A new kid on the block is trouncing old hands at the black economic empowerment (BEE) game.
Four-year-old generics firm Enaleni has come out above everyone in the FM's 2007 Top Empowerment Companies (TEC) survey. It's a pleasant surprise.
The company's improved empowerment credentials led to it outclassing Iqbal Survé's Sekunjalo, last year's overall winner, as well as runners-up The Don Group and Sun International, to take top spot overall.
In a survey undertaken by BEE rating agency Empowerdex, Enaleni managed to produce a total BEE score of 79,28%. It is followed in second place by services group Adcorp (73,22%) and in third place by hotels group The Don (70,89%).
Enaleni's overall score has risen from 69,88% in last year's TEC survey. Its total score is ahead of last year's top score of 76,44%, achieved by investment holdings group Sekunjalo. In 2006, Enaleni (a JSE debutante at the time) was rated the most empowered health-care company in the TEC survey and fourth overall.
Empowerdex analyst Rovendren Govender says Enaleni achieved top marks for employment equity, which in turn boosted its ranking in this year's survey. (For the Top 200 Companies table, click here.)
"It features in the Top 15 for all other elements of the broad-based BEE scorecard. One might say that the company takes a comprehensive approach to BEE and that has earned it points for the various criteria in all the elements."
The group, which employs about 750 people, scored 11 points out of a possible 15 on employment equity and 7,35 out of 10 points on the management element. It clinched 18 out of 20 points on ownership.
Also, Enaleni snatches the enterprise development top spot, with Adcorp coming in second. The group scored 13,3 out of 15 points on preferential procurement.
The rest of the health-care industry achieved a total BEE score of between 23,71% and 51,12% compared with Enaleni's 79,28%. These companies fared badly on management, employment equity, preferential procurement and other elements of empowerment.
At 39,3%, Aspen is strong on black economic interest, with Enaleni lying second on 35%.
The oldest and second-largest listed health-care group, Medi-Clinic, remained the least empowered company in the sector.
Could it be that older groups (generally characterised by a dearth of black representation at senior levels) find it difficult to transform?
Unlike some players who keep using government's indecision on its BEE framework as an excuse for what strikes one as half-hearted promotion of broad-based empowerment, Enaleni has been bolstering its BEE credentials as if empowerment is about to reach its sell-by date.
According to chairman S'bu Luthuli, the firm embraces BEE not because it unlocks doors to government tenders. It's a business imperative that underpins the sustainability of SA's economic health, says Luthuli. To this end, Enaleni is planning to lift its equity in black hands beyond 50% and improve its other empowerment indicators.
Before long, the majority in the executive and senior management teams will be black.
"Enaleni reflects the successful transformation of a thriving empowerment company," says Luthuli.
The firm is always looking at promoting empowerment at various levels, he adds. That's probably explained by the fact that it received good scores in areas as diverse as procurement and board participation in this TEC survey.
As if to prove that BEE is not "a business risk", Enaleni remains on an upward trajectory. It's the only firm to have graduated from the alternative exchange to the main board and prides itself on being one of SA's fastest growing companies.
It was established in 2003, and its popularity, sales and profitability continue to grow in leaps and bounds. Now, after a furious rally, the share price has taken a slight breather. Listed in June 2005 at 120c/share, Enaleni's stock hit a record high of 650c three months later.
The stock was quoted at levels above 500c at the end of February this year. However, profits and therefore the share price are expected to rise when the splurge on antiretroviral drugsgets under way not later than next year.
One unresolved issue is capacity. The possibility of demand outstripping supply is real given the projected rise in Aids-related spending and the broad growth in the sector.
Should this happen, Enaleni will have to outsource to other players such as the AltX-listed Imuniti, which is already handling some orders for such major players as Aspen.
But even if it squanders a few income opportunities (due to outsourcing), Enaleni's bullish earnings forecasts remain justified.
After all, the group produces 7 000 t of liquids and 850m tablets a year in its Durban south Mobeni plant, which will soon exceed full capacity. While getting ready to compete for part of the multibillion-rand state Aids treatment tender next year, Enaleni is already investigating additional capacity in Durban and elsewhere to cope with fast-growing demand.
The company is extending its winning streak - effortlessly it seems. Its latest financial results, which were due to be released as TEC went to press, were expected to be impressive. Notwithstanding its relatively small size at this point, a spot in the JSE Top 40 companies index seems imminent as the group entrenches itself as one of the major forces in the lucrative pharmaceutical market.
Interestingly, when Enaleni went to the market, it set itself what then appeared to be an overly ambitious target of R500m in annual sales within five years. Look at them now.
With revenue, profits and hopefully the share price north-bound, black people (investors, staff, local communities and other groupings) are guaranteed a lion's share of the returns, given that the company will soon be majority-held by black shareholders.
Indications are that spending on other broad-based BEE elements (skills development, preferential procurement, enterprise development and corporate social investment) will go up.
Though described as "truly broad-based" with a bias towards women groups, its empowerment shareholder base lists a few big-hitters like former Amabubesi bigwig Bulelani Ngcuka, omnipresent BEE investors Safika as well as Tambo family-controlled Koketso, whose CEO and chairman, Dali Tambo, was until last year a director at Enaleni.
Given its proclaimed bias towards women, Enaleni has some way to go to improve its gender mix. Pamela Pillay, who has been with the firm since inception, is the only female in the five-member executive team. The second woman, Thembisa Dingaan, is a nonexecutive. But both women are black.
Enaleni has done well but there's still room for improvement.
