The South African Competition Commission has referred a supplier of the main ingredient in bricks used in the construction of affordable housing to the Competition Tribunal for charging excessive prices.

Thursday, 09 February 2012 02:00

Strong foundations on balance

While trading conditions appear anything but vibrant, both Afrimat and Mazor can face down the next 18 months with some confidence thanks to their prudence in retaining strong balance sheets since their respective listings on the JSE

Friday, 20 May 2011 02:00

Construction competition cuts margins

Despite mostly paltry results from construction companies, projects like the Gautrain, World Cup infrastructure and road building have drawn to an end.

Thursday, 13 May 2010 02:00

Afrimat earnings up 25.7% to 50.9c

Building materials supplier, Afrimat, has reported a 25.7% rise in diluted headline earnings per share to 50.9c for the year ended February 2010 from 40.5c a year ago.

Construction materials supplier Afrimat expects earnings and headline earnings per share to be 20%-30% higher for the year to February as a result of lower costs.

Wednesday, 21 April 2010 02:00

Afrimat expects earnings 20-30% higher

Afrimat has advised that its earnings and headline earnings per share for the year ended February 28, are expected to be between 20%-30% higher than previously.

Tuesday, 11 August 2009 02:00

Afrimat sees improvement in construction

Afrimat said that despite a slower trade performance in the year to February 2009, improvement is already evident in the months since year-end.

Friday, 01 February 2008 02:00

Staying ahead

It’s been just over a year since Afrimat, a supplier of building and construction materials throughout Southern Africa, listed on the JSE.

Construction IndustryThe success of the listing marked a pinnacle in the company’s history. From humble beginnings, the company has now entrenched itself as a leader and pioneer in the industry.

Afrimat CEO Andries van Heerden says that the company’s story is, in fact, the story of Prima and the Lancaster Group, two major players within SA’s construction industry.

Established in 1963, Prima was the brainchild of Christiaan du Toit, a grader operator who identified a market opportunity for aggregates. Upon his death, the Worcester-based crusher was taken over by his son Francois, and the younger Du Toit’s driven principles continue to influence the company today.

In 1979, Du Toit was joined by his brother-in-law Theunis Jordaan, whose administrative strengths were the perfect complement to Du Toit’s technical expertise. The duo later became a trio when, in 1985, civil engineer Peter Corbin came on board.

The company now entered into an interesting stage of development: Prima established Meng beton, a readymix cement company intended as a marketing channel for stone; and Boublok, which manufactured bricks from quarry waste products.

Prima also embarked on an acquisition drive that saw it consolidating its base through the purchase of quarries in Paarl, Caledon, Bredasdorp, Stanford and Robertson. Later, it set its sights on greenfields developments, establishing new quarries, including a site in Grabouw.

Though Prima was blazing a trail through the industry with a strategy which was, according to Van Heerden, “visionary for the time”, the Lancaster Group was also notching up impressive growth. The group had its roots in a Vryheid stone mine that was established in 1965 by brothers Gordon and Desmond Lemmon-Warde. The quarry grew rapidly, spurred by the development of the Richards Bay coal line. On the back of this expansion, the brothers decided to establish a second quarry in Ulundi.

This led to the formation of the second company within the Lancaster group, Lancaster Precast. Van Heerden says that the latter was created in 1973 to manufacture precast blocks from the quarry’s waste products in Vryheid.

Though Lancaster Quarries continues to enjoy significant growth — going on to purchase additional quarries in Harrismith, QwaQwa and Hluhluwe — the expansion of Lancaster Precast outstripped its sister company, with the result that it boasted twice the revenue and profit of the quarry business during the previous financial year. This success prompted Lancaster Precast to purchase factories in Harrismith, Ladysmith and QwaQwa. Additional factories were opened in Mkuze and Ulundi and four readymix plants were commissioned.

The link between Prima and the Lancaster Group was forged by Van Heerden. He had joined Prima as operations director in 2001 and was appointed managing director in 2003.

Chief among his achievements during this period was the empowerment transaction concluded between Prima and Mega Oils in 2003. The transaction saw Mega Oils acquire a 25,1% stake in Prima, and has been described by both sides as tremendously successful. “We have been blessed to find a partner who adds enormous value,” Van Heerden says.

Mega Oils’ Loyiso Dotwana, who is now a director at Afrimat, agrees that the transaction unlocked significant shareholder value. “At the time the transaction was made, Mega Oils was well aware of the impending boom in the construction industry, spurred by government’s extensive planning with regard to infrastructure,” he says, explaining the value he recognised in the potential partnership between the two companies. His insights were on target: Dotwana says that the basic principles of good business practice and corporate governance, coupled with a comprehensive knowledge of Afrimat’s business environment, have contributed to the partnerships’ ongoing success, while a team of industry leaders and empowerment shareholders that add real value continue to ensure that Afrimat stands out from competitors.

In spite of his passion and commitment to Prima, Van Heerden resigned in 2005, following a decision not to list the company on the JSE. But his dream was far from forgotten: later that year, he brought together a consortium, including empowerment partners Kwezi Mining, and purchased the Lancaster Group. In May 2006 an agreement was reached to merge Lancaster Group with Prima Quarries to form Afrimat, and by November that year, Van Heerden realised his listing ambitions.

More than meeting his expectations, the listing was something of a triumph for Afrimat. “The shares were oversubscribed 27,5 times, and we raised R125m,” he recalls. Initially priced at R5, the share price has since shown significant growth. Afrimat has also enjoyed significant growth in earnings per share, while the company’s balance sheet remains extremely strong.

This has placed Afrimat in a position for further expansion, which it has achieved through its acquisition of Malan’s and Denver quarries. The acquisition is doubly attractive, Van Heerden says. Not only does it grant Afrimat increased access to the Cape Town metropolitan area, but through a transaction between Malan’s and Denver quarries shortly before the acquisition, Afrimat now also holds assets formerly belonging to the latter in the mushrooming Port Elizabeth node.

The acquisitions and mergers that have taken place over the 40 years leading to Afrimat’s formation have placed the company in a particularly strong position. Today, Afrimat operates 22 quarries, two gravel mines, six sand mines, 19 readymix concrete plants, eight precast concrete bricks and blocks factories and a fleet of mobile crushing equipment. The company also offers transport, drilling and blasting services, with a fleet of 280 vehicles including earthmoving equipment, its own readymix trucks, contracted readymix trucks, tipper trucks, brick delivery trucks and cement tankers.

These resources have enabled Afrimat to entrench itself as a dominant player in the Western and Eastern Cape, KwaZulu Natal, the eastern Free State and Namibia.

“We have been blessed to find a partner who adds enormous value”

 

Monday, 30 July 2007 02:00

Boom time builds up to beyond 2010

Government and private sector infrastructure investments are expected to secure the boom in the construction and building industries until well after the 2010 soccer World Cup, according to industry leaders.

Brian BruceThey said the government's decision to go ahead with a R400-billion infrastructure programme, an even bigger commitment by the private sector and economic growth rates well above 5% a year would buoy the industries and drive the economy.

Brian Bruce, chief executive of Murray & Roberts, predicted the boom would continue long after 2010 and well "into the teens of the 21st century".

He cautioned, however, that there might be some ups and downs in the industry during this period.

But, despite this caution, construction companies are flocking to list on the JSE's alternate exchange, which facilitates listing of small companies.

Since AltX was established almost three years ago, 14 of the 50 companies listed are related to the building and construction sector with interests in home improvements, heavy construction and building materials and fixtures.

Among the bigger groups are Esor, Sanyati Holdings, Afrimat and the Raubex Group. The total market capitalisation of these companies this week was R20.6-billion, according to an AltX spokesman.

And Stefanutti & Bressan, with annual turnover of R1.7-billion, plans to list on the JSEs' main board on Friday after raising up to R465-million by placing 35 million shares. A limited offer of a further 11.5 million shares will be offered to vendors.

The company believes that revenues will grow to R2.5-billion in 2008. In the year to February, the group earned a net profit of R67.2-million, after the cost of BEE involvement, and expects this to grow to R115-million in 2008.

The group has a 15% BEE involvement through Mowana Investments.

Chairman and co-founder of Stefanutti & Bressan, Gino Stefanutti, said the construction industry was experiencing unprecedented growth and that there was "a positive picture of long-term growth for the industry".

Last month, the FNB Civil Construction Confidence Index, compiled by the Bureau for Economic Research recorded another increase.

Cees Bruggemans, chief economist at First National Bank, said that the figure reflected "very favourable business conditions". It is reported that the industry had grown by 13% a year since 2003.

The SA Federation of Civil Engineering Contractors noted that the number of people in the construction industry had risen to 114 000 in the first quarter of this year .

But, the FNB Index found , a shortage of skilled labour was affecting construction activities and impinging on completion times. Training would have to be accelerated to contain construction costs as a result of higher wages .

Power generation, with Eskom looking at another nuclear power station, will also help keep activity high. Power generation infrastructure development will begin in earnest next year and this is a 25-year project.

Transport, water and sanitation, schools and hospitals will need to keep pace with the macro- economic growth, said Bruce.

The attractiveness of the building and construction sector has attracted an unsolicited bid for building materials supplier Iliad Africa from a consortium led by Absa Capital. Talks are continuing.

Last week Iliad said it had acquired the Gauteng-based, R220-million-a-year Thorpe Timbers . Recently, the group bought USM Building Supplies and Lumber City in Lephalale (Ellisras). The combined acquisitions should add R350-million to revenues.


South Ocean, the Johannesburg-based manufacturer of building wires, has spent R10-million on the first phase of its expansion plans by purchasing new machinery that will increase its capacity by 10%.

The company, which was listed in February, has begun the second phase of expansion at a cost of R30-million for new machinery, buildings and working capital, which will add 15% to capacity.

The company recently acquired Radiant Lighting for R485-million, which expands its operations into decorative lighting, lamps and bulbs and electrical products.

Black empowerment group Afrimat announced two weeks ago that it had purchased two quarries and a concrete block-and-brick factory in KwaZulu-Natal, its second acquisition since listing in November. This brings its number of quarries to 22 and brick factories to nine.

Building materials supplier Afrimat has bought Scottburgh quarries - a quarrying and block manufacturing business - for an undisclosed amount.

Construction Industry"The acquisition is in line with Afrimat's strategic objective of strengthening its presence in key metropolitan areas and in a region where significant growth is expected," the company said on Monday.

Scottburgh quarries comprise two commercial quarries in Scottburgh and Pietermaritzburg and block manufacturing plant in Scottburgh.

The acquisition is subject only to the fulfilment of certain administrative conditions. 

Afrimat, which debuted on the JSE in November last year, recently acquired quarries and sand mines business Malans Group for 125 million rand, entrenching the group's presence in the Western Cape.

 

 

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