ALTECH - officially the Number 1 JSE listed company in Financial Mail Top 100 Companies Survey 2011

ALTECH - officially the Number 1 JSE listed company in Financial Mail Top 100 Companies Survey 2011

Altech has been selected as the top JSE listed company in the Financial Mail Top 100 Companies 2011 survey. The annual survey is commissioned by the Financial Mail to measure the historical financial performance of South Africa’s top companies and provides a picture of the sustainability of an enterprise.

Altech was placed number seven in last year’s ranking but shot up to the number one spot by virtue of having a very high return on equity (RoE) combined with one of the highest qualitative scores of any company in the rankings this year. In other words, the company had a very balanced scorecard.

Despite the fact that 2010 was a tough one, Altech has remained in the top 10 over the past two years while other ICT companies have failed to make a consistent showing in the top 20. This is a reflection of Altech’s consistent performance despite the harsh economic climate that South Africa and the rest of the world have experienced over the past few years.

The survey is based on a variety of financial and historical data.

According to the Financial Mail, the first criterion in the historic quantitative analysis of the top listed companies is that they should have a market capitalisation of at least R1bn so that investors can be confident that an operation is sustainable and has critical mass. The second criterion is a consistent track record over the previous five years.

A portion of the overall score (quantitative and qualitative combined) is derived from a five-year assessment of Internal Rate of Return (IRR) and compound growth in Earnings per Share (EPS). In this way, factors that are within management control, as well as those that are derived more from the market, are incorporated. IRR measures a company on its returns to shareholders — a combination of dividend flows and capital appreciation in the share price, also known as total shareholder return (TSR). Another portion of the total score is derived from return on equity in the latest year under review, which means that recent success is also rewarded and a company is not entirely judged on its history.

However, because the aim of the survey is to use the past as a guide to — rather than a determinant of — the future, 60% of the score is based on a largely qualitative assessment of how “investable” a company is.

Factors included here are how the company is managed (and is likely to continue to be managed); its corporate governance procedures and culture; and its black empowerment status. Also included is the quality of communication with shareholders and stakeholders; the prospects for growth in the sector or sectors in which the company operates; contextual issues such as regulatory uncertainties and tax regimes; and, crucially, whether the share is reasonably liquid and offers value.

Altech’s selection as the top company is an indictment of its market strength, its viability and its future prospects.

The survey numbers are validated and analysed by the Bureau for Financial Analysis, which aims to eliminate variations in the way that companies report their financial performance by standardising treatment of the figures. The results are not always identical to the financials published by the companies themselves in their year-end presentations or the annual report, nor do all year-ends coincide. But the calculation is consistent from year to year, as is the cut-off date for collating figures.