top500 7th edition

AN EXCLUSIVE INTERVIEW WITH

CHRISTO WIESER S A : R 1 4 5 . 0 0 ( I n c l .VAT ) U K : £ 8 : 0 0 U S A : $ 12 . 0 0

011 232 8000 [email protected]

REAL PEOPLE. REAL SOLUTIONS.

Seaparo Phala

Chief Information Officer, Department of Arts and Culture

CHALLENGE:

· Control escalating printing costs

· Simplify management of devices across five sites

SOLUTION:

· Reduced number of devices from 450 to a fleet of 56

networked multi-function printers

· Print management software

BENEFITS:

· Cut printing costs by 30%

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“Besides these benefits, we’re using less paper, which means we’re saving more trees, helping us with our ICT initiative for a greener environment.”

bran

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636_Nashua_DAC_DPS_297x430.indd 1 2015/10/28 10:14 AM

INSIDE TOP 500 UPFRONTContributors and featured clients 4

Editor’s letter 5

Foreword 6

FEATURESInterview with Christo Wiese 8

Taking stock of GDP 14

Top 500 - how the winners are decided 20

The Top 500 companies in South Africa 22

The big five of banking 36

Special economic zones 42

Retail possibilities in South Africa 60

The future of state-owned companies in South Africa 70

Leadership, structure and people 76

Special economic zones

T O P 5 0 0 / 7 t h E D I T I O N2

70

60

The future of state-owned companies in South Africa

Retail possibilities in South Africa

Feeding our nation

42 48

by Lynne BrownMinister, Public Enterprises

by Christo Wiese

by Fiona Wakelinby Rob DaviesMinister, Trade and Industry

ARTICLESKeeping buoyant 46Feeding our nation 48BPO industry in the spotlight 54Making South Africa a winning nation 88President Jacob Zuma maps the way forward 96Government initiatives stimulate the economy 98

INDEXA-Z of the Top 500 companies 107

UPFRONTCONTENTS

T O P 5 0 0 / 7 t h E D I T I O N 3

The Wiese factor 8

CreditsTOPCO MEDIA

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from any errors or emissions. ISBN: 9780620531054

An interview with Christo Wiese

Bestmed Medical Scheme ….…...….. Pg 86

Bidvest Protea Coin ….…............…… Pg 34

Claremart ….…….........................…... Pg 19

EXPOCENTRE ...………................... Pg 106

FleetAfrica….…..........................…..… Pg 82

GIBB ….…...........................…...... Pg 74

Grid Worldwide .................................... Pg 93

JHB Water .......................….…....……. Pg 58

MSC ….……...................................…. Pg 84

Nashua ........................…. Inside Front Cover

PG Bison ............................................ Pg 66

SANRAL ............................................... Pg 102

UCT Graduate School of Business .... Pg 101

VKB Agriculture .................................. Pg 52

BRIAN KANTOR

Brian Kantor serves as Chief Investment Strategist and Economist, Investec Wealth and Investment. He was the founding Chairman of Victoria and Alfred Waterfront (Proprietary) Limited, leading that company and the redevelopment of the Cape Town Waterfront from 1988 to 2001 and is Professor Emeritus, University of Cape Town.

Pg 14

ANDREW OLIVIER

Andrew Olivier is managing partner of the Working Journey, an Australian consulting company with offices in Sydney and Adelaide. The Working Journey (www.theworkingjourney.com) has strong links in South Africa. Andrew’s most recent book is “Organisational Design: What Your University Forgot to Teach You” (2013).

Pg 76

ANCHEN VAN ANTWERPEN

Anchen van Antwerpen is the founder of 3flow Consulting, a Cape Town based company specialising in master data analytics and insight management. She has over 15 years’ experience in the online retail sector, h aving had a front row seat to the development of South African ecommerce.

Pg 36

CHRISTO WIESE

Christo Wiese is an independent non-executive director at Steinhoff International Holding; non-executive chairman of Invicta Holdings; and chairman of Pepkor and controlling shareholder of Shoprite Holdings, Africa’s largest retailer. He was recently awarded an honorary doctorate for his contribution to the South African economy.

Pg 60

JEREMY GARDINER

Jeremy Gardiner joined Investec in 1991. He has been a Director at Investec Asset Management and Investec Fund Managers since December 1999 and is responsible for communicating Investec’s views on global and domestic markets and economies to the investing public and the world at large. Pg 3

Pg 46

CHANTELL ILBURY

Chantell Ilbury is an independent scenario strategist, facilitator, speaker and author. She specialises in the use of scenarios and game-playing strategy to guide corporate teams through strategic conversations.

Pg 88

LYNNE BROWN

Lynne Brown is Minister of Public Enterprises and served as a Premier of the Western Cape Province from 25 July 2008 to May 2009. Prior to her appointment as a premier, she was MEC for Finance and Tourism in the Western Cape.Pg 36

Pg 70

ROB DAVIES

Rob Davies is Minister of Trade and Industry. He holds a doctorate in Political Studies from the University of Sussex and a Master’s in International Relations from the University of South Hampton. He was a member of the South African Ministerial delegation to the World Trade Organisation in Cancun in 2003 and Hong Kong in 2005

Pg 42

CONTRIBUTORS

FEATURED CLIENTS

UPFRONT CONTRIBUTORS & FEATURED CLIENTS

T O P 5 0 0 / 7 t h E D I T I O N4

Whilst at times it may feel as if technology has made the world a

crowded house in which to live, it has fundamentally changed the way

we do business, banking, communicate and even conduct conflicts.

Farmers across regions, astronauts in space, surgeons on different

continents and school children in rural areas are now connected

in a way that was inconceivable 50 years ago. We have redefined

the term 'community' – and Toffler’s third wave continues to gather

ever-increasing momentum. The only constant is change and, like the

dinosaurs, if we are not adaptable and agile in our response to changing

external forces, then the light at the end of the tunnel may just be a train.

As editor of Top500 I am privileged to be in conversation with leaders in

industry and government who are in the vanguard of seizing challenges

and turning them into opportunities. This leading B2B publication

provides invaluable business intelligence in the form of the listing of the

top 500 best-managed companies in the country together with incisive

features and articles written by industry experts, top of their game.

On our front cover is the iconic Christo Wiese, who was recently named

the richest man in South Africa and who has blazed a trail in the retail

industry as well as on the mergers and acquisitions front.

In this edition we have included: an article by, and an interview with,

Dr Christo Wiese; Prof Brian Kantor, Chief Strategist and Economist

from Investec, who unpacks the GDP; Rob Davies, Minister of Trade

and Industry, speaking about the Special Economic Zones and Lynne

Brown, Minister of Public Enterprises, who updates us on the status

of state-owned companies. The article on the banking sector presents

an overview of 'the Big 5', and the feature on requisite organisations

addresses success from a level of work and complexity paradigm. The

'Big Issue' feature takes a look at the state of our nation from different

perspectives.

This publication truly provides business intelligence in every sense of the

word and I hope you enjoy engaging with the research, the articles and

the features as much as I have.

Fiona Wakelin Editor

BUSINESS INTELLIGENCE IN EVERY SENSE OF THE WORD

UPFRONTEDITOR'S LETTER

T O P 5 0 0 / 7 t h E D I T I O N 5

SOUTH AFRICAA NEW PLATFORM FOR BUSINESS It gives me great pleasure to pen this Foreword on behalf of South

Africa’s tourism industry – with particular reference to business

eventing.

Tourism continues to play a meaningful role in contributing to

the economic development of our country and our people and

remains one of the six economic growth sectors, as identified by

government, on which to focus its efforts to support investment

and facilitate growth.

One particular offering of this sector is business events, which was

identified by the Department of Trade and Industry as one of three

niche tourism segments. In response to this and the mandate

articulated in the National Tourism Growth Strategy, South African

Tourism established a business events unit within the organisation

to help grow the industry by taking advantage of the international

interest in the country as a destination for conferences, incentives

and exhibitions.

T O P 5 0 0 / 7 t h E D I T I O N6

FOREWORD

A Foreword by Thulani Nzima, Chief Executive Officer, South African Tourism

The South Africa National Convention Bureau (SANCB) was

launched in 2012 and promotes the country as a preferred

business events destination by focusing on its infrastructure and

facilities, from telecoms to modern transport and healthcare,

world-class hotels and cuisine to a vibrant cultural life. Our

business also focuses on the unique selling proposition that

South Africa offers the global business events market, for being a

‘value for money’ destination, possessing accessible and reliable

infrastructure and a professional industry.

At the time of the launch of the SANCB, we agreed with industry

partners and stakeholders on the following five year goals and

targets to grow the South Africa business events industry:

• Increase the size of South Africa’s business events industry

by 50%

• Double the impact of business events on tourism yield and

geographic distribution

• Broad recognition in South Africa of the business events

industry as a major driver of job creation, skills development

and transformation of the nation’s knowledge and creative

economy

It is safe to say that, since then, South Africa’s business events

industry has continued to soar, securing 163 international

association conferences for the country over the next five years,

which will attract over 150 959 professionals. This in turn will

create 753 event days and generate an estimated R3.19-billion in

economic impact.

The significant wins have thrust South Africa onto the global

stage and fast-tracked our global rankings. According to the

International Congress and Conventions Association (ICCA), the

most accurate and reliable gauge in the world of how destinations

perform in the association market, South Africa hosted 124

international and regional association meetings moving South

Africa from 34th positing in 2013 to 32nd position in 2014.

This makes South Africa the top business events destination on

the Continent ahead of Kenya, Senegal and Egypt, which fared

impressively - and ahead of other global destinations, such as

Hong Kong, the UAE and New Zealand.

The wider impact of the industry’s success is evident beyond the

foot and air traffic we see, or the lengthy awards and accolades

our destination receives. Our successes demonstrate to the world

how rich we are in intellectual and human resources, highlights our

professional and able business events industry that is on hand to

deliver exceptional experience and our intimate understanding of

the economic sectors where South Africa is a leader globally.

But perhaps more importantly, our success is evident in the

lives and livelihoods of the people who are directly and positively

impacted by these meetings and big events.

Tourism (including business events) continues to support one in

ten South Africans in employment and contributes about 9.5%

of the country’s GDP in total. From mining, manufacturing and

information and communication technology to creative industries

and medical sciences, hosting events in these sectors contributes

significantly to the macro-economic benefits for our country. It is

because of this contribution that tourism has become one of our

country’s bedrock industries for growth, for development and for

socio-economic progress.

These are the benefits we want our local industry and corporates

to know about and our counterparts across the continent to

experience.

While South Africa is the undisputed leader in business events

on the African continent, the country still has to work hard to

attract and host more regional association conferences. The

continent hosted 308 association meetings out of the 11 565

held worldwide. We are changing this through our business trade

show platform, Meetings Africa. The business event trade show

offers ample opportunity for African exhibitors to network and do

business with hosted buyers from the rest of the Continent.

It is now the leading, biggest and longest running business events

trade show in Africa. It is also highly regarded as a quality show

that is fast changing the way global business events industry

views the Continent.

South Africa’s business events are globally competitive, locally

relevant and on an all-round winning path. We invite all who want

to be part of this growth and contribute to it, to work with us to

see its full impact realised.

FOREWORD

THULANI NZIMAChief Executive Officer, South African Tourism

T O P 5 0 0 / 7 t h E D I T I O N 7

T O P 5 0 0 / 7 t h E D I T I O N00

The year 2015 marks the golden anniversary of the opening of the first Pep store in Upington. Fifty years later, Christo Wiese, chairman of Pepkor and controlling shareholder of Shoprite, speaks to Fiona Wakelin about his journey – and doing business in South Africa today.

THE WIESE FACTORA SOUTH AFRICANSUCCESS STORY

T O P 5 0 0 / 7 t h E D I T I O N 00

INTERVIEW WITH CHRISTO WEISE ARTICLE

THE WIESE FACTORAN ICON IC SOUTH AFR ICAN SUCCESS STORY

“I was born in 1941 and we lived on a farm

until we moved to Upington in 1947. It was

a fascinating place to grow up in because,

in those days, it was still very much a

frontier town. It was out in what people

would refer to as ‘the bundu’.

“People were isolated in a very harsh, very

beautiful part of the world. They had to work

hard to do well for themselves – but the town

itself was dynamic. It was post the Second

World War. There were lots of things that

just weren’t as available as they are today.

But what was fascinating is how, in one

generation, in my lifetime, I saw people who

had been a relatively poor but very proud

community, becoming very prosperous.

“I was fortunate in that I grew up in a

business home. My father had a farm but

he also had a business in town. Eventually

my mother had her own business. And

so I learned about those things, in a way,

almost subconsciously. Today I notice

how many people there are that are well-

educated but simply have no idea as to

how a business works. Sitting around the

dinner table while things are discussed

– you become aware of the very basic

principles. You know that the customer is

king and you’ve always got to be ready to

render the best possible service. So for me

it came very naturally.

“Although when I grew up I didn’t plan to

make business my career. I wanted to be

a lawyer, actually. I started off by saying

I wanted to be a magistrate – I thought

that it was quite romantic. Intellectually it

appeared to be challenging. But as I say

I’m very grateful for the fact that I grew up

in the home that I did with parents who

loved life but had very clear beacons.

My dad died young, he was 64. But my

mum lived to the age of 94 – she was a

remarkable woman.

“I left Upington at the age of 15 to go

to school at Paarl Boys High; then I

went to university and until my 24th year

never even considered not going back to

Upington, because it was my world. And

then, one day I got up and I knew that I

would never go back there permanently.”

AND THE HISTORY OF PEP?

“PEP started as a very, very small

business. It was literally one room.

There wasn’t an abundance of capital

and it started out there in Upington.

Infrastructurally, it was adequate, because

it had rail and one plane a week to Cape

Town and it had roads, although mostly

gravel, to the big city. But in terms of

starting a small business, we experienced

all the challenges that every small business

experiences – there was never enough

money and it was difficult getting credit.

We had to find the right people to work

in the business. – the list of challenges

that every small business person will

be painfully familiar with. But the point

I always make is that all big businesses

have one thing in common, they all start

out as small businesses.

“There were a few other challenges that

I would rank pretty high in priority. We’ve

been through our share of recessions,

where the economy just slowed

dramatically, where it currently is very slow

going. We’ve gone through all the political

turmoil of the ‘80s and then the speech

in 1990 and the advent of the new South

Africa. Those were all challenges that we

had to face. But there’s nothing unique

about it. People in other countries, other

societies go through far worse upheavals

and the trick is to adapt and to learn to live

with it.”

‘TIMING IS EVERYTHING’ BUT SO IS CHOOSING THE RIGHT PEOPLE. WIESE SPEAKS ABOUT VALUES AND THE IMPORTANCE OF A BUSINESS CULTURE.

“Right at the outset Renier van Rooyen,

founder of PEP, who is one of South

Africa’s great entrepreneurs, said we had

to articulate our values, or our philosophy,

very clearly so that everybody would

know the kind of drumbeat to which we

march. We used five words: faith, positive

thinking, hard work, enthusiasm and

compassion. Faith can mean many things

– faith in yourself, faith in your fellow man,

faith in a higher being, in your country.

Hard work speaks for itself. I always say

to people when they ask ‘what is the

secret to success?’ – very simply, it’s a

four letter word, spelled W-O-R-K. If you

work the solutions will come. Somehow

some people think they can skip that and

it will all happen. If your business culture

is based on sound principles, people who

are not comfortable with that culture,

will stick out. So it is a sort of a natural

process of weeding out those who do

not contribute.

“One of the strengths in PEP was that

it was like a family business. Family

members all joined and then friends and

then the family of the friends. So that

formed the nucleus and that, I believed,

contributed to establishing and developing

the culture. And today, one of the things

I’m very proud of: PEP is totally reflective

of the demographics of South Africa –

and has always been, even in the really

bad, old apartheid days. So that’s been a

wonderful experience.”

MOVING ON TO THE CURRENT SITUATION IN SOUTH AFRICA

“The one point I often try to make to

people, when they complain about South

Africa, the question always has to be –

compared to what? Just look around you.

What must it be like to run a business

in Iraq or Afghanistan or Yemen? But

people always want to compare South

Africa to Switzerland. And then you go to

Switzerland and you find they’ve got their

own problems.

“South Africa is going through a tough

patch currently in its trajectory but it’s not

the toughest patch that its been through.

Look at the South African war and you

can imagine what happened to the rural

people, both white and black after the

scorched earth policy. They had nothing

left – and they’d entered a new century

and the world was changing. So the patch

we’re going through at the moment may

seem pretty tough – but if you compare it

to others, it’s actually less so.

“That is not to say that there aren’t

enormous challenges or huge problems.

I don’t get discouraged but I do get very

frustrated – only because it is so easy to

do a few things that will make life so much

better for so many more people.

“The one area in which South Africa has

T O P 5 0 0 / 7 t h E D I T I O N10

“I always say to people when they ask ‘what is the secret to success?’ – very simply, it’s a four letter word, spelled W-O-R-K.”

T O P 5 0 0 / 7 t h E D I T I O N 11

FEATUREINTERVIEW WITH CHRISTO WIESE

“The patchwe’re going through at the moment may seem

pretty tough - but if you compare it to others it’s

actually less so.”

T O P 5 0 0 / 7 t h E D I T I O N12

“If you’re not positive about life, how do you get on?”

T O P 5 0 0 / 7 t h E D I T I O N 13

consistently outperformed the rest of

the world since 1994 has been tourism,

which is a tremendous, miracle industry.

And then suddenly we get new visa

rules. Now China and India are not

promoting South Africa anymore as a

tourist destination – because if someone

from China wants to get a visa he has

to personally travel to a South African

embassy or consulate. The result is

already a noticeable decline In tourist

numbers from those areas, I am told.

“So those things are extremely frustrating.

How do we get through it? We talk about it,

we put the case forward and we know that

things change – and sooner or later the light

will dawn. It’s an old cliché but everybody

in South Africa, across racial and ethnic

groups will sink or swim together.”

WIESE CONTINUES TO BE OPTIMISTIC ABOUT SOUTH AFRICA’S FUTURE. HE SPEAKS ABOUT SPREADING THE OPTIMISM AND GETTING PEOPLE TO STAY AND INVEST IN THE COUNTRY’S FUTURE.

“It’s my perception that South Africans

are among the people in the world

who beat up on themselves the most.

Everything that happens here is a

calamity. Again, coming back to my

earlier point, compared to what? If I

could have my way, I would like people

to understand something that I’ve been

struggling with, which is – what is the

benefit of being negative?

“I’m not starry eyed, I don’t close

my eyes to the challenges and the

problems, but how do I benefit myself or

my community or my country by being

negative? Nobody has ever been able

to explain that to me. It comes back to

those five words, positive thinking could

actually be number one – if you’re not

positive about life, how do you get on?

“To be an entrepreneur, you’ve got to

be positive. Because if you get up in

the morning thinking about what can

go wrong in your world today - that can

wipe you out. You’ve got to just be that

little bit adventurous. You don’t focus on

what can go wrong, but what you can

make right and build your business. And

this leads me to what can we, as South

Africans, do about the troubled times

we find ourselves in. The first thing we

can do is stop beating up on ourselves.

We need to have conversations, public

conversations. No one person has all the

wisdom to solve South Africa’s or the

world’s problems. We know it will be a

huge joint effort, but the prize of success

is enormous.”

SPEAKING OF SUCCESS, WIESE KEEPS POWERING AHEAD – NAMED AS SOUTH AFRICA’S RICHEST MAN FOR 2015 – THIS YEAR BRAIT, IN WHICH HE IS MAJORITY SHAREHOLDER, PURCHASED AN 80% SHARE IN VIRGIN ACTIVE AND 90% OF CLOTHING RETAILER NEW LOOK.

“As you know Virgin Active was bought

by Brait. Brait focuses on businesses

with very good management, with

high growth potential and businesses

that are highly cash generative. Virgin

ticked all three of those boxes. What is

interesting is that Richard Branson, the

entrepreneur, retains a 20% stake, which

we feel is important.

“Virgin Active is already the dominant

player in that industry, in both South Africa

and the UK. It has started rolling out in

high growth economies in South East

Asia, where they see tremendous scope

for that kind of business. So it has a very,

very high growth profile and excellent

management and we are very excited

about it. But obviously Brait will from time

to time, as they normally do, update the

market on how the business is going.”

WIESE’S BUSINESS ACUMEN AND PASSION IS ALL ENCOMPASSING. HE SPOKE AT LENGTH ABOUT HIS INVOLVEMENT WITH THE FREEMARKET FOUNDATION INITIATIVE WHICH IS MAKING A PROFOUND DIFFERENCE TO THE LIVES OF THOSE WHO ARE NOT ABLE TO PARTICIPATE IN THE ECONOMY BECAUSE THEY DO NOT HAVE TITLE DEEDS TO THE LAND ON WHICH THEY LIVE.

“Poor people around the world own

trillions of dollars of assets but can do

nothing with them, because they do not

have legal title. The land on which their

homes are built, whilst legally belonging

to the state or municipality or provincial

government, in practice belongs to the

occupier. Hernando de Soto, Peruvian

economist in his book The Mystery

of Capital said that what government

should do is simply, through a stroke of

a pen, make those people owners.

“The Free Market Foundation, after years

of knocking at doors and lobbying, finally

made a breakthrough in Free State and

Western Cape to convince government

to give the land to the occupant. They’ve

managed to bring that cost down to

R1 850 per unit.

“My family donated 100 units in the

Free State and 100 units in the Cape.

The point I made at that handing over

ceremony was that in the preamble to

our Constitution it is stated that South

Africa belongs to all the people who live

in the country. This initiative gives body to

that concept because now it is possible,

if we get this initiative rolling the way

I’m hoping it will, for every household in

South Africa to have title deed.

“This is something in which every South

African can participate. We can, literally,

in a year or two, transform South Africa.

It’s not just about the monetary value

but about human dignity. There are 12

million formal housing units in South

Africa. If each one of those housing

units donated one title then everyone

would own their land. And the South

African landscape would be completely

transformed.”

FEATUREINTERVIEW WITH CHRISTO WIESE

“Everybody in South Africa, across racial and ethnic groups will sink or swim together.”

The SA economy in Q2 2015 was not as it appeared – after taking an inventory. According to the first readings of gross domestic

output (GDP), in real terms for Q2 2015 the SA economy performed very poorly. It is estimated by stats SA to have shrunk by 1.3%

on a seasonally adjusted annual rate in the quarter.

Investec Chief Economist, Brian Kantor takes a close look at South Africa’s GDP in the second quarter in 2015 – and finds all is not as it seems ...

TAKING STOCKOF GDP by Brian Kantor

T O P 5 0 0 / 7 t h E D I T I O N14

2010

-1

Quarter to Quarter*Year on Year

*Seasonally adjusted annualised rates

0

1

2

3

4

5

6

2011 2012 2013 2014 2015

REAL GROSS DOMESTIC PRODUCTPercentage Change

Source: SA Reserve Bank

(All figures are taken from the Quarterly Bulletin of the SA Reserve Bank, September 2015.)

FEATURETAKING STOCK OF GDP

On a second reading for the second quarter of figures provided by

the SA Reserve Bank, which include estimates of the demand side

of the economy, the outcomes seem even worse. Gross Domestic

Expenditure (GDE) is estimated to have declined by as much as a

7.2% rate in the quarter.

The outcomes were not nearly as dire as might be inferred from

either the GDP or GDE estimates. Final demand, the sum of

spending by households, firms and the government sector, actually

grew by about 1%. That final demands continued to grow at a very

modest pace is consistent with our own measures of economic

activity. What turned final demands into very weak GDE growth rates

was a dramatic decline in inventories. Inventories in Q1 grew by

R8.8-billion on a seasonally adjusted annual rate. In Q2 they declined

by the equivalent rate of over R38-billion. This decline in inventories

was enough to reduce real GDP in the quarter by as much as 6.2%.

REAL GROSS DOMESTIC EXPENDITURE AND FINAL DEMAND

Final demandGross domestic expenditure

Percentage change from quarter to quarter

2010-10

-5

0

5

10

15

2011 2012 2013 2014 2015

Seasonally adjusted annualised rates Source: SA Reserve Bank

T O P 5 0 0 / 7 t h E D I T I O N 15

Much of the action is attributable to the large seasonal

adjustment factor interpolated to the estimates of

inventories, the consistency of which may well be

questioned. It is normally the case that the second

and third quarters are periods when inventories are

built up and the fourth and first quarters are normally

associated with a general run down in inventories. But

as the Reserve Bank comments, inventory events in Q2

were anything but normal in the mining and oil sectors.

To quote the Economic Review of the Reserve Bank for

Q2 2015:

“Following a modest build-up in inventories in the

first quarter of 2015, real inventory levels declined

significantly at an annualised pace of R38.9-billion (at

2010 prices) in the second quarter. The rundown of real

inventories in the second quarter of 2015 was mainly

due to the destocking in the mining and manufacturing

sectors, partly reflecting subdued business confidence

levels and a decline in import volumes.”

In the mining sector, inventory levels at platinum mines

in particular contracted during the period on account of

a significant increase in the exports of platinum in order

to fulfil offshore export obligations. The rundown of

inventories in the manufacturing sector partly reflected

lower crude oil import volumes due to scheduled

maintenance shutdowns at major oil refineries over

the period. Consistent with a slower pace of increase

in retail trade sales, the level of real inventories in the

commerce sector rose in the second quarter. Industrial

and commercial inventories as a percentage of the non-

agricultural GDP remained unchanged at 13.8% in the

first and second quarters of 2015.

Inventories can run down because firms lacking

confidence in future sales plan for a reduction in goods

held on the shelves or in warehouses. They may also

run down in an unplanned way because firms are

surprised by the actual sales they were able to make.

The planned reduction in inventories can represent

bad news for the economy as orders decline. The

unplanned reduction can mean better news should

firms attempt to rebuild inventories. Similarly, a planned

increase in inventories can reflect a more confident

outlook for sales to come. An unplanned build-up of

inventories may also reflect unexpectedly poor current

sales volumes and so fewer orders to come in the

quarters ahead.

Making the distinction between planned and unplanned

inventory accumulation will be all-important for any

forecast of economic growth. In the case of the SA

economy in Q2, it seems clear from the Reserve Bank

statement that the run down in inventories in Q2 was

for largely idiosyncratic reasons, making the application

of seasonal adjustments particularly subject to error.

T O P 5 0 0 / 7 t h E D I T I O N16

FEATURETAKING STOCK OF GDP

Judged by the estimated growth in final demand, the

economy did not deteriorate in Q2 as the statistics

on the pure face of it may suggest. In our judgment

of the National Income Accounts released for Q2, the

economy continues on its unsatisfactorily slow growth

path as other indicators of the economic activity,

including our own Hard Number Index, have revealed.

The economy is growing slowly and not shrinking, nor

is it about to do so.

There is, moreover, at least one silver lining to be

found in the latest statistics: as much as inventories

subtracted from the growth rate, net exports added

as much, due to the growth in export volumes and the

stagnation of import volumes. The trade balance went

into surplus and the current account deficit declined

thanks to the weaker rand and the relative absence of

strike action.

T O P 5 0 0 / 7 t h E D I T I O N 17

Another development this year, essential to lessening the

tax burden on the productive part of South Africa and

so increasing potential growth, is the further decline in

public sector employment in Q1 noted by the Reserve

Bank. Lower tax rates and less spending on employment

benefits for a bloated public sector and also lower

interest rates, will help stimulate a recovery in the all-

important household spending that is essential for faster,

sustained growth over the longer run.

A combination of export growth and a stronger trade

balance, combined with a smaller budget deficit

accompanying fewer expensive public officials, of the

kind revealed in Q2 2015, is some of the right stuff

necessary to recalibrate the SA economy in the collective

mind of the global capital market from a fragile to a

resilient economy.

http://www.zaeconomist.com/sa-economy/

taking-stock-of-gdp/

September 17th, 2015

“As much as inventories subtracted from the growth rate, net exports added as much, due to the growth in export

volumes and the stagnation of import volumes.”

T O P 5 0 0 / 7 t h E D I T I O N18

100 000 members of the public attend our auctions annually 57 000 website visitors to our website per month1000 auctions carried out by us in a year80+ Properties on auction every month65 different newspapers used to highlight our properties60 repossesed vehicles on offer every month

0% is the amount of commission our sellers have to pay

Leading The Industry

021 425 8822 I www.claremart.co.za I 49 Somerset Rd, Green Point, Cape Town, 8001

What it takes to be a TOP 500 Auctioneer

T O P 5 0 0 / 7 t h E D I T I O N20

HOW THE WINNERS ARE DECIDED

The Top500 research methodology has been designed in conjunction with the University of Cape Town’s Development Policy Research Unit

Top 500 aims to identify the top five companies in each of the 100 business sectors monitored by Topco Research Department. In order to do so, some measure of the qualities that we consider to be characteristic of top companies must be designed in order to rank companies. To be classed as one of South Africa’s best companies, we expect companies to excel in three key spheres, namely financial performance, empowerment, and policy and accreditation.

The criteria within financial peformance speak to the ideas of top companies being large, growing and productive institutions that are leaders by virtue of their size and dynamism. Financial performance is measured by four indicators: turnover, rate of turnover growth, rand turnover growth, and turnover per employee.

Size is both an indicator and an outcome of whether or not a company is a top company. From the perspective of financial performance, turnover is used to proxy company size and this indicator has a large weight within the measure. The dynamism of top companies is reflected in their ability to expand and grow, and so we include two indicators – one relative, one absolute – of growth in the scoresheet. The former indicator is the rate of turnover growth over the year, since top companies are faster-growing, while the latter is the rand value of the turnover growth. Absolute turnover growth is included to account for the fact that top companies’ growth should make a large contribution to increased total output. These two indicators have a medium weight within the scoring system. Top companies are more productive than other companies and the final performance indicator, turnover per employee, which has a medium weight, speaks to this characteristic.

The business sector has an important role to play in promoting equity and social transformation. Top companies are committed to fulfilling this role, and this commitment is measured using six criteria. Two of these criteria focus on companies’ commitment to the goal of transformation as

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