through the economic cycles have been handed down over the generations and stretch across the shores to Australia.

These experiences are invaluable in helping to shape our thinking and ensuring that our disciplined culture remains embedded in everything we do.”

Sunday Times TOP 100 COMPANIES 29

Steady and deliberate: building blocks for a winning formula Construction materials retailer Cashbuild has established itself as a force in SA despite tighter consumer spending

By PENELOPE MASHEGO ● A steady and strategic growth plan has proven to be the right formula for building material retailer Cashbuild as it navigates a tough operating environment.

The company, which boasts 41 years in business, has established itself as a force in urban and rural areas of southern Africa.

Cashbuild CEO Werner de Jager says the key to its strategy is its steady and deliberate approach that has seen it open stores in areas where it didn’t have a footprint.

It’s a strategy that has paid off, landing Cashbuild in the top 10 of the Sunday Times Top 100 Companies.

In the past financial year to end-June, the company opened nine new Cashbuild stores and two P&L Hardware stores, refurbished 26 stores and relocated four Cashbuild stores.

The retailer closed five Cashbuild stores, three P&L stores and six DIY stores amid constrained consumer spending.

In spite of the store closures, Cashbuild will open 10 stores in the next year and is in line to grow its market share.

The retailer operates 315 stores.

De Jager says the company performed reasonably well against the backdrop of a challenging environment.

According to its annual results for the year ending June, Cashbuild’s net profit saw a marginal increase to R427m from R421m in the previous year.

He adds that Cashbuild will continue on its steady path towards growth and will not be making big changes to its strategy.

“In tough times like this, it’s not necessarily time to make wholesale changes [or] do knee-jerk reactions. So we’ll just keep on focusing on our core strengths and make sure

Cashbuild CEO Werner de Jager

we execute them well. I think that’s the key for the year ahead,” he says.

The year ahead also includes improving the performance of P&L Hardware, which Cashbuild acquired for R350m in 2016.

“We had the previous owner still working on their earn-out and we had some once-off business combination costs that we had to put through in terms of International Financial Reporting Standards, so the performance of P&L this year was disappointing,” De Jager says.

We’ll just keep on focusing on our core strengths and make sure we execute them well

However, Cashbuild now has 100% control of P&L and is working on the businesses’s gross margins, which had dropped.

“But all in all, from a strategic perspective we are very happy with the acquisition, It’s giving us what we expected,” says De Jager.

The stakes are high in the retail sector with increasingly tech-savvy and demanding but cash-strapped consumers, who have become used to getting rewarded for their loyalty. As such, Cashbuild has invested in the Cashbuild Shopper app.

“It’s not like a traditional loyalty programme, but we collect your information at the point of sale,” says De Jager.

He describes the programme as something that will take customer engagement to the “next level”.

Through the Cashbuild Shopper app, customers will qualify for airtime and specials and they will also be entered into competitions.

The app, which Cashbuild launched earli● Continued

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November 10 2019

30 Sunday Times TOP 100 COMPANIES

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From Page 29

er this year, now has more than 1-million users.

Going forward, the company is working on maintaining and gaining market share and improving the retailer’s reach.

“The cake is not going to get bigger, so we must make sure that we try and get more of the cake,” says De jager.

“And we are protecting our growth margins very strongly during this time because you are not going to stimulate sales by just dropping prices and giving away margin.

“And our cost control is as tight as it’s ever been and we’ve been doing very well at that for a number of years, but we are not spending money unnecessarily.”

Lester Davids, trading desk analyst at Unum Capital, says Cashbuild has managed to “hold its own” in an unfavourable economy.

In addition to lower LSM shoppers and contractors, the company also counts home builders, home improvers, farmers and traders as its customers.

“This is especially beneficial for November 10 2019

Our cost control is as tight as it’s ever been and we’ve been doing very well at that for a number of years

shareholders as the business model is seen as defensive — for example, when individuals do not relocate, they then opt to renovate their current home using Cashbuild as a source for building materials,” Davids says.

“The group also has mutually beneficial relationships with suppliers, giving it substantial buying power and the ability to control costs, which enables them to offer quality, best-value products and services at convenient locations, to all their customers.”

He says Cashbuild’s strategy of controlling costs, investing in new stores and increased marketing will benefit the group once the economy improves.

De Jager has been Cashbuild’s CEO for the past seven years and Davids says his leadership has helped to grow the business’s revenues and net asset value while investing in new stores for future growth.

“It’s important to realise that this was achieved in the face of a lowgrowth economic environment where other retailers have come under severe pressure as reflected in their earnings declines as well as market-share losses,” he says.

UNBREAKING THE NEWS. N UWE VRYE WEEKB L AD ELKE VRYDAG .

WHEN WE FINANCE AND MANAGE INFRASTRUCTURE SOLUTIONS, WE BEND THE ARC OF HISTORY TOWARDS SHARED PROSPERITY. At t h e D B SA , i n f r a s t r u c t u r e d e v e l o p m e n t i s a b o u t m o r e t h a n j u s t f i n a n c i n g b r i c k s a n d m o r t a r.

I t i s a b o u t i m p r o v i n g p e o p l e ’s l i v e s a n d i n t e g r a t i n g Af r i c a ’s e c o n o m i e s . We o f f e r e x p e r t i s e and infrastructure solutions, ranging from planning, project preparation, financing, delivery a n d m a i n t e n a n c e. T h r o u g h s o l i d p a r t n e r s h i p s w i t h o u r c l i e n t s a n d s t a k e h o l d e r s , w e p r o m o t e s u s t a i n a b l e d e v e l o p m e n t i m p a c t i n S o u t h Af r i c a a n d a c r o s s t h e c o n t i n e n t .

We a r e D B SA . B u i l d i n g Af r i c a ’s P r o s p e r i t y.

To p a r t n e r o n t h i s j o u r n e y o r t o f i n d o u t m o r e a b o u t u s , v i s i t w w w. d b s a . o r g