Listed in the “Construction and Materials” sector on the Main Board, black empowered construction materials supply group Afrimat draws on more than 40 years’ experience. The group executes cost effective extraction of high quality Mining & Aggregates for the infrastructure, civil, construction and building markets and in addition adds value to produce concrete manufactured products and readymix concrete.

Specifically the group supplies blocks for low-cost housing projects, ballast for rail projects and stone for road and water reticulation projects.

During the 2008 financial year Afrimat produced approximately 4,4 million tonnes of Mining & Aggregates and sand, approximately 200 000 cubic meters of readymix concrete and the equivalent of 85 million bricks. Sales volumes remained healthy in the first quarter of FY 2008 in spite of a significant downturn in private spending.

Tight cost structures, highly efficient mining practices and impeccable equipment maintenance standards are maintained. Well equipped workshops are also in place. A professional and skilled management team, many of whom have more than 20 years’ experience in the industry, steer the group.

Mining & Aggregates

  • 22 quarries
  • 2 gravel mines
  • 6 sand mines
  • 30 track mounted crushers and screens
  • Mobile drilling and blasting
  • Reserves of stone for an average of at least 15 years
  • Quarries close to major metropoles

Concrete Manufactured Products

  • 8 concrete manufactured product factories
  • Supply low-cost housing projects
  • 90% of raw materials needs (excluding cement) sourced from Afrimat’s own quarries

Readymix Concrete

  • 19 readymix batch plants
  • Supply large scale civil engineering and infrastructure projects
  • Close to 90% of Readymix Concrete’s raw material needs (excluding cement) is sourced from Afrimat’s own quarries

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Notwithstanding that infrastructure investment continues at an unprecedented rate the economy has weakened as a result of a cumulative increase in interest rates, tightening of credit standards in line with the National Credit Act, rising inflation caused by rocketing fuel and food prices and the electricity crisis.

This investment in infrastructure development is set to be the cornerstone of economic growth for the foreseeable future, with Government having earmarked R590 billion to be deployed over the next five years. Afrimat is well positioned to benefit with a focus on road and rail projects, water reticulation and low-cost housing.

Afrimat’s product offering, geographical positioning and in addition, flexibility to “go where the work is” utilising mobile crushing units gives the group strong competitive advantages.

Eskom new projects (R1 trillion over 20 years)

  • Medupi power station (approximately R70 billion)
  • Project Bravo (approximately R80 billion)
  • Nuclear power stations
  • Pump storage schemes
  • Solar and wind generation


  • Public transport, roads and rail: R8,2 billion
  • Gauteng roads: R14,3 billion

Medium term budget framework (MTF)

  • Schools and clinics: R9 billion
  • Housing, water and general building:
    R6 billion
  • 2,4 million more houses (2,3 million since 1994)



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  • HEPS up 20,4%
  • NAV of 348 cents per share
  • Operating margin of 22,4%
  • Geared for growth
  • Final dividend of 16 cents per share

Key ratios  
Current assets:current liabilities 2:1
Net cash on hand R37 566 000
Debt less cash:equity 5,8%
Debt:equity 13,9%
Total liabilities:shareholders’ funds 42.1%
Retained income R 242 485 000
Total dividend 23 cents per share


Headline earnings was up by 79,5% to R92,5 million for the year to February 2008. Headline earnings per share (HEPS) accordingly increased 20,4% to 70,4 cents. Operating margins were solid at 22,4% reflecting the particularly healthy performance of two of the key divisions – ‘Mining & Aggregates’ and ‘Concrete Manufactured Products’. A final dividend of 16 cents a share was declared for the year compared with no dividend the year before.

All divisions performed well with the new acquisitions and newly commissioned projects boosting capacity. The ‘Mining & Aggregates’ division had a particularly good year driven by strong demand for its products, higher value products in the sales mix and improved pricing. Additional quarries in Saldanha Bay and Kommetjie boosted the division’s capacity.

The ‘Concrete Manufactured Products’ division benefited from ongoing investment in the low-cost housing market by both government and the private sector.  Capacity expansion at the Ladysmith plant will help generate future growth in this division. The ‘Readymix Concrete’ division was impacted by a harsh winter and intensified price competition the first six months but significantly picked up its performance in the second half of the year. A capacity boosting upgrade at the Denver Quarries, bought as part of the Malans Quarries acquisition, is due for completion in July 2008.

The group concluded two earnings-enhancing acquisitions – Malans Quarries (including Denver Quarries) and Scottburgh – which strengthened Afrimat’s portfolio with strategically located quarries and sand mines, sophisticated mobile crushers and another brick and block factory. The acquisitions were included in these results for nine and eight months respectively. Integration has been smooth and seamless.

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Afrimat has established a New Business Development Team to assist in maintaining strict focus on sustained growth. The team is tasked with identifying potential new projects, both organic and acquisitive, and fast-tracking them to maximise returns for stakeholders.

The team will be responsible for smooth integration of new acquisitions or new projects, as well as ensuring efficient utilisation and allocation of resources in the engineering and manufacturing facilities.

It comprises two executives from the corporate head office, Carl Malan, formerly Managing Director of Malans Quarries and Johan Bisschoff, a mechanical engineer with a MBA degree. The team is further strengthened with four former directors of Prima and Malans Quarries.

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Afrimat has embarked on a re-branding process that will see all underlying subsidiaries and newly acquired businesses adopting a single Afrimat brand identity over a period of a year, starting in the southern parts of the country. On listing the established brands of the two underlying companies, Lancaster and Prima, were retained.  However, the Afrimat brand since listing has built credibility and entrenched a strong market positioning, making a re-branding of the group under one umbrella an important strategic initiative in furthering growth.
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Afrimat is firmly aligned with the current unprecedented infrastructure spend which will offset the impact of economic decline. The group will continue to build on its intellectual capital base and bolster capability to "go where the work is." Strategic priorities include strong organic growth, growth through synergistic acquisitions and expanding geographically to enhance the groupís profit generation.
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Afrimatís Ladysmith concrete brick and block plant underwent a R4,5 million upgrade, doubling current production of blocks and boosting overall production by 20%. Prior to the upgrade, existing equipment had been working at full capacity but barely met market demand. The new plant is already working at 80% capacity, producing an extra 36 0000 blocks per month.

This has allowed Afrimat to satisfy existing demand and expand its range of products. Profitability is further boosted by improved economies of scale.

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Afrimat is entering the readymix concrete market in Port Elizabeth.

Readymix concrete is a profitable “added value” business which Afrimat undertakes from many of the group’s quarries throughout South Africa and it further opens a marketing channel for the sale of its primary product, crushed stone.

During the year Afrimat’s geographical expansion programme began in earnest. The group has successfully established a foothold in Gauteng with a greenfields project on the West Rand in terms of which Afrimat has signed a royalty agreement to crush and market Mining & Aggregates at a mine dump near Krugersdorp. In the initial stage mobile crushing equipment will be used, to be replaced by fixed plant within three months. This project will supply the local market as well as bulk users of crushed Mining & Aggregates in the area.

Afrimat is confident that plans to extend its reach further into the buoyant Gauteng market will be realised in the current year. Ongoing expansion of the mobile crushing capacity enables the group to take advantage of infrastructure projects outside its traditional areas of operation.

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There are currently 133 643 175 million shares in issue.

Directors’ dealings
All Afrimat directors are locked into a two-year equity hold obligation, with disposal restricted to 25% in each of the first two successive years. All restrictions on disposal fall away in the third year. Since January 2008 until June 2008 the following directors’ dealings have taken place, with the purchases by directors affirming their confidence in the group’s prospects.

Directors’ dealings
Date Director Nature of transaction Number of shares Price per share Total
21 Feb 08 Marthinus W von Wielligh Purchase 50 000 R7,45 R372 500
21 Feb 08 Marthinus W von Wielligh Sale 2 340 R7,45 R17 433
28 Jan 08 Francois du Toit Purchase 28 107 R7,00 R196 749
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This is the second edition of the Afrimat Investor Newsletter,
looking at the first half of 2008.

Should you have any suggestions of specific information you would like included in future editions, please revert to investorrelations@envisagesa.co.za.
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