Afrimat Limited is a leading black empowered open pit mining company providing industrial minerals and construction materials. Listed in the 'Construction & Building Materials' sector of the Main Board JSE Limited...read more

October 2006

November JSE debutante Afrimat meets with strong investor interest


Black empowered building supplies group Afrimat Limited, which today published its abridged pre-listing prospectus, has met with enthusiastic interest from the select group of investors privy to its private placement roadshow in October. The group provides a diverse product range of Mining & Aggregates, readymix concrete and concrete blocks and bricks and will slot into the JSE main board’s ‘Construction & Materials’ sector. Afrimat plans to list in on 7 November with a market cap of around R600 million.

The prospectus sets out the group’s forecast revenue to February 2007 of R471,4 million, which is expected to yield profit after tax (PAT) of R63,6 million. This compares with pro forma revenue of R413,4 million and PAT of R46,0 million, respectively, had the underlying Prima and Lancaster groups been merged at February 2006. 2007 headline earnings is forecast at R62,8 million, up from pro forma headline earnings of R47,3 million for 2006.

CEO Andries van Heerden says he is optimistic that the company will successfully raise its intended target of R75 million new capital by the private placement of 15 million shares at R5 a share. “The capital raised will strengthen the balance sheet and enable the company to list with no gearing, smoothing the progress of Afrimat’s acquisition strategy.” The group intends embarking on an aggressive acquisition trail that would see it boost market capitalisation to the R1 billion mark in the foreseeable future.

Afrimat plans to acquire quarries that will expand its geographical spread to Gauteng, Mpumalanga and Limpopo and increase its existing dominant footprint in KwaZulu Natal. “There are a number of attractive consolidation prospects as well as greenfield prospects in the market,” van Heerden says.

The group’s BEE shareholding will prove an advantage in this respect. “As a listed company we can offer smallerquarries compliance with Mining Charter BEE requirements,” says van Heerden. Afrimat’s BEE partners Mega Oils and Kwezi Mining are already part of the group as shareholders in Prima and Lancaster respectively, and will together make up 21% of the shareholding at group level after listing. A staff trust will hold 4,1% to bring the total BEE shareholding after listing to R25,1%.

Afrimat was formed through the merger of Prima and Lancaster, the dominant building supply specialists in their respective regions. Prima operates in the eastern and western Cape and Namibia and Lancaster in northern KwaZulu Natal and eastern Free State. “The intention to merge the two companies was to exploit the synergies and expand product and geographical diversity, and is a logical progression in our long-held vision for a listing as a consolidated group.”

The merged group has 18 quarries, 12 readymix plants and 8 precast factories in total. In addition 4 mobile crushing plants and 1 readymix concrete plant offer greater geographical flexibility.

Van Heerden concludes “As a group Afrimat has a good vertical integration with our quarries supplying our readymix plants and precast factories with the majority of raw material. The diverse product range and well-established brands in a wide geographical area will enable us to capitalise on a flourishing building and construction sector and deliver meaningful returns to shareholders.”

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