For the first time AltX companies have a separate ranking in the Top Empowerment Companies (TEC) survey, giving these small up and coming firms a platform to show their commitment to transformation.
The TEC might provide a stage for these businesses to promote themselves but this does not mean they have fully grasped the opportunity to get themselves ranked. Leading empowerment financial services company Vunani, for instance, is not only an investor in many AltX listed companies, it is also self listed on the junior exchange. But it has not made the rankings because it missed the deadline to submit its details for the survey.
Also missing is high flying microlender Blue Financial Services. Vox Telecom, which has Mvelaphanda Group as its empowerment shareholder, has scored no points whatsoever.
Could all that mean AltX companies are lacking in commitment when it comes to empowerment matters? Not really. Of those that took part in the survey 45 got some kind of ranking. Some companies - such as the top-ranked employment placement group Workforce, with its score of 66,95%, coming in at 25th place - would have done even better if it was ranked in the overall index.
Workforce's high ranking should not come as a surprise as employment agencies such as Adcorp Holdings and Kelly Group have traditionally scored well in the survey. Workforce founder CEO Ronny Katz has over the past 30 years built a company that specialises in having its own permanent labour force working temporarily for other businesses. Workforce provides training and benefits, but its customers pay the salaries.
Like other employment agencies it performs well on preferential procurement, enterprise development and socioeconomic development.
Its performance, however, has been taking some strain. Revenue for the half year to end-June 2008 rose 20,3% to R564m but the bulk of this growth came from recent acquisitions and only 6% was organically. Its cash pile decreased from R28,7m at the beginning of the period to R5,7m at the end.
It might have hit a few bumps lately but in the past six years the group has grown its annual turnover from R276m in 2002 to R968m in 2007 - an average annual compound growth rate of 23,3% - and earnings before tax and interest jumped from R11m to R53m for the same period.
With a score of 64,09%, second-ranked Rare Holdings also would have scored well on the overall rankings. The pipe supplier and installer was formed when Van Leeuwen SA, which commenced operations in 1975 decided it needed an empowerment partner. It then entered into negotiations with Don Ncube, the founder of Real Africa Investments, resulting in the creation of the Rare Group in 2002.
The Real Africa Investments holding has scored it high marks for ownership. It is also one of the few that scores relatively well for black people in executive management jobs and spending on skills development.
Rare has gone from strength to strength since listing in 2007. Revenue was up 42% to R452m and there was a 75% increase in attributable profit to R24,5m for the year to end-June. Its cash on hand increased from a negative R8,6m to a positive R19,8m. Its expansion elsewhere in Africa - Angola, the Democratic Republic of Congo and Zambia - has garnered it most of the benefits of doing cross-border business with few of the dangers.
It has also tapped into the lucrative infrastructure development market by getting government contracts to upgrade and manage water systems. Water losses from leaky pipes and inefficient management systems amount to R3,2bn/year in SA.
B&W Instrumentation & Electrical comes in at third place on the AltX ranking. The construction-linked company scored 51,54% and took an unusual route to get itself empowered. Unlike other companies, B&W chose to have its employees as its empowerment partner. It went about creating an employee trust that holds about 7% of the firm.
B&W has its own accredited training centre and it spent R1,3m on improving the skills of its employees in 2007. This focus on skills resulted in it having the highest rating among AltX companies in the TEC rankings.
It also has a policy of mentoring small black-owned contractors. Once these contractors demonstrate technical competence, financial stability and industry expertise, B&W goes into a joint venture with them. And if sufficient contracts have been completed on a joint-venture basis, B&W and these contractors go on to form a company.
Waste management group Interwaste Holdings and pigment and dye manufacturer Rolfes Technology come in at fourth and fifth respectively.
One of the reasons Interwaste listed was to bring in a black shareholder; and it has done reasonably well in achieving its transformation goals. It now has Vunani as a shareholder and has made some progress in supporting and buying from black-owned businesses.
Rolfes Technology, which has Vuwa Investments as its empowerment partner, is also making progress. It improved its empowerment status for procurement and social investment when it agreed to rent 20 vehicles from Mercedes-Benz Financial Services SA's empowerment partner, Lephuthing & Three Daughters Hauliers in September 2008.
In this deal all three sides gain as it not only improves the empowerment ranking of Mercedes-Benz Financial Services SA and Rolfes Technology but also makes Lephuthing & Three Daughters Hauliers a more viable business.
Making up the remainder of the Top 10 are discount airline 1time, hotel group Gooderson Leisure Corp, steel merchant BSI, technology company Simeka Business Group and construction group Esor.
