AFRICA
THE BUSINESS MAGAZINE FOR AFRICA’S INDUSTRY LEADERS
October 2019
www.enterprise-africa.net
Acquisition to Improve Financial Inclusion
Across sub-Saharan Africa Exclusive interview with Experian SA CCO Mark Wells ALSO IN THIS ISSUE:
GraySwan Investments / Grinaker LTA / Legaro Property Development / NPS
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EDITOR’S LETTER
EDITOR Joe Forshaw joe@enterprise-africa.co.za SENIOR PROJECT MANAGER Sam Hendricks sam@enterprise-africa.co.za SENIOR PROJECT MANAGER Tommy Atkinson tommy@enterprise-africa.co.za PROJECT MANAGER James Davey jamesd@enterprise-africa.co.za PROJECT MANAGER Chris Wright chrisw@enterprise-africa.co.za PROJECT MANAGER Daniel Roper daniel@enterprise-africa.co.za PROJECT MANAGER Tom Gibbons Thomas@enterprise-africa.co.za FINANCE MANAGER Chloe Manning Chloe@enterprise-africa.co.za SENIOR DESIGNER Liam Woodbine liam@enterprise-africa.co.za CONTRIBUTOR Manelesi Dumasi CONTRIBUTOR Karl Pietersen CONTRIBUTOR David Napier CONTRIBUTOR Timothy Reeder CONTRIBUTOR Colin Chinery CONTRIBUTOR Benjamin Southwold CONTRIBUTOR William Denstone
Published by Chris Bolderstone – General Manager E. chris@cmb-media.co.uk Rouen House, Rouen Road, Norwich NR1 1RB +44 (0) 1603 855 161 E. info@cmb-media.co.uk www.cmb-media.co.uk CMB Media Group does not accept responsibility for omissions or errors. The points of view expressed in articles by attributing writers and/or in advertisements included in this magazine do not necessarily represent those of the publisher. Whilst every effort is made to ensure the accuracy of the information contained within this magazine, no legal responsibility will be accepted by the publishers for loss arising from use of information published. All rights reserved. No part of this publication may be reproduced or stored in a retrievable system or transmitted in any form or by any means without the prior written consent of the publisher. © CMB Media Group Ltd 2019
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Yet again, alongside all the stories of doom and gloom, we are seeing signs of progress across southern Africa. While so many talk about a challenging economy and difficult marketplaces, many companies continue to adapt and change in order to meet the needs of customers, bolstering reputations at the same time. Take our lead feature for October, Experian, the South African arm of the global credit, data, and information business. After completing a significant acquisition earlier in the year, Experian is now introducing its services across Africa, in markets where traditional credit bureau services are not so common. Even with an uncertain economic future, across the entire region, this business has supplied services of the highest importance, making it vital in the operations of its customers. Now, the company is thinking about further expansion and looking for more opportunities for growth. It’s a similar story at Wirquin SA, the regional division of the international plumbing and sanitary products company. This is a business in desperate need of capital expenditure to help make the most of booming demand. By delivering products of the highest international standards, Wirquin has entrenched itself as an indispensable partner to home builders looking for quality and value. Then there’s National Packaging Systems, the Durbanbased food packaging machine manufacturer. This is a business which competes against major international organisations but is managing to maintain a healthy market position thanks to an understanding of what customers need. All of these businesses are aware of the uncertainty and negativity coming from doubt in the economy, but all are deepening their relationships with customers and establishing themselves as partners of choice in order to avoid any downturn effect. Get in touch and tell us how your company is embedding itself within the business of your customers. We’re online @ EnterpriseAfri1 and on LinkedIn.
Joe Forshaw EDITOR
GET IN TOUCH +44 (0) 1603 855 161 joe@enterprise-africa.co.za www.enterprise-africa.net
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06/NEWS: The News Snapshot A round up of some of the latest news stories from around the country
134/EXHIBITION CALENDAR: Key Upcoming Events Across the Country Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors
8/ EXPERIAN SA Acquisition to Improve Financial Inclusion Across sub-Saharan Africa Following its acquisition of Compuscan, Experian is targeting growth across southern Africa, with a target of improving financial inclusion by helping financial institutions to understand more about their markets, and end-consumers to understand more about credit. “It’s the largest acquisition for Experian this financial year and that shows that we are growing rapidly and giving a significant contribution to our Experian shareholders,” Experian SA CCO Mark Wells tells Enterprise Africa.
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CONTENTS
49/ INDUSTRY FOCUS:FINANCE
INDUSTRY FOCUS: MANUFACTURING
18/GRAYSWAN INVESTMENTS Gray Swans and Blue Waters
80/WIRQUIN SA Ever-Growing Wirquin Continues on Expansion Journey
26/THE VALUATOR GROUP Core Values 32/ATTACQ Results Sky-High as Waterfall Takes Shape 39/MARSH AFRICA Bringing Order to Chaos 42/SATIB INSURANCE BROKERS African Tourism’s Primary Risk Partner INDUSTRY FOCUS: PROPERTY 49/GRINAKER-LTA CONSTRUCTION A New Dawn for 130-year-old Construction Giant 57/LEGACY GROUP Leonardo Joins A Long Line of Legacy Luxury 64/LEGARO PROPERTY DEVELOPMENT Johannesburg’s New Shining Light in Property 73/THORNYBUSH LUXURY GAME LODGE COLLECTION Thornybush Hoping for Spike in Tourism
86/NATIONAL PACKAGING SYSTEMS 36 Years of Automating Africa’s Food Packing 92/THE BIOVAC INSTITUTE Local Vaccine Manufacture Returns to South Africa 98/FRIGOGLASS SA The Coolest Brands Meet the Coldest Drinks 105/NAMPAK BEVCAN Can Do Approach Keeps Nampak At the Top INDUSTRY FOCUS: TRANSPORT/LOGISTICS 111/AMI MANICA Local Knowledge Takes Freight Global 117/SHELL SOUTH AFRICA Strategically Growing in Upstream & Downstream INDUSTRY FOCUS: TECHNOLOGY 123/ZEISS SA See Beyond What Meets the Eye 128/INTERSWITCH The Key to Africa’s Electronic Payment Revolution www.enterprise-africa.net / 5
NAMPAK SELLS ITS GLASS BUSINESS Last month, Africa’s leading packaging group, Nampak, said it has entered into a R1.5bn deal to sell its glass business. Nampak Glass primarily manufactures beer, spirits and wine bottles, as well as water and juice bottles, and food jars. Its manufacturing facility at Roodekop in Johannesburg produces glass containers of various sizes, and has a total capacity of 285,000 tons. The deal is reportedly with Isanti Glass. The black-owned investment group Kwande owns 60% of the company, while SABSA – the holding company of South African Breweries – holds the rest. According to reports, Nampak plans to use the proceeds from the deal to help settle debts.
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SA INVESTS US$5 BILLION IN INTERNATIONAL CAPITAL MARKETS
The South African government has successfully placed two US$5 billion tranches in bonds that will mature in 2029 and 2049, respectively. The bonds were placed in the international capital markets on 23 September 2019. In a statement, National Treasury said US$2 billion will mature in a decade, while US$3 billion will mature in 30 years. “Due to favourable pricing and a sizeable order book, the Republic was able to prefund an additional US$1 billion over the planned US$4 billion. Prefunding is the early issuance of an amount planned to be issued in future years. This is done to take advantage of good pricing and favourable market conditions, while reducing future borrowing need,” said Treasury. The 10-year bond is priced at a coupon rate and re-offer yield of 4.85%, which represents a spread of 313 basis points above the 10-year US Treasury benchmark bond. “The 30-year bond, priced at a coupon rate and re-offer yield of 5.75%,
which represents a spread of 358.6 basis points above the 30-year US Treasury benchmark bond,” National Treasury said. The transaction was 2.71 oversubscribed, with investor demand across Europe, North America, Asia, South America, Middle East, Africa and others. In terms of investor type, demand was supported by a mixture of fund managers, insurance and pension funds, financial institutions, hedge funds and others. Treasury said government sees the success of the transaction — believed to be the largest ever out of sub-Saharan Africa — as an expression of investor confidence in the country’s sound macro-economic policy framework and prudent fiscal management. Treasury has mandated Citi, Deutsche Bank/Nedbank (consortium), Rand Merchant Bank, and Standard Bank as Joint Bookrunners. The empowerment partners for the respective banks are Crede Capital Partners, Rho Capital, Theza Capital and Africa Rising Capital.
NEWS SNAPSHOT PLANS TO EXPAND EAST LONDON IDZ
The expansion of the East London Industrial Development Zone (ELIDZ) will aid efforts to create jobs and grow South Africa’s economy, says Trade and Industry Deputy Minister Fikile Majola. Located in the Eastern Cape, ELIDZ plans to expand its operations through additional investments to create 1 300 jobs in the near future. The Deputy Minister, who had a
meeting with Eastern Cape MEC for Finance, Economic Development, Environmental Affairs and Tourism, Mlungisi Mvoko, welcomed the move to expand the industrial development zone. “With the kind of plans they have, it is clear they are going to run out of space. They are a successful IDZ and their work is already commendable.
As government, we should support the expansion plans because they are going to grow industries and create new jobs, thus ensuring our economy grows,” said Majola. Since its inception, the East London IDZ has succeeded in attracting up to R4.4 billion in private investments, while over 4 000 jobs were also created.
CAPE TOWN’S SHARKS MISSING Disturbing reports have started emerging from the City of Cape Town where experts are suggesting that residents of the region’s seas are no longer being sighted. The great white sharks for which the city has become a tourist hub have apparently not been seen at all this year. Many sharks are tagged and call areas around Cape Town – especially False Bay – their home. divers and adventure tourists come from all over the world to cage dive with the sharks, with many calling it a ‘bucket list activity’. Across Cape Town, a large number of people are employed by companies that market themselves as shark businesses. If the shark disappearance is a longterm problem, the effect could be damaging on the local tourism industry. Some reports suggest that overfishing has removed the shark’s food source, while others suggest that orcas entering the region could have scared the sharks away temporarily. Some commentators have suggested it is too early to know whether the issue is a long-term problem. Some local scientists claim that, so far, no sharks have been viewed in 2019.
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EXPERIAN SA
Acquisition to Improve
Financial Inclusion
Across sub-Saharan Africa PRODUCTION: Karl Pietersen
Following its acquisition of Compuscan, Experian is targeting growth across southern Africa, with a target of improving financial inclusion by helping financial institutions to understand more about their markets, and end-consumers to understand more about credit. “It’s the largest acquisition for Experian this financial year and that shows that we are growing rapidly and giving a significant contribution to our Experian shareholders,” Experian SA CCO Mark Wells tells Enterprise Africa. 8 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
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“We’re in a world where technology can disrupt businesses,” said Experian Group CFO, Lloyd Pitchford at the company’s results presentation in May. And he meant it in a truly global sense. All markets around the world are being disrupted by new technologies, whether it’s developed markets like the USA, or growing economies like South Africa. In SA, Experian’s appetite for growth through technological innovation is just as fierce as in any other global market. Ultimately, the goal of this financial data analytics and credit bureau business is to help people and organisations to assess, predict, plan and protect themselves. Technology has become an integral part of this offering, and its influence is only set to increase. By investing in major acquisitions, and growing its product portfolio, Experian is fixed firmly on the growth path, and is helping more and more people and organisations to improve their understanding of, and access to, financial services, while at the same time helping lenders to understand market opportunities. In May, Experian SA completed the acquisition of Compuscan and
// COMPUSCAN HAS A FOOTPRINT WITH LOCAL RELATIONSHIPS, KNOWLEDGE AND DATA, AND EXPERIAN HAD A DESIRE TO BEGIN TO PROVIDE MORE FINANCIAL SERVICES AND CREDIT OFFERINGS ON THE CONTINENT // 10 / www.enterprise-africa.net
Scoresharp to create an African powerhouse with industry-leading technology and unrivalled reach. Experian SA Chief Customer Officer, Mark Wells talks to Enterprise Africa about how the deal is boosting financial inclusion and helping to bring more people into the credit economy. “The acquisition was seen as a strategic opportunity for growth globally,” he says. “While it happened on our continent and in our market, it was something that had a lot of attention from the Group CEO and investment board – it was a big deal for Experian as a global entity. The reason for that is the reason we chose to buy Compuscan – our ambition to expand into subSaharan Africa. “Previously, Experian had done quite a lot of narrow scope work in Africa – assisting certain financial institutions in the likes of Malawi and Botswana with regulatory analytics work – but that was an on-demand, reactive thing. If you look at the footprint of Experian across the globe, other than South Africa, the African continent is relatively untouched. Enter Compuscan which was a SA-born start-up business that had grown into a medium-sized business with the mission of expanding across sub-Saharan Africa. “Compuscan had put down a footprint as a credit bureau and analytics services business across five other African countries and had begun to make great inroads in those markets. What they didn’t have was the capital investments and the ability to grow at scale, so it seemed like a perfect marriage and that is exactly what is has turned out to be. Compuscan has a footprint with local relationships, knowledge and data, and Experian had a desire to begin to provide more financial services and credit offerings on the continent.” Compuscan’s footprint spans South Africa, Namibia, Botswana, Uganda, Ethiopia, Mozambique and Lesotho. Scoresharp has been a wholly owned subsidiary of Compuscan since 2007 but
// ON THE AFRICAN CONTINENT, WE UNDERSTAND THAT THE COMPUSCAN ACQUISITION IS MOST DEFINITELY THE START OF A GROWTH STRATEGY // has always been branded as an analytics organisation that was independent of a specific bureau. Its expertise comes in the form of a unique ability to take the best of data and interpret it in credit risk decisions to give the best possible outcome for a credit lender. The result of the acquisition was a doubling of the employee base, an expansion of the product and service portfolio, and access to knowledge and data across important new markets, furthering Experian’s global footprint. The success of the merge has been down to blending the two organisations strengths and weaknesses. “It’s been an incredibly positive thing,” says Wells. “The businesses are very complimentary. We’ve had very little overlap in terms of customer penetration and customer services. Compuscan had traditionally built its business on the microlending sector and their main source of income and service provision is to approximately 3000 microlenders in South Africa, extending across its other markets. Experian has always been very focused on providing services to financial institutions - tier one banking, telcos, retail etc. We also had quite a different array of services so while there is an overlap in terms of the consumer credit bureau, Compuscan had a more mature analytics offering and Experian had a more mature commercial credit bureau as well as enterprise-class software and fraud offerings. “Each of the individual business had
EXPERIAN SA
areas that we were strong in and areas that we were less strong in but in this acquisition, the reason that Compuscan was such a good target for us is that we were strong where the other was weak and vice versa. By putting the two organisations together, the value proposition on both sides has improved.” R120 MILLION INVESTMENT A prerequisite of the acquisition, instilled by the Competition Commission, was that Experian must invest in South Africa. Happy to oblige, Experian announced it would invest R120 million into new technological enhancements, establishing South Africa as an investment hub. The two key focus areas for this investment are moving the business onto a global cloud-based reference architecture, in line with international best-in-class, and adopting a new service model to remain compliant with the various legislations active across different territories. “We took two parallel and separate running credit bureaus and we wanted to move to a much more agile architecture as we merged the data assets with the technology that serves customers. The first part of the investment is around moving to best-of-breed technology – a reference architecture based on cloud that would allow a much more agile service. It’s the reference architecture that Experian is using globally and is starting to roll out in other parts of the world. It’s beneficial for the African continent as, when products are developed on top of the credit bureau, if we are using the same reference architecture and structure in a cloud environment, our time to market bringing new products to African customers will be that much quicker,” says Wells. The second part of the investment is what Experian terms ‘the hub and spoke services model’. “Legislation in each country is different with regards to data protection, data privacy and
storing data in country or allowing data to be stored in a central place. While we’re looking to remain absolutely compliant with those laws, where we can get economies of scale using a shared services model in this cloud infrastructure, we are looking to be able to service African countries from a central place where it is possible. Where data has to be stored in country, we would look to make those investments into reference architecture in those countries,” details Wells. GELEZAR Another technological advancement, which looks set to have a real tangible impact on South African consumers and businesses, comes with the launch of Experian’s GeleZAR app. The company describes the app as a continuation in the fight against financial exclusion.
GeleZAR, which will be available from the app store once pilot testing is complete, is an educational tool which is aimed at the unbanked population, outside of the formal credit economy. This is a large market, and one which many companies have tried to exploit over the years. Wells insists that by helping consumers to understand more about credit, credit bureaus, financial services, and credit profiles, they can make better use of the data that is held about them and, potentially, unlock new opportunities in the formal credit sector. “Firstly, we want to provide financial education to consumers as well as small and medium enterprises,” he says. “The app is targeted towards the unbanked sector of society and allows them to educate themselves on basic principles such as budgeting and how to handle
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INDUSTRY FOCUS: FINANCE
money. It then takes those consumers on a journey to help them understand about credit and what a credit score is. It helps previously unbanked consumers from the credit economy to start understanding how they could unlock access to financing and build a credit profile that will create opportunities for them in their daily life.” The app will also offer benefits to the country’s lenders. By using the app, consumers will offer up information about themselves as the technology will pull relevant data from the cell phone. This information can be used by Experian to create an alternative profile of a person – extremely useful in a market where only around 52% of people have access to credit. Banks and other lenders are keen on gaining this type of information so that they can understand more about the market and its potential.
“We ask consumers for consent to provide us with certain data that they store on their smart phones,” says Wells. “We have found that if we are able to gain access to smart phone data, specifically for people that do not have a credit profile, that data provides us with an ability to build an alternative credit score which we have found to be quite predictive. We have piloted this is Brazil and in parts of Indonesia and we are using some of the algorithms they have developed. We have proven a correlation between traditional data and mobile scraping data, and it allows us to accelerate consumers ability to access credit. If we are given consent by consumers, with the intent to build an alternative credit profile, we can go to financial institutions looking to lend to that segment and give them a view of those consumers where they may not have had data before.”
This idea holds potential for the wider sub-Saharan African region. Sub-Saharan Africa is projected to have 500 million smartphone subscribers by 2020 and a large portion of society remains unbanked and outside of the transitional credit economy. “We are in a pilot phase right now, we have partnered with a number of financial institutions and one of the largest low-cost mobile phone retailers in Africa, and they have preloaded the app on phones. We are testing the algorithms and tweaking them specifically for the South African market,” says Wells. “We’re in the early stages but it’s something we are very excited about because we’ve seen success in other parts of the world in developing alternative credit scores. In the rest of the sub-Saharan African market, 80-90% of the market isn’t part of the credit
Paragon Business Solutions Paragon Modeller is the product of Paragon’s 25 years’ experience in the credit industry. Modeller is a flexible scorecard development tool that allows the user to develop predictive models for use in all stages of the credit cycle through a clear, easy-to-navigate interface. Its Paragon’s decades of expertise that gives Paragon customers absolute confidence in their tools. Scoresharp (Experian) have been the preferred local re-sellers for Modeller in Southern Africa since 2008. Paragon Modeller is used across the lending industry by retail banks, small lenders, mortgage providers, motor finance, loan, and mail-order companies. By ensuring that the Modeller scorecard building process is up to date and easy to manage, development times are shortened creativity is encouraged and developer satisfaction is increased. Our rolling development program assesses and adapts leading edge statistical and ML techniques keeping you on top of business trends and helping you create models to provide much-needed insights that can ultimately help your company make more strategic, informed decisions. With regulation of the credit industry becoming increasingly tighter, we understand how important it is to be able to trace every stage in the development of a scorecard. Models produced using Paragon Modeller are fully audited, and the results can be imported into Microsoft Office applications. Documentation becomes a straightforward process using the built-in notebook, or Word/Excel add-ins. Paragon Modeller simplifies and guides the user through all aspects of the scorecard-building process, including the more complex areas such as grouping of variables, reject inference, validation and model building. The user carries out all the different stages of scorecard development in a single system, from a single interface, with no duplication of data and effort. Modeller scorecards can be implemented seamlessly in your processing systems using a number of export and packaging tools, dramatically reducing implementation problems. The highly-specialised team at Paragon/Scoresharp is always on hand to provide personalised technical support and training. To enquire about a trial of Modeller trial email us at info@credit-scoring.co.za
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INDUSTRY FOCUS: FINANCE
economy and doesn’t have a data set that services a traditional credit bureau,” he adds. Constantly adding to, and improving, the data available – and aggregating that data in a speedy and discernible manner – is a core capability for Experian, which is why it continues to develop new tools to access more data, even from mature credit markets. In the USA, a new tool that encourages consumers to offer up extra data – data that might not be included in a traditional credit report – has helped to improve credit scores almost instantly. Experian Boost has seen such success, the company is already planning roll out in the UK and other mature markets. “It’s a consumer service that has been launched, calling on consumers to contribute their data that isn’t
traditionally stored with the intent of immediately boosting their credit score,” says Wells. “It’s at the other end of the spectrum from the GeleZAR app but it’s part of the same story – consumers have data that is valuable and they can make that data work for them, continuing to enhance their ability to access financial services and credit. “In a live environment, as they submit data, in an open banking way, they will see their credit score improve so they have benefits from the lenders they use. “We’ve had a massive uptake in the US with Experian Boost and so the company is now looking to roll out globally. It is a product which is aimed more at people who understand their credit score. Again, it’s about how do they own their own data and make it work for them,” he adds.
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INVESTING IN GROWTH The growth of the product portfolio and the delivery of new services coming out of Experian make for an extremely exciting international business, and the fact that the end goal is improved financial inclusion helps to list this business among one of the most important in the region. But, even with a fantastic reputation, Experian remains hungry for further growth. Wells says that further acquisitions, mergers, partnerships and joint ventures are already being considered. He says that there is certainly a feeling that local is best and, taking from the Compuscan lead, developing local knowledge is the way to go. “This idea lends itself to M&A activity,” he adds. “We don’t have any specific targets at this stage as we are still looking to bed this acquisition down and enhance our services to those countries where we already have a presence. In the very near future, we will start to identify opportunities in other markets that would be able to benefit from the same types of services that an ExperianCompuscan merger has already brought to markets where it is active.” Of course, one of the major hurdles to any investment or growth strategy is the strength of the local and global economy. South Africa has faced a weak economic climate for some time and the global economy is characterised by unpredictable choices. But, in difficult times, Experian provides data insights to assist with the best possible decisions. Its knowledge, data, and analytical ability give lenders a much clearer picture of the market, and this can help reduce risk. “Our industry specifically is not immune to local economy pressure
EXPERIAN SA
// ULTIMATELY, THE SERVICES WE ARE LOOKING TO PROVIDE SURROUND HOW WE CAN GAIN MORE APPROVALS FOR FINANCIAL SERVICES CREDIT GRANTING THAN WE HAVE TODAY` // but what we have found, especially in South Africa, is that as pressure comes on to our client base, around credit provision, they become more risk averse. As they become more
risk averse in their practices, they have an increased hunger for data and interpretation of that data so they can glean insights out of that data. This is where our value proposition sits,” Wells explains. “While our customers are always very cost-conscious and looking to drive pricing down, we have seen an increased demand for closer relationships and they are asking us for additional insights that can assist them in unlocking new markets in a relatively risk averse way. That spawns new opportunities for us so I wouldn’t say we operate without impact from the economy but it does drive customers to expand their relationships with us as they look to minimise pressure and reduce losses by not taking too many risky decisions.”
RISKY FUTURE? With the Compuscan acquisition now complete, and Experian in a position to provide more data insights than ever before, the future looks bright. But there is one unknown hanging over the financial services industry – the looming National Credit Amendment Bill. Informally known as the ‘debt relief bill’, this piece of national legislation is designed to help those with serious debt problems. Specifically, individuals could be allowed to apply for relief and their debt could be suspended, partially or in full, for up to 24 months. Ultimately, if circumstances do not improve, debt could be terminated. The bill has been signed into law by President Ramaphosa and the big banks are concerned. Experian is
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INDUSTRY FOCUS: FINANCE
// WE HAVE FOUND THAT IF WE ARE ABLE TO GAIN ACCESS TO SMART PHONE DATA, SPECIFICALLY FOR PEOPLE THAT DO NOT HAVE A CREDIT PROFILE, THAT DATA PROVIDES US WITH AN ABILITY TO BUILD AN ALTERNATIVE CREDIT SCORE WHICH WE HAVE FOUND TO BE QUITE PREDICTIVE //
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waiting to realise the full impact. “From an Experian perspective, it provides us with a certain amount of work to do but also with opportunities,” says Wells. “We are obligated, once the debt relief bill is legislated, to create an identifier in the bureau that can recognise individuals that have applied for debt relief. The opportunity comes as each and every one of our banking and lending customers are interested in the exposure that they have to consumers that may apply for debt relief. They are coming to us and asking if we can assist them with making sure they understand their exposure and they understand the potential losses that they may experience based on people applying for debt relief. “What we are not yet clear on
is how our customers will respond,” he adds. “Will they become more risk averse and cut down on lending to consumers who have applied for debt relief or will they see it is an opportunity to service the market as others withdraw? It will be interesting, and our perception is that it doesn’t affect Experian’s business other than the development that we need to do on the bureau.” South Africa’s Banking Association has made it clear that it does not support striking off debt in any form. Various analysts have suggested that SA banks could suffer losses of up to R25 billion. But Experian would not be directly impacted – the company does not lend money and is purely a custodian of data.
EXPERIAN SA
“It enables us to provide an additional service by identifying individuals that may qualify for debt relief, and that information is valuable for our customers as they can gain an enriched story about who they are lending to.” For Experian, locally and globally, it is important for financial institutions to seek data insights in order to grow their businesses. Experian’s large amount of expertly aggregated data is invaluable in situations like this. The company has cleverly positioned itself as an organisation that financial institutions can truly partner with and derive benefit from. With an ever-growing middle class around southern Africa, and a desire within financial institutions to lend to more people and grow
presence, now is the perfect time for Experian to go out and stake its claim as the African partner of choice – backed by international expertise – for both businesses and endconsumers looking to improve their access to the formal credit economy. “Ultimately, the services we are looking to provide surround how we can gain more approvals for financial services credit granting than we have today. The organisations that are our customers have exactly the same objective. In order for them to do that, they need to be able to assess the risk, and in order for them to do that, they need insights to make informed decisions,” says Wells. “We need to provide as much data as we possibly can both in traditional credit form as well as in alternative data form so that we can inform those
organisations whether someone is credit risk or not,” he concludes. Technology is changing the landscape for this important sector and this vital company. Fortunately, Experian is an industry-leader and its position is secured by an ongoing enthusiasm for innovation and improvement.
WWW.EXPERIAN.CO.ZA
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GRAYSWAN INVESTMENTS
Gray Swans
and Blue Waters PRODUCTION: Colin Chinery & GraySwan Investments
More and more of South Africa’s middle-class investors are looking to move money offshore. They want to live in the sun but invest in the shade. “Private clients who had 15 tor 20% of assets, now suddenly want to put as much overseas as possible,” says Duncan Theron, CEO of high-performing GraySwan Investments.
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Far away places for farsighted funds? Offshore assets have always been part of the investment armoury of the super-wealthy. But now South Africa is seeing a boom in middle-class investors looking to move money offshore for wealth diversification and a more secure retirement. “Taking money overseas is an ongoing activity, but over the last year or two it has really multiplied,” says Duncan Theron, CEO of GraySwan Investments. “Clients are continuously asking us what they should do with their offshore assets, how do they get them offshore cost effectively, and which jurisdictions and offshore platforms should they use and asset classes and funds should they invest in?”
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Johannesburg and Cape Townbased GraySwan Investments delivers wealth management solutions to private and family office investors, along with investment consulting to institutional and corporate investors, currently advising to more than R20 billion in assets. ROBUST AND SUCCESSFUL Among the most highly experienced independent advisory businesses in the South African financial sector, GraySwan’s track record is proof of a remarkably successful and robust investment process developed since the company’s founding nearly 10 years ago. “Our clients are top performers since the inception of our business and are the ambassadors of our business.
Our business has always grown by word of mouth. The differentiator for us is that we are truly independent and we are investment advisors with previous offshore investment management backgrounds. “We are passionate about investments and passionate about doing the right things for the right reasons always. “Whatever we set ourselves out to do, we do with integrity and do it whole-heartedly. We always go that extra mile. We focus on investments – and we do it well. Our clients see us as their trusted long-term investment thinking partners,” says Theron. The brand title is a benchmark of prudence; a gray swan being a potentially very significant event; unlikely but still possible.
INDUSTRY FOCUS: FINANCE
// TAKING MONEY OVERSEAS IS AN ONGOING ACTIVITY, BUT OVER THE LAST YEAR OR TWO IT HAS REALLY MULTIPLIED // Translated into GraySwan’s advisory model it means risks that can be identified and should then either be avoided for their unintended consequences on investors’ portfolios, or otherwise managed to maximise expected returns at predefined levels of risk. GraySwan has two divisions GraySwan Investments and GraySwan Wealth – with the first providing investment consulting services to institutional investors such as pension funds, medical aid funds, short-term insurers as well as corporate clients, while the latter offers parallel services to private clients and family offices seeking investment advice. INSTITUTIONAL FOCUS The launch of GraySwan Investments in 2010 saw an initial focus on investment advisory to institutional investors. For the founders it was a natural progression as they previously consulted to and managed many of the largest institutional clients in South Africa’s assets. The core team all came from big corporate backgrounds in the investment management or institutional asset advisory spaces. As a former senior investment consultant at Alexander Forbes and thereafter Riscura and finally Chief Investment Officer for Sanlam’s offshore alternative asset management business, Duncan Theron boasts more than 23 years in the industry. Together with his senior team they have more than 110 years of investment experience and the team is also one of the most stable amongst its peers.
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“We set out to provide an independent, non-conflicted, institutional investment advisory business such as we were providing 15 to 25 years back before we headed into offshore asset management.” History had given them a lesson and an opening. Whilst working in the offshore asset management business, Theron and his partners, had to deal with local investment advisory businesses and during such time witnessed how conflicted and reactive these advisory business models had become. “Once independent, boutiquefocussed businesses, these advisors had mostly become ‘One Stop Shops’, offering all the different services with all the conflicts of interest. They were consultants, administrators, actuaries; employ benefit consultant and asset managers - just about everything. The investment advisory offering had become the low-cost service to attract assets to their other business offerings. As a result, the investment advisory offering as provided by the industry was seldomly a high-quality high offering as it had to be provided at a low cost just to win the client over. “We saw there was a gap in the market as some clients required a more sophisticated and pro-active service and better returns and decided we would come back, and again start an independent, unconflicted but a highquality investment advisory business. We knew there were institutional investors that were desperate for a better solution. “Offering a boutique, ownermanaged, focused and tailor-made premium and world-class service, we were very fortunate in immediately attracting a few large pension funds. That gave us the dream start. Today our focus has moved more to smaller and medium-sized pension funds as these clients are typically very entrepreneurial and are desperate for a more dynamic and personalised and high conviction offering.”
More followed, and with success and acclaim came calls for diversification. “Starting purely as a nondiscretionary institutional investment advisor, we only provided advice. The pension fund, medical aid fund or short-term insurer would make the decision and we would thereafter implement such. We had no discretion. During the past two years some of our larger institutional clients has changed our mandates where we no longer provide advice but rather we now actively manage their entire investment program as per our best discretion within a well-defined and agreed investment framework. We call this service ‘Outsourced Chief Investment Officer’ or OCIO in short. Such discretion is testimony to our institutional clients trusting that our advice works and that we can implement such faster and more timeously if we manage their investment programs.” GOING PRIVATE Then, in Theron’s words, “Something happened. Trustees of our pension funds and other institutional clients we were working with began saying that if the superior performance was what we could achieve for their funds, what
// FOR US IT’S NOT ABOUT BEING THE BIGGEST BUT BEING THE BEST. OUR PROPRIETY ANALYSIS AND HIGH CONVICTION AND SOMETIMES CONTRARIAN RESEARCH IS THOROUGH AND DETAILED //
Get the best of both worlds.
Glacier offers a range of local and international investment solutions that meets a diverse set of client needs.
Our solution set encompasses both local and international platform investments as well as traditional life investment solutions (guaranteed return and income products). This allows us to meet the needs of investors seeking certainty amid the current market volatility while still growing their wealth. Visit www.glacier.co.za or speak to your financial adviser about Glacier’s wide range of solutions.
GLACIER FINANCIAL SOLUTIONS (PTY) LTD AND SANLAM LIFE INSURANCE LTD ARE LICENSED FINANCIAL SERVICES PROVIDERS.
INDUSTRY FOCUS: FINANCE
could we do for them as individuals? “We had never been in private client advising, but always been institutional advisers and investment managers, so our initial response was that we couldn’t really help. This was unchartered territory for us. “Until one day, the Chairman of one of our biggest institutional clients told me, ‘you’ve got no choice, you are going to help me!’” This was the kick-start of the private client business, GraySwan Wealth. And with it came a deja vu moment. “We discovered the same lack of service, poor returns and independence in the private client advisory segment. “There are only a handful of independent advisory businesses with an institutional pedigree in the private client advisory business; the large majority are all product and commission-driven. “We are not commission driven and we don’t sell investment products. We have no ties to any stockbroker, bank or asset manager or life insurer. Nothing. “That was four years back, and since then our business has morphed strongly into the private client space, and now about 20% to 25% of our income is from private clients. “That doesn’t mean we are picking the stocks, that’s the asset manager’s job. It means we are still picking the best of breed asset managers and the funds in which we invest. “Most of our private clients have also started giving us discretion rather than simply asking for advice, and
// WHATEVER WE SET OURSELVES OUT TO DO, WE DO WITH INTEGRITY AND DO IT WHOLE-HEARTEDLY. WE ALWAYS GO THAT EXTRA MILE // 22 / www.enterprise-africa.net
with more leeway we can change and re-balance things more dynamically, and manage our best view investment strategy for our clients.” LEEWAY AND LEVERAGE And private clients are benefiting from GraySwan’s big institutional base and proprietary research, with the leeway and leverage it gives to negotiate fees and access to unique opportunities. “With the lower investment manager cost structures which we can access, we have basically passed over all these cost savings through to our private clients. It also gives us a better chance of performing better, especially in the low return investment environment where every half a per cent counts.” With markets notably choppy and very unpredictable you can’t solely take a long-term buy and hold view anymore, says Theron. “You have to make ongoing tactical changes. And with our offshore alternative investment management backgrounds we can ensure our clients are constantly protected by utilising smart and costeffective hedging strategies. That’s why our institutional clients have performed so well over the past nine years and because our private clients are now also top performers since we started their offering. Everyone insures their house, their cars and their lives – investors should also protect their investments.” Experienced in servicing big institutional investors, GraySwan applies the same thoroughness, proprietary research, methodology and quality service offering to a private client individual and family offices. “And these private clients and family offices are not used to it. They are mostly used to an advisor tied to a big bank or life insurer or asset manager trying to sell them a product. At GraySwan we have a dedicated research team with more than 110 years of investment experience and which have been together for more than 10 years, an institutionalised investment committee and we travel the world finding investment opportunities
for our clients. This institutionalised proprietary research and advisory approach which we now offer to a high net worth individual or family office is very uncommon and we believe therein lies the difference. In a space of a few years we now advise to more than R650 million of private client and family office assets. Such is testimony to the need for a more sophisticated and high conviction advisory service which produces better returns.” The last two years in the wealth management business has opened a further window of opportunity. INTO WEALTH MANAGEMENT PRODUCTS “Realising we were attracting more and more private clients not wealthy enough for us to deliver tailor-made advisory solutions, we started three core wealth management products; a low equity, medium equity and high equity fund of fund unit trust. These unit trusts now have more than a two-year track record and is already outperforming its peers and such at lower costs than the peers. The collective size of the unit trusts is already in excess of R350 million in size and as they continue to grow we will be able to reduce costs further for our clients. “We had never thought we were going to construct wealth management products, but the need for the more middle ground individual was clearly there. They need better performing and lower cost products to help them save for retirement.” Another new service that GraySwan has started offering to its corporate clients is Treasury solutions. With South African listed companies sitting with more than R850 billion in cash on their balance sheets, there is a need to invest such monies in enhanced cash-type solutions which offer higher returns but with little volatility. “We not only advise them how to manage the cash better but also assist them with their foreign exchange hedging programs,” says Theron.
IT’S TIME TO
RETHINK INVESTMENTS
Investment Consulting Wealth Management Treasury Solutions
GraySwan is an award winning independent investment advisory and wealth management company.
We provide investment advice & wealth management solutions to institutional, corporates, family office & private client investors.
www.grayswan.co.za | info@grayswan.co.za | (JHB) 011 431 0141 | (CPT) 021 852 9092 Gray Swan Financial Services (Pty) Ltd (Reg No: 2010/009813/07) is an authorised Financial Services Provider (FSP No: 42290).
INDUSTRY FOCUS: FINANCE
FINDING A PARTNER Originally a family-orientated business, GraySwan enhanced its shareholding structure two years ago when it sold 50% of the business to Mettle Investments, the Cape Townheadquartered holding company of a group of specialised lending businesses operating in South Africa and the UK. “Mettle is a very dynamic and entrepreneurial company with great aspirations,” says Theron, “and our DNA and culture are a perfect and an easy match. I have known some of the Mettle guys for longer than 20 years, so it was an easy decision. They play in the private debt space – the fastest growing asset class in the world. We’ve learnt a lot about private debt as an unexplored and undiscovered asset class for investors and we’re already invested in such unique under-the-radar opportunities for some of our more sophisticated clients.” He believes Mettle is the ideal strategic partner to continue to catapult GraySwan to the next level where the company has now started to compete
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more aggressively in the institutional investment advisory and wealth management industry. “For us it’s not about being the biggest but being the best. Our propriety analysis and high conviction and sometimes contrarian research is thorough and detailed. We follow a very disciplined processes, which we have refined over the past two decades of working together at GraySwan and other companies. Our superior institutional as well as private client track records are proof that our investment process works.” POINTS OF SUCCESS If the success of GraySwan can be seen as a triangle with independence, a proven investment process and costeffective advice structures as its three points, there is also what its CEO calls “a softer ingredient.” GraySwan is a signatory to the United Nations Principles of Responsible Investing, has previously been named Responsible Investment Consultant of the Year by industry body BATSETA and
also participates on a global reporting committee which focus on responsible investment practices. “All our clients are investing in responsible investment products. We’ve been industry leaders in South Africa to introduce our clients to such products. Locally, the market is only now waking up, and everybody’s getting on the bandwagon. We’ve always been investing in such products and such track records have outperformed traditional products and such at lower fees. “And this is going to be a major theme of a range of new very innovative offshore products which we are building for our private clients as well. It’s a core ingredient.” Offshore is on a roll. “Private clients who had 15 tor 20% of assets, now suddenly want to put as much overseas as possible. To assist them with such we now also provide foreign exchange services to move their Rands offshore seamlessly and cost effectively in additional to our standard advice to move assets
GRAYSWAN INVESTMENTS
CEO Duncan Theron
tax effectively to the most suitable offshore investment jurisdictions, platforms and range of funds.” Recently, Theron has been in London and Malta for two weeks. “A lot of South Africans are looking at Malta as a jurisdiction, and also a place to potentially get a second passport.” He was on the George Cross island setting up unique offshore funds and creating alternative investment products for GraySwan’s private clients. “This is the next phase of the business. South African private client investors and wealth advisors are looking for something different offshore and that’s the gap which our products are going to fill.” The London visit saw Theron securing a 50/50 partnership with Absolute Return Partners - “an owner managed business very much like us, focussing on tailor-made institutional advice. We’ve been working together for more than two years and now we have formalised our collective offering. They also think very differently and that’s what we like!
“They have also realised that their clients do not always require a sophisticated tailormade solution but sometimes simply want an offshore cost-effective product that works, so we have teamed up. We are now collectively building a range of very unique and alternative offshore products via the Malta jurisdiction for both our client bases.” LAST CHANCE SALOON? Theron’s views on South Africa’s political and economic situation are not short on candour. “We have a new President in place, and I think the general consensus is that if this President and his team doesn’t change things around in the next year or two, then what real hope is there for the country? “This is the mind-set of most South Africans. And they are already starting to look at parachute Plan B, and all these residency and passport programmes. “This is what has catapulted a lot of people taking more money overseas. It’s been ongoing, but over the last year
or two it has really multiplied. With so many jurisdictions, platforms and more than 50,000 offshore funds it’s not an easy decision to make. This is where we come in.” While South Africa’s economic growth outlook is clouded by a lack of clarity and progress on reforms, Theron sees some positive signs that the tide has turned. “But now it must turn much faster. I believe we have seen the worst, but if these positives do not manifest in material economic growth for at least the next year or two, then I think people will say; ‘Well, this was the last chance.’ And I would find it hard to disagree with that view.”
WWW.GRAYSWAN.CO.ZA
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THE VALUATOR GROUP
Core Values PRODUCTION: Colin Chinery
With acknowledgement to the real estate maxim about location, location, location, for business, it’s all about value, value and value. “It’s absolutely crucial for individuals, boards, shareholders and investors to rely on the soundness of valuations,” says Gavin Commins, CEO of South Africa’s leading brand, The Valuator Group. 26 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
//
The 2008 global financial meltdown triggered by the collapse of Lehman Brothers – and resulting economic fall-outs pushed the world’s banking system towards the edge of collapse. In South Africa, the economy fell into recession for the first time in 19 years, nearly a million jobs were lost in 2009 alone, and house prices, manufacturing, and mining activity shrank. And with governments pumping billions into stricken banks, and many high-profile companies questioned for misrepresenting their assets, the crisis brought another sea of change - a demand for better corporate governance, with robust and independent regulated valuations near the top of the reform agenda. “It’s absolutely crucial for individuals, boards, shareholders and investors to rely on the soundness of valuations,” says Gavin Commins, CEO of The Valuator Group (TVG). “With the 2008 world stock market crash, the whole world woke up to regulation, corporate governance and sound business values. IT’S ALL ABOUT VALUE “Valuation is now seen in terms of, what is a company? - whether private or listed - and how does it grow
// WE LOOK AT THE SERVICES WE OFFER AS A LONG-TERM RELATIONSHIP WITH CLIENTS. YOU ARE DEALING WITH THE HEART AND SOUL OF A COMPANY, AND THE HEART AND SOUL OF A HIGH-NETWORK INDIVIDUAL // 28 / www.enterprise-africa.net
its wealth? It’s all about value, and valuations play a key part in this. “And then you’ve got the whole issue of transparency and reporting to make sure everything is correct for the stakeholders. “Up to fifteen years ago valuations were a kind of old man’s profession and career. But now it’s become a highly demanding and sought-after profession where many complex issues need to be resolved in terms of fair value whether for sale, mergers and acquisitions or financial reporting.” A one stop shop across highly varied, often complex segments of the economy, TVG’s team of experts perform valuations covering the full segment in the property space, movable assets like plant & machinery and works of art amongst other specialised assets for projects of any type or size throughout South Africa, and into Africa, the Indian Ocean Islands, and the UAE. The portfolio spread is impressive; covering virtually every sector in the economy which includes commercial and industrial, hospitality, mining, banking, agriculture and many others. “We are one of the few valuation companies - certainly in South Africa and probably in Africa - that offers the full gambit of valuation service for property (high end residential, commercial, industrial and retail), plant, machinery, equipment and technical assets and works of art covering art and antiques including jewellery,” says Commins, TVG Founder, with a strong background as a CEO, and also consultant to large international companies ranging from finance to construction. GOING GLOBAL Established in 2007, the Group has grown from a Cape Town-based operation to become a national, and global operation, with offices in Durban, Johannesburg, Port Elizabeth, Dubai, and Lagos, Nigeria with others to be announced soon.
// VALUATION IS NOW SEEN IN TERMS OF, WHAT IS A COMPANY? - WHETHER PRIVATE OR LISTED - AND HOW DOES IT GROW ITS WEALTH? IT’S ALL ABOUT VALUE, AND VALUATIONS PLAY A KEY PART IN THIS // “We started from a small base and grew accordingly, offering a package of valuation services where we could see there was need and market potential.” It is crucial says Commins, for individuals, boards, shareholders and investors to rely on the soundness of valuations. “They need robust and credible valuations, and we build relationships through trust and integrity in the best interest of our clients.” Twelve years on, does The Valuator Group now rank as one of South Africa’s leading independent valuation business? “I would very much say so as one can see from the companies we work for mentioned on our website under references.” TVG’s one stop shop offers specialisation and convenience. Cost-effectiveness too. “Take a factory in need of assessing for insurance purposes, its two main assets - the building, and plant and equipment. “The valuation can be undertaken by two different companies, or by our one stop shop, offering both expertise and cost benefits. “With the types of client we work for, and the spread of sectors, that’s the uniqueness we offer.” Operating in both market and insurance segments, TVG valuers use personal expertise, experience, extensive research and acceptable
THE VALUATOR GROUP
methodology in accordance with International Valuation Standards to attain realistic values of assets. “Many people think that insurance values are the same as market values,” says Commins, “but of course they are completely different. “There is no international obligation to have your assets valued for insurance purposes, other than what your insurance needs are but it is important that clients are comfortable that their assets are accurately valued at all times. “But for market purposes, particularly for financial reporting if you are a listed entity, one requires assets to be valued according to IFRIS regulations. And with all that’s been going on, accounting firms are now themselves loathed to take and value specialised assets, so they get us to do this for them as professionals.
“BROKERS LOVE US” “Brokers are our biggest clients - they love us simply because they want their clients not to have issues down the line.” But if detached from stringent market-place obligations, the importance of precise valuations in the insurance sector cannot be overstated. “Insurance companies are very quick to apply their average clause, a complicated formula that effectively means the client is under-insured in the event of a claim.” So why take that risk? Far better says Commins, to have insurancerelated assets valued every year, a service The Valuator Group offers with its low-cost Five-Year Long-Term Assistance Plan. This ensures assets are correctly valued during this period, with the fee effectively spread over the five years, or longer as negotiated.
“It gives everyone peace of mind, both the broker representing the client, the insurer, and most importantly of course, the client. “We believe valuation shouldn’t be a one-off, it should be a relationship developed between us and the client over a period to maximise the service and costs.” WATERPROOFED QUALIFICATIONS A MUST And that relationship should be underpinned by the highest professional qualifications. “Clients should ensure that their Valuer or valuation company is not only qualified but registered with the correct bodies such as the South African Council for Property Valuations Profession, the South African Institute of Valuers, or from an international perspective, the Londonbased, internationally accredited Royal
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INDUSTRY FOCUS: FINANCE
Institution of Chartered Surveyors. “The company should also provide valuers who have knowledge and experience in carrying out valuations for specific assets, such as aeroplanes, classic cars, jewellery, antiques and fine art. It’s important to marry the valuer to the required field. “With a top specialised division covering many different categories Fine Arts valuations has grown substantially over the last five years where today we assist clients selling collections, and since we are paid commissions by the chosen platform, whether a gallery, auction house or whatever, often at no cost to the client.” While the property market is highly regulated, fine arts is among those in the asset space where there are only a few accredited qualifications. “It all comes down to experience, and in art you need a whole range of specialist experts. And we have got the right people - a key factor.”
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MOVING ON Expanding from its strong valuations’ presence, TVG is looking into adding additional related services with its initial focus in the mining sector. “There is also a lot of opportunity on the risk advisory side as well which we are looking at,” says Commins. TVG has just completed a valuation case involving a listed mining house closing a mine and selling off the moveable assets. “Following a dispute between the purchaser of the plant and equipment, and the mining house, we were employed by the attorneys to put our estimate of fair value on the table to sort out the dispute. “So, valuations are not just for market or insurance purposes - there are other reasons why valuations are needed,” explains Commins. TVG’s global expansion has seen offices opening with success in Nigeria
and Dubai. “Dubai is a different market to what we are used to, with neither companies nor individuals paying tax, for example.” The Dubai operation was prompted by the oil crisis when low prices awakened many Middle Eastern investors to the dangers of having all their eggs in a single basket. “They were looking to expand their investment base, and a lot were looking at Africa. We wanted to be there, holding the hands of potential investors, particularly if there was not a reputable financial services company behind the particular deal. “We also wanted to take advantage of the Middle East market itself - and the potential there has still to be realised. It’s a difficult market, however, we are there but do need strengthen our team and are looking for key individuals to join us.”
THE VALUATOR GROUP
AFRICAN OPPORTUNITIES In Africa, aside from Nigeria and the DRC, the Group has a representative in Mauritius, and will be shortly setting up in Namibia and Ghana. “While Mauritius is a very small country with just over a million people, it has been very successful in setting up a financial services base with very attractive tax rates for both individuals and companies. “A lot of corporates have set up in Mauritius and running their head offices from there. We are looking not only at the Mauritius market - which itself is quite small - but also the spin offs from corporates that have set up there in sectors from mining to
// AT THE END OF THE DAY, IT’S ALL ABOUT PERFORMANCE AND VALUE //
hospitality and with a lot of operational entities in Africa. “Our aim is to have a footprint right throughout Africa and the Indian Ocean Islands.” While the Group focuses on valuations, whatever the transaction, there has to be a value attached to a business, whether based on income or net asset value, says Commins. “And we are there as a wholly independent, arms-length valuation company, with no interest whatever in the deal, from either a sellers or purchasers perspective. “We look at the services we offer as a long-term relationship with clients. You are dealing with the heart and soul of a company, and the heart and soul of a high-network individual.” Clients, stresses Commins, do not want matters of high confidentiality “travelling around the world. They want to trust you and be able to work with you and your team.”
BOOM TIME FOR TVG Meantime the South African economy is still battling with economic growth, low or non-existent, tax revenue collection repeatedly below forecasts, and debt levels increasing at alarming rates. But the valuations profession is a sector for all seasons, an indispensable precision instrument for economic activity, veracity, governance, and ultimately, success. “We are very fortunate,” says TVG’s Group CEO. “In the current political and economic environment, South Africa is going through some big challenges, but we have been booming for the past two or three years. “Our business is not bullet proof, but in bad times and good times, there’s always going to be the need for valuations. At the end of the day, it’s all about performance and value.”
WWW.THEVALUATOR.CO.ZA
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ATTACQ
Results Sky-High
as Waterfall Takes Shape PRODUCTION: Timothy Reeder
Attacq is among South Africa’s premier REITs, and has been responsible for some of the major projects in the country in recent years. Phase one of the iconic Waterfall City precinct has just been launched, to great fanfare, and has contributed hugely to results which continue to defy the prevailing economic mood in the country. 32 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
// WATERFALL FEATURES EVERYTHING YOU WOULD EXPECT IN A VIBRANT, MODERN DESTINATION AND EMBRACES URBAN LIVING TO THE FULLEST //
Attacq MAF Woolworths pan
34 / www.enterprise-africa.net
//
“Attacq is a premier property company that delivers exceptional and sustainable growth,” outlines the South African giant of its overarching mission. Targeting exceptional and sustainable growth, the business has two focus areas: investments and developments. Investments are made up of completed buildings held directly or indirectly while its properties, propertyrelated rights and land encompass office, mixed use, and light industrial properties and developments. Focussing on its four key market sectors of retail, office, industrial and hotel, Attacq has amassed an enviable portfolio which numbers such landmark constructions as Lynnwood Bridge Precinct and Glenfair Boulevard in Pretoria, Garden Route Mall in George and the MooiRivier Mall in Potchefstroom, all having received glowing reviews and caused reverberations throughout the country. WATERFALL CITY PROGRESS The headline-grabber in the Attacq armoury though is, without question, the immense Waterfall City and Logistics Hub set between Pretoria and Johannesburg. “Waterfall is a signature mixed-use development located in Gauteng, South Africa’s commercial centre,” Attacq explains. “It features everything you would expect in a vibrant, modern destination. It embraces urban living to the fullest with offices, residential, retail, a logistics hub, schools, hotels, a hospital, parks, restaurants, entertainment and more.” Having acquired the development rights to Waterfall City in 2008, Attacq has never wavered in its quest to create a leading Central Business District (CBD) for Gauteng. “The Waterfall development consists of Waterfall City, an integrated city that works, alongside Waterfall Logistics Hub; this is Gauteng’s logistics hub of choice, and includes light industrial and warehousing,” the company explains. “It is a truly connected hub, a fully-integrated
ATTACQ
lifestyle which offers a complete worklife package. “The design is inspired by the contemporary principles of walkable, energised, mixed-use environments to create a truly first-class city.” Rapidly progressing from being ambitious plans on paper to a worldclass reality, last month brought news of real progress in the high-rise residential aspect of Waterfall City with the launch of the Ellipse Waterfall. This aspect will consist of 590 apartments across four towers, namely Newton, Kepler, Da Vinci and Galileo, and with work is set to be completed in 18 months’ time, there are forecast to be 10,000 people installed at completion. “The breath-taking architectural design at Ellipse Waterfall complements the beautiful modernity of Waterfall City,” Attacq says. “Each striking
apartment features ultra-indulgent modern finishes, eco-friendly features, high ceilings and airy windows that bestow unparalleled vistas of the Gauteng skyline.” Giles Pendleton, Chief Development Officer at Attacq, described the importance of breaking ground on this aspect of the overall project, as the full vision begins to really take shape. “We believe that Ellipse is poised to redefine the live, work, play ethos in Gauteng,” he outlined. “Based on the premise of excellence in infrastructure, safety and sustainability, Waterfall is a fully contained, mixed-use node that encompasses a variety of lifestyle, residential and commercial needs. “Ellipse is at the heart of this exciting new metropolis offering the only luxury high-rise apartments in the precinct.”
Phase two of the development will involve construction of the flagship 16-storey Cassini towers, while the third will entail the construction of the 12-storey Galileo tower and will be completed nine months after Cassini. “Waterfall’s location is unparalleled,” Melt Hamman, Chief Executive Officer of Attacq, added, going on to detail the finer points of the precinct’s draw for a diverse crowd of clients. “Not only is it situated on the business corridor between Johannesburg and Pretoria, but it is supported by two Gautrain bus routes, private schools, a private hospital and features world-class lifestyle and leisure amenities on its doorstep. This makes Ellipse a compelling proposition to discerning investors looking for long term capital growth and secure rental yields.”
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INDUSTRY FOCUS: FINANCE
EXTRAORDINARY RETURNS Predictably, the Ellipse Waterfall development has smashed market sales expectation, in spite of the prevailing economic challenges which continue to dog the country. Over 80% of the 272 apartments in the Newton and Kepler towers have already been sold and a waiting list for the final two towers is steadily growing, marking a total value of R550 million in sales to date. The progress at Ellipse has been a key driver to Attacq’s ability
// ATTACQ IS A PREMIER PROPERTY COMPANY THAT DELIVERS EXCEPTIONAL AND SUSTAINABLE GROWTH //
Waterfall City & PwC Aerial
36 / www.enterprise-africa.net
to report thriving performance throughout this year. Attacq’s first taste of financial success was the interim dividend it reported of 40.5 cents per share for the six months ended on the 31st of December 2018, well in line with guidance. At the same time, the group’s distributable earnings per share were revealed to
have increased by 9.5% to 45 cents per share, largely as a result of the substantial additional income and growth in the dividend sparked by the completed developments. “We are very pleased with our half year results and the progress made in the transition from a capital growth business model
ATTACQ
We execute each project, regardless of its size, with the same meticulous attention, endeavouring to high quality workmanship through careful selection of skilled artisans and specialized contractors and since its inception our company is well renowned for its commitment to quality.
Hotels, Leisure & Casino’s • Sports Facilities Warehouses & Production Centres • Civil Works Shopping Centres & Off ices • Education Buildings Education & Residential Buildings • Cross Boarder Contracts • Heritage & Public-Art Projects
Witkoppie 64-Ir, Boksburg • 011 323 2800 • thusangm@akhane.co.za • www.akhane.co.za
// WE REMAIN FOCUSED ON WATERFALL AS IT IS ATTACQ’S UNIQUE ENABLER FOR DELIVERING FUTURE GROWTH // into a REIT,” said Hamman. “Our focus remains on the four key value drivers underpinning our business model, namely the South African portfolio, developments in Waterfall, investment in MAS and our Rest of Africa retail investments. “We remain focused on Waterfall as it is Attacq’s unique enabler for delivering future growth,” Hamman underlined. These encouraging signs at the turn of the year were converted into quite remarkable double-digit growth six months down the line, seeing this foremost South African
REIT lift its full-year dividend per share to 81.5 cents for the year ended June 30, 2019. It represents year-onyear growth of a phenomenal 10.1%, and comfortably exceeds the market guidance provided in September 2018 of between 7.5% and 9.5%. “By combining living, working and lifestyle spaces, we have achieved a winning formula at Waterfall, the success of which is evident in the 13.1% increase in trading densities for the Mall of Africa as well as the exceptional interest from buyers for our first high-rise residential development, Ellipse
Waterfall,” summed up Melt Hamman, as he explained how bringing Waterfall City closer to completion have impacted Attacq’s entire bottom-line. “Overall retail trading densities in Attacq’s SA portfolio were up 6.8%, which is great given the tough consumer and retail market locally. We are pleased with the results and are excited about the future of Waterfall.”
WWW.ATTACQ.CO.ZA
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MARSH AFRICA
Bringing Order
to Chaos PRODUCTION: Timothy Reeder
Marsh needs no introduction - it is universally renowned as the global leader in insurance broking and innovative risk management solutions, delivering across 130 countries worldwide. For nearly 150 years Marsh has grown by helping clients anticipate and meet the challenges of changing times and technologies, and in Africa, specialises in providing clients with the intellectual capital and industry experience to unlock the opportunity in risk.
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Since 1871, clients have relied on Marsh for its unique brand of trusted advice, as they seek to have their interests represented in the marketplace, to make sense of the increasingly complex world of today, and, perhaps most crucially, to help them turn the risks they face into new opportunities for growth. In today’s increasingly uncertain global business environment, Marsh is on hand to help clients to thrive by enabling them to anticipate, quantify and more fully understand the range of risks they face. On offer are the full spectrum of services, spanning risk management, risk consulting, insurance broking, alternative risk financing and insurance programme management. “Our more than 35,000 colleagues work on behalf of our clients,” Marsh elaborates, “who are enterprises of all sizes in every industry, and include businesses, government entities, multinational organisations, and
individuals around the world.” Marsh has some 40 local offices across the Middle East and Africa, from which it leads the industry through its highly valued insight and advice which have benefitted many of the region’s leading companies, family businesses, international organisations and government/private institutions. “Together, we are creating a benchmark of excellence in the risk and insurance industry by harnessing our global and domestic expertise drawing from over 40 years of experience and insight from our continuously expanding operations in the Middle East and Africa,” Marsh sums up. COMBINED EXPERTISE Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (MMC), the leading global professional services firm in the areas of risk, strategy and people that brings together the unique
capabilities of Marsh, Guy Carpenter, Mercer and the Oliver Wyman Group, and the association equates to the combined expertise of some 75,000 people worldwide, and annual revenue exceeding $15 billion. “The MMC Advantage is our unique approach to harnessing the collective strength of our businesses to deliver the full value of Marsh & McLennan to clients,” Marsh explains. “We empower our colleagues to collaborate across businesses and borders to help organisations navigate their greatest risk, strategy and people challenges and seize new opportunities. “We work with clients of all sizes to define, design, and deliver innovative solutions to better quantify and manage risk,” continues Marsh of its core activity. “To every client interaction we bring a powerful combination of deep intellectual capital, industry specific expertise, global experience, and collaboration.”
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INDUSTRY FOCUS: FINANCE
// IN UNCERTAIN TIMES, VIGILANCE AND BROAD, SYSTEMIC RISK ANALYSIS COUPLED WITH POLITICAL AND TRADE CREDIT INSURANCE WILL BE VITAL TO MINIMISING THREATS // This word collaboration comes up time and again when examining the root of Marsh’s success, and bleeds right through the whole organisation. “Our greatest assets in our business,” summed up Marsh Africa CEO Jurie Erwee in conversation with leadershiponline.co.za, “are our client relationships, which have been built around our clients’ needs.” Marsh
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SA’s CEO, Spiros Fatouros, meanwhile, underlined the importance of expertise in building up the necessary trust to allow Marsh to dominate the industry. “Marsh’s global footprint has taken over 25 years to build and allows us to service clients locally around the globe,” he stated. “People don’t often care if you’re the biggest, it’s always about the service you provide. The real benefit of working with Marsh is the tailored local delivery that is leveraged off a global network of experts.” Jurie Erwee explained how the combination of innovation, collaboration and forward, global thinking will people Marsh forth in its next phase. “The spirit of innovation is firmly entrenched in our DNA. Marsh has pioneered a great number of concepts including the birth of insurance broking in the 19th century. Africa offers a lot of promise long term and we are here to continue to invest. We will see a return on those investments as long as we continue to work through the challenges we face as a country and business collectively.”
POLITICAL RISK Insurance is an organic business, and one of Marsh’s most important attributes is the ability to identify and adapt to the types of risk likely to become increasingly prevalent. When we took a look at Marsh last year, it was the findings from a report by TheCityUK and Marsh which pointed to cybercrime as the number one risk for financial and related professional services firms. Marcus Scott, Chief Operating Officer of TheCityUK, explained that, “cyber security is now a major risk demanding board-level oversight as companies find themselves under siege from cyber-attacks. In fact, for many of our members it may well be the biggest single risk. It’s essential for all boards to have robust governance systems in place to manage these risks.” The passing of another year has brought with it a new focus, however, and rising geopolitical tensions and protectionist sentiments, coupled with ongoing trade disputes, are leading to increased uncertainty and risk for
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multinationals with direct foreign investments, Marsh finds. Based on data from Fitch Solutions, a leading source of independent political, macroeconomic, financial, and industry risk analysis, Marsh’s Political Risk Map 2019 rates more than 200 countries and territories on the basis of short- and long-term political,
// OUR MORE THAN 35,000 COLLEAGUES WORK ON BEHALF OF OUR CLIENTS, WHO ARE ENTERPRISES OF ALL SIZES IN EVERY INDUSTRY //
economic and operational stability and gives insight into where risks are most likely to emerge. Some of the key findings include the possibility of escalating trade tariffs and geopolitical disputes between the US and China, increasing the risk of further Chinese retaliation and US counterretaliation. Export heavy economies, like Germany, are likely to be impacted, while the UK’s negotiations to exit the European Union continue to loom large over the political risk landscape. Encouragingly, the African region once again saw some of the biggest improvements in political risk, but also some of the most notable deteriorations. South Africa, Mozambique, and South Sudan all fared better, while uncertainty around elections and deteriorating economic
and humanitarian conditions are causing concern in Zambia, Mali, Algeria, Tunisia, Cameroon, and the Central African Republic. “Businesses with direct foreign investments are facing an unprecedented breadth of challenges today from emerging economies to so-called developed economies,” said Evan Freely, Global Practice Leader, Credit Specialties, Marsh. “In uncertain times, vigilance and broad, systemic risk analysis coupled with political and trade credit insurance, will be vital to minimising these threats.”
WWW.MARSH.COM
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SATIB INSURANCE BROKERS
African Tourism’s
Primary Risk Partner PRODUCTION: David Napier
SATIB Insurance Brokers is the industry leading organisation handling all aspects of insurance for the tourism, leisure and hospitality sectors across Africa. Whether it’s hotels, B&Bs, safari organisers, bungee jump businesses, tour operators or game drivers, SATIB is experienced in all aspects, and is looking forward to a bright future where African tourism represents one of the world’s fastest growing markets. 42 / www.enterprise-africa.net
INDUSTRY FOCUS: FINANCE
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September was tourism month for South Africa. Designed to provide a month-long, heightened focus on the significance of the tourism industry in South Africa, the Department of Tourism put on several events to highlight the amazing tourism spectacle that South Africa boasts. In line with the United Nations World Tourism Organisation’s (UNWTO) World Tourism Day – which takes place on September 27th – 2019’s celebrations in SA centred around KZN. The home of two world heritage sites, like the rest of the country, KZN has so much to offer international and domestic tourists, and many businesses have grown out of the demand on the economy from travellers. Over the past decade, South African tourism has become a superior contributor to the country’s economic performance. This growth node has been one of the shining lights in what has been an otherwise unpredictable economy.
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In July, Stats SA released new figures on the tourism industry confirming its importance. According to the official statistics company, one in every 22 South Africans is employed in some way by the tourism sector. In Cape Town alone, some 300,000 jobs are dependent on the industry. In 2018, just under 16 million people visited South Africa from foreign countries. This is a fantastic gradual improvement, coming up from less than seven million in 2004. Almost 95% of visitors cited vacation as their primary driver for visiting South Africa, and the government is keen to continue building a reputation on these strong figures. Overall, tourism is responsible for 1.5 million jobs in South Africa and a R425.8 billion contribution to the economy. According to the World Travel and Tourism Council, this makes South Africa the largest tourism economy on the continent. But, while the success of the sector is clear to see, Tourism Minister
// SATIB’S FOCUS IS STILL THE ENTIRE TOURISM SECTOR // Mmamoloko Kubayi-Ngubane is keen for progress to maintain. On Tourism Day, she spoke to SABC and detailed some concerns regarding the future of the industry. “For July, our numbers dropped. Globally, tourism is growing. Everybody is seeing more people moving, but we are not capturing that as Africa as a whole. If you look at Asia-Pacific and Europe, they are sitting at more than 300 million visitors annually. In Africa, we are sitting at 67 million as a continent. South Africa attracts 10.4 million and that is not good. We have so many attractions, we have beautiful people who love to host people, we have different packages - the Big 5, nature reserves, coastal, townships –
SATIB INSURANCE BROKERS
so we are now analysing the reasons that people sometimes choose not to come. We fight for the visitors that come here as we are competing with everybody across the world. If visitors don’t come, we lose jobs and we lose economic growth. Tourism is a sector that has been growing very strongly, contributing 2.9% to GDP but we could be contributing much more. The entry requirements to start businesses in tourism are relatively low – anyone can get involved whether it’s women, young people, black, no education. We
// OUR PULSE IS OUR CLIENTS AND THAT IS WHERE WE CAN ACTIVELY GAUGE HOW THE ECONOMY IS REALLY PLAYING OUT //
as South Africans must consider the impact of our behaviour on the image of our country. Our appeal is please think about the impact of your actions.” If tourism is to continue showing little or no growth, and international tourists begin to shift their attention to other developing regions of the world, the economic impact on South Africa, and Africa, could be catastrophic. One company that will be hoping for a shift in trends and further growth in the sector is SATIB Insurance Brokers. This is a company that perfectly characterises the wide scope of activity that is encapsulated by the tourism industry. SATIB is a specialist risk solutions business, delivering products and services for corporate and private enterprises operating exclusively across the African tourism sector. For SATIB, the past two years have been extremely exciting and busy. Operating across both tourism and financial services – two of the most important
industries in Africa – this is a business with real reach and tangible impact. Founded in 1990, SATIB began life as an insurance business that focussed on the protection of valuable wild game around Africa. It was a family business founded by Brian Courtenay but the range of services quickly grew and demands from the market saw SATIB invest into new product lines, new geographic markets, and new strategies. Today, SATIB is a true industry leader, boasting a presence across nine African countries, and operations in even more. “SATIB’S focus is still the entire tourism sector,” says Managing Director, Dewald Cillié. “Wherever possible, we would like to be in every single country in Africa,” he adds. Cillié, an industry veteran who took the top job at SATIB in January 2018, told Enterprise Africa last year that the company was searching for growth through acquisition and merger activity. So far, this strategy has paid off and the
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INDUSTRY FOCUS: FINANCE
company’s growth has been unhindered by any negativity in the tourism space. “I am focussing on exponential growth for the business and getting back to personal client service, and that is what I want the business to target,” he said. “Our pulse is our clients and that is where we can actively gauge how the economy is really playing out. The feedback so far has been great, but the stronger the Rand gets, the lower figures we see with international travel.” In 2018, SATIB opened a new office in Mauritius in order to expand its reach into the Indian Ocean Islands. The company in Mauritius is named African Risk Transfer (ART) and is headed up by Gavin Courtenay. The business is a reinsurance brokerage– very similar to SATIB’s South African operation. In SA, the company expanded its reach into the smaller-scale bed and breakfast market by acquiring a stake in
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Olive Insurance Brokers. “Olive Insurance Brokers is a fantastic and well-known business within its market. It was a strategic decision to either set up our own, or partner with someone who already has a fantastic reputation in that
industry,” said Cillié. This specialist business exposes SATIB further to tourism in South Africa’s rural communities. These areas present large opportunities as many tourists come to the country looking for a more
SATIB INSURANCE BROKERS
// THE DRIVE BEHIND THIS WAS TO GET A BIGGER FOOTPRINT, AND ACCESS TO HOUSEHOLD, CAR AND SMALL BUSINESS RISK PRODUCTS THAT OUR EXISTING CLIENTS MIGHT NOT HAVE // authentic African offering – away from the major metros and cityscapes. A few years earlier, SATIB announced a merger with firstEquity Group – a South African insurance broking business established to fill a gap in the market for a professional independent broker with a local feel. The merger saw SATIB able to bring new services to its existing clients. While remaining focussed on its traditional tourism offerings, SATIB gained a much deeper product portfolio and a new ability to service its existing clients more thoroughly. “This includes a merger with a strategically placed PSG office here in Johannesburg – the Randburg branch. The drive behind this was to get a bigger footprint, and access to household, car and small business risk
products that our existing clients might not have. We are also busy setting up a PSG wealth business to take care of our client’s life, health and retirement interests. It’s given us a bigger footprint inside South Africa and allows SATIB’s historic and unique products to be launched to a bigger distribution base,” said Cillié. Since initiating this strategy of inclusive growth and expansion, SATIB has thrived – but all of the positivity, the whole way down the value chain, comes from the success of tourism, leisure and hospitality as a whole. According to Minister KubayiNgubane, the unsavoury images that are projected around the world need to be stemmed. Unruly protests, violence, crime stats, blackouts, water shortages,
unemployment – of course, the general public and the government must work together to reduce and eliminate these issues. For SATIB, as long as tourism businesses continue to thrive, there will always be a need for protection against risk. And this means there will always be a need for specialists who understand each sector of the industry in-depth. With economic predictions suggesting that the country could be entering a more positive period – 3.1% GDP growth in the second quarter, and the promise of further FDI from the President – perhaps the tourism sector can look forward with positivity. “Overall, things are positive and people are now looking to the future,” says Cillié, signalling that SATIB is encouraged about the path forward.
WWW.SATIB.CO.ZA
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GRINAKER-LTA CONSTRUCTION
A New Dawn for 130-year-old
Construction Giant PRODUCTION: Manelesi Dumasi
In keeping with the wider construction industry in South Africa, Grinaker-LTA Construction has faced significant challenges over the past few years. But now, the company is looking forward to an exciting new dawn as it finalises a deal to take it under new ownership. Enterprise Africa talks to Operations Executive, Eugene Schieman about the strength of this industry titan. www.enterprise-africa.net / 49
INDUSTRY FOCUS: PROPERTY
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There’s a feeling of excitement and new hope coming out of Grinaker-LTA Construction. The Boksburg-based construction firm, recognised across the industry as one of the biggest and best, has been purchased by the Laula Consortium – a black-owned holdings company – ending a period of uncertainty experienced over the past two years after Aveng announced it would dispose of various non-core assets. “It’s definitely a new dawning and we want to align our current ideas with the new management,” says Operations Executive, Eugene Schieman. In January 2018, indebted Aveng announced it would sell off a number of non-core companies including GrinakerLTA Construction in a bid to raise cash to service debts. The R100 million deal was designed to see Grinaker-LTA Construction put into the hands of a new shareholder that could take the business forward responsibly. Aveng CEO Sean Flanagan commented: “We are very pleased
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to have found the right partner in Laula to unlock Aveng Grinaker-LTA Construction’s full potential and further enable its growth. The nature of the transaction will ensure a seamless transition for employees, customers and suppliers while making a sustainable contribution to transformation of the construction industry.” For Grinaker-LTA Construction’s 4000 people, things are looking bright and the future holds much opportunity. “We are very excited – it has been 20 months in the making,” says Schieman. “It was only announced at the start of August who the new shareholder would be, and that is still subject to the competition authorities approving the transaction. As much as there is excitement in the camp, the deal is subject approval from the competition commission because of the size and nature of the transaction. For now, we are in a position where we have been sold but we are in a hands-off state until the transaction receives final approval.” It’s a sense of relief and excitement
for those inside the business as a number of other deals have fallen through. Reports suggest that deals with Kutana Construction and other big-name firms failed to materialise. This new deal brings certainty for the company, along with a new structure and fresh strategy. “Being part of Laula will allow us to come to the table as a transformed business,” says Schieman. “Creating a tier one, black-owned entity is good for the construction industry and shows the industry is turning the corner as we will have black-owned business that can unpack and deliver major infrastructure.” BUILDING A NEW REP The association between GrinakerLTA Construction and its long-term owner, Aveng, has caused concern for stakeholders in the business. Between 2008 and 2018, Aveng’s share price imploded, shedding more than 99% of its value. The decline in the construction industry combined with a number of other issues caused a business, which
GRINAKER-LTA CONSTRUCTION
previously boasted annual revenues of more than R50 billion, to be value at less than R150 million. “Unfortunately, Aveng has put out poor results and we as Grinaker-LTA have had no opportunity to respond,” says Schieman. “When we were described as a ‘non-core asset’ it makes it difficult to talk to a client who then views us as part of the non-core. The media has put us in the same basket as struggling companies and those that have entered business rescue. People read about us being disposed of and struggling but we haven’t had the opportunity to get out there and have our say. “We are optimistic as we now have a voice and we can rewrite the narrative of a transformed business that wants to take advantage of opportunities – something that the country at large has been asking for. Most of the large companies do not represent the demographics of the country and we want to make sure the transformation agenda is not something we aspire to but it is something that is ongoing throughout the business. For me, it’s a very positive time and we are very excited, looking forward to the future and especially the next two months.” Fortunately, the company has a strong and historic background to build from. Its brand is extremely well-recognised and will forever be associated with successful major projects, all over South Africa. “It is our 130th anniversary and there are not many firms across South Africa that can boast of such a rich history - we have dominated the construction space for a century, but celebrations have been put on hold until we get this final approval - we should have some announcement and clarity in November,” says Schieman. In the middle of Sandton, acknowledged by most as Africa’s richest square mile, Grinaker-LTA Construction has conquered the landscape. “We have developed so much there,” admits Schieman. The
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INDUSTRY FOCUS: PROPERTY
headquarters of Sasol (R1.4bn) and Old Mutual (R1.4bn), The Marc shopping centre (R1.8bn), and the ongoing development of the Leonardo (R1.3bn) – the tallest building in Sandton - are some of Africa’s most impressive mega structures and have all been delivered single-handedly by Grinaker-LTA Construction. “Our ability to deliver on time, puts us in the space with the largest contractors,” confirms Schieman. RIGHTSIZING THE GIANT South Africa’s construction and building industries have been hit hard in recent years, with many companies struggling following the 2008 global financial crisis, or left without a pipeline after the boom following the 2010 FIFA World Cup. The legacy issues stemming from that tournament have also damaged the reputations of some of the country’s large players and, with the economy hitting several technical recessions since then, re-focusing strategy and reorganising to streamline operations has been essential.
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“The construction industry follows the economy and when there is a slump in the economy, this industry feels it first and foremost,” details Schieman. “One of the things that this business has enjoyed is volume of work – profits are linked to volume. With the dip in the order book, we have struggled. We have had to right-size the business and press reset to think differently, especially with the change that we are experiencing. Investors are not willing to spend and FDI has been hindered. There is a lot of change happening in the economy and the result is a delay from investors who are waiting for the next moves from the government – we feel that. Where we would expect some contracts to be awarded, they are holding back or gone to retender. That has impacted our order book and as a result, our fixed cost is suffering. You can’t have a bloated overhead because the business was geared to do billions. Because of the lack of order book, we have trimmed down from an overhead perspective to be in-keeping with the changing times
where we need to think nimbly.” This means de-corporatizing the business, cutting unnecessary levels of management, reducing job duplicates, and moving much quicker to pick up trends ahead of the curve. Grinaker was a listed entity before merging with LTA, which was also a listed entity, and Grinaker-LTA was then acquired by Aveng which is also a listed entity – “we have always been a massive company with corporatized structure,” admits Schieman. “We are looking forward to nimble, quick thinking where we are much more responsive and much more proactive in anticipating change, therefore being able to strategize based on where the economy is going or where our clients want to go.” Grinaker-LTA Construction was previously a R7 billion turnover business but the new owners are looking to sustain at around R3 billion, rather than going out and trying to redevelop the order book in what is now a tight and highly
GRINAKER-LTA CONSTRUCTION
competitive market. One part of the Laula Consortium is Oteo Investment Holdings and CEO, Mlu Manci – who will take up an interim role as Executive Chairperson at Grinaker-LTA when the transaction is complete. “We have no intention of growing too fast,” Manci told Engineering News Online. “Our main aim is to use the foundations built at Grinaker-LTA over the past 117 years to create a sustainable construction business that will endure for another 100 years.” Schieman agrees, stating that a more efficient business will bring benefits for clients. “Our new owners are very entrepreneurially minded and we want to adopt that approach. We need to be nimble and agile, and we are now a much leaner outfit with a much leaner overhead in terms of how we manage. This smaller entity, that makes decisions much quicker and can respond to changing environments quicker, is something that we are looking forward to as we have not behaved in that way in a very long time.”
ALWAYS CONSTRUCTING While the transaction is finalised and while the business completes its rightsizing activity, work on the ground continues. A large project pipeline lays ahead for Grinaker-LTA and, with operations around the country, Schieman suggests that the company remains extremely busy. “There’s expansion at the Heineken brewery in Johannesburg where we have been heavily involved since that brewery since it started and we have a great relationship with the client; we are working for Telesure at the Auto & General building where we are handling refurbs on the building we originally built; we have been awarded a UIS project in Pretoria, a car park and eight storey building; we are busy with work on the N4 which will soon be complete; we’ve just finished a stretch of road on the N1 near Ventersburg; we’ve been awarded a R400 million student accommodation design and build in the Eastern Cape; we have an excellent relationship with Aspen
Pharmacare and we are doing a lot of work for them, we have been on their facility for past five or six years; in KZN, we are building a TVET college and we have work with Transnet; in Cape Town, we have some framework contracts that we are doing for the City of Cape Town and the Department
// WHERE WE WOULD EXPECT SOME CONTRACTS TO BE AWARDED, THEY ARE HOLDING BACK OR GONE TO RETENDER. THAT HAS IMPACTED OUR ORDER BOOK AND AS A RESULT, OUR FIXED COST IS SUFFERING// www.enterprise-africa.net / 53
INDUSTRY FOCUS: PROPERTY
of Education; these are the sort of projects that we are busy with and they keep us focussed and sharp. We want to show that we can be disciplined enough, with the competence and skill, to manage business successfully.” The Leonardo building - a 55-floor, approximately 240m luxury skyscraper – is a jewel in the crown of Sandton, and Grinaker-LTA will soon complete the major project. “We have another few weeks there - we are trying to kick the ball through the posts. We have conducted practical
completion inspections for 85% of the building and we are busy prepping the last bits on the upper floors. The development sold out early on, and it’s been a long haul,” says Schieman. But in the future, it will not be only globally iconic structures that GrinakerLTA works on. Following the rightsizing of the company, Schieman confirms that smaller contracts will also now be pursued. “If there is work out there, we want to be able to tell our clients we can provide a solution regardless of whether it is a large or small contract,” he says.
// THE NATURE OF THE TRANSACTION WILL ENSURE A SEAMLESS TRANSITION FOR EMPLOYEES, CUSTOMERS AND SUPPLIERS WHILE MAKING A SUSTAINABLE CONTRIBUTION TO TRANSFORMATION OF THE CONSTRUCTION INDUSTRY //
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Many mid-tier players have taken on mega projects in recent years as the industry has looked for reputable businesses that can step up. But with these companies looking up, and Grinaker-LTA looking down, the market is getting crowded. “The reason we are starting to consider ourselves as a medium-to-large player is because we are also playing in smaller markets. For example, the Telesure job is R20 million and we want to be agile enough to be in this space because there is a lack of work in the top end. Mediumsized companies tend to play in the subbillion market and we want to participate in that market and compete in the space. “It’s extremely competitive,” he adds. “The smaller players have much smaller overheads and we have looked at our overhead structure to ensure we eliminate double teaming and eliminate layers of management that are not necessarily required and make us not as nimble as we need to be.”
GRINAKER-LTA CONSTRUCTION
// THE CONSTRUCTION INDUSTRY FOLLOWS THE ECONOMY AND WHEN THERE IS A SLUMP IN THE ECONOMY, THIS INDUSTRY FEELS IT FIRST AND FOREMOST // EXCITING NEW ERA Change is often resisted within big business. The upheaval that comes with new strategies, new cultures, and new business principles can scare those who are not flexible. But at Grinaker-LTA, change has been inevitable for some time. The deal to
take the company into a new future that will allow it to thrive and display its true expertise and capabilities – will bring further change yet, but this is refreshing. “As a business, we are trying to sustain what we have – something around R3 billion. We want to keep it around there and improve margins while gaining discipline and injecting excellence into the company. When the economy turns, we will be well-poised to capitalise on the opportunities that are there.” Where others have toppled over, unable to change quick enough, Grinaker-LTA is now positioned to thrive as a transformed business that boasts global quality and safety standards. “Some of the other tier one contractors have entered business rescue and are really struggling. We are not at all in that space – on the contrary. We are looking forward to an exciting new era,” conclude Schieman.
With many expecting a turnaround in the economy to begin in 2020, and many others describing the construction sector as a treasure trove that could be South Africa’s sunrise sector, the future looks bright for Grinaker-LTA and the feeling of excitement bubbling behind the scenes looks set to spread throughout the company. The word ‘Laula’ translates from Zulu as ‘control’, and with Grinaker-LTA now under fresh new control, the only way is upwards for this 130-year-old South African institution.
GRINAKER LTA
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LEGACY GROUP
Leonardo Joins A Long Line of
Legacy Luxury PRODUCTION: Timothy Reeder
Over the last 20 years, the Legacy Group has been behind some of the most exciting retail, commercial and hospitality developments on the African continent. The Group is spending big on uplifting its current prime properties, while Leonardo, about to take the crown as Africa’s tallest building, is set to officially open this month. www.enterprise-africa.net / 57
INDUSTRY FOCUS: PROPERTY
//
The Legacy Group is built on three key pillars, of the Property Development and Hotel and Resorts arms come in for the majority of the plaudits. “The Legacy brand was established by individuals who were leaders in the property development, construction and hospitality industries,” Legacy Hotels & Resorts Chairman Bart Dorrestein told us in November last year. “Their role was pivotal to the strong foundations on which the group’s success has been built.” Ever since its infancy, Legacy has been considered a true pioneer in luxury lifestyle projects on the continent, Dorrestein went on. “The founders of the Legacy Group were involved in many of South Africa’s iconic hospitality developments,” he revealed, “including Sun City, The
Palace of the Lost City as contractors, and Nelson Mandela Square, which was developed in the early 1990s.” In brief, Legacy Property Development assists Legacy and its outside clients in ensuring that projects are completed on time, to specification and within budget. Legacy Hotels & Resorts, meanwhile, operates an extensive collection of four and five star hotels, bush lodges, leisure resorts and casino resorts in key tourism and business locations throughout Africa. “Legacy offers its clients, shareholders and partners the opportunity to invest in the skills and experience of its founders and the values they aspire to uphold,” was Dorrenstein’s overall summation of the Group’s offering.
LEONARDO COMPLETION Almost a year ago now, the vast majority of the furore and excitement whenever the Legacy name was mentioned surrounded its revolutionary mixed-use development at the heart of Africa’s financial hub, Sandton. “The Leonardo promises to become Africa’s benchmark mixed use development,” enthused Dorrestein, “offering a complete lifestyle in one location. There will be some 10,000m² of offices and plans are under consideration, subject to market demand, to develop a luxury six-star hotel.” Back then, Leonardo was inching skyward, ever closer to dominating an already world-famous skyline, Dorrenstein outlined.
Committed to Delivering World-Class Bespoke Finishes The Leonardo, an iconic, superstructure, towering above all that it surrounds, personifying the very essence of distinction, its very name is synonymous, with structure, architecture, science, design, sculpture and art, and we, at Marble Classic, were afforded the opportunity, to extend our knowledge, experience and expertise on this most prestigious project. We commend Architects and Designers who had clear-cut and decisive ideas on the selection of materials for this impressive structure. Their concept reflects modernism and power in this unique edifice, and the products are chosen to satisfy that vision and with the luxury of access to extraordinary materials, such as large format tiles out of Italy and Spain, and exotic marble used for wall cladding in public areas of the Hotel as well as staircases. The interesting use of beautiful local granites on external wall applications to swimming pool copings renders the internal and external structure of this modern and elegant super-build, a timeless opulence and aesthetic beauty both inside and out. Marble Classic was privileged to work and experience The Leonardo. All staff, Quantity Surveyors, Draughtsmen, Site Foreman and Managers, Site workforce, Factory workforce, in fact, all at Marble Classic (Pty) Ltd, involved in this project, worked and experienced the Leonard, up-front and personal. It was not an easy task, and there was blood, sweat and tears, and very long days and nights, but finally the results, the Leonardo, and we were privileged to be part of this adventure. Marble Classic (Pty) Ltd, is committed to precision and consistency in the work we endeavour to execute both on-site and in our factories. We specialise in the design, supply and installation, of marble, granite, natural stone, engineered stone materials, ceramic and porcelain tiles, and porcelain slabs. We also are proficient in all types of curtain walling, and various natural stone and, porcelain tiles installation techniques. Manufacturing at our Factory is delegated to fully computerised plant machinery and equipment which adopts highly advanced technologies, in profiling and design of products. However, we cannot attribute our success to the hightech machinery and equipment alone, our factory technical staff and workforce and technicians, are specialised and experienced in every aspect of the natural stone, ceramic and porcelain tile applications and designs industry. The Legacy Group has set a very high standard in Luxury and Design, in this supreme build ‘The Leonardo’.
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Committed to Delivering World-Class Bespoke Finishes
The Leonardo - Towering Above the Rest Info@marbleclassic.co.za 011 392 6700 www.marbleclassic.co.za
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// THE REFURBISHMENT OF MANY OF OUR PRODUCTS REMAINS A FOCUS // “The development commenced on a phased basis with 33 floors, with expansion linked to market demand. The market’s response has been phenomenal, and we are now developing the building to its full potential at 55 floors, reaching 240m into the sky.” Eventually forecast to be valued at nearly R3bn, The Leonardo occupies prime real estate on Maude Street, just a stone’s throw from the Johannesburg Stock Exchange (JSE). It is set to offer a mix of residential
and commercial space including more than 200 apartments, 15,000m² of office space, a hotel and even a small retail section. Originally slated for a September 2018 finish, the developers instead opted to push the building past the 50 floors originally planned and take the tallest crown from the Carlton Tower, also located in Johannesburg, which reaches 223m and had remained the tallest building in Africa for over 40 years. While its reign may be short-lived, with a number of other
developments across the continent threatening to surpass the Leonardo’s height, Legacy will surely look to enjoy every moment of the triumph when The Leonardo opens its doors this month. “The Leonardo epitomises the ideal of a mixed-use development – a means to live-work-play in the lap of luxury, with every creature comfort and convenience at your fingertips a simple lift ride away,” commented Gijs Foden, Legacy Living Director of Sales. “We believe that The Leonardo will be
Only the best wireless connectivity for Legacy’s latest masterpiece The rise of Legacy’s latest masterpiece, the Leonardo, is the very definition of living in the lap of luxury. Residents, guests and visitors can expect a luxury coffee shop, premium business and conference centres, extravagant apartments and penthouses and so much more all while being constantly connected! Aside from the flawless architecture and elegant interior, the luxurious 234m high building is fully equipped with the latest technology. One of the most important technical requirements was that every inch of the building has Wi-Fi connectivity. To meet this demand eComX turned to the UniFi SDN Wi-Fi network connectivity solution from Ubiquiti Networks. With UniFi technology throughout the building, residents, guests and visitors will be able to seamlessly connect to the high-performance Wi-Fi network, whether it be from the parking in the basement or at the top-level floor from the penthouses. Once connected, residents, guests and visitors will be able to roam freely within the building and enjoy uninterrupted connectivity, even in the elevators! eComX has not only supplied seamless Wi-Fi connectivity but are also responsible for the security of the networks, as security is always a very important requirement at Legacy hotels. This is all centrally managed with VLANS and different SSID’s. Client isolation is enabled to protect the guests from each other, this is done on device, switch and firewall level. This state-of-the-art network was envisioned by Thomas Klingler, Group Financial Manager at Legacy Hotel Management Services. Jointly Thomas assisted eComX with the design and implementation of the network as they are experts in enterprise and hospitality ICT solutions and have been a trusted partner of Legacy for almost 20 years. Trusting them not only to deliver based on their technical abilities but also for their experience and knowledge that aesthetic appeal plays an important role in the hospitality industry. “If you can see our device without specifically searching for it, you are welcome to send us a photo’’ – Helmut Schling, Engineer at eComX eComX are experts in delivering the best connectivity solutions with a strong focus on customer service, which made partnering with a like-minded technology distributor a must – this is when they turned to MiRO for their value-added approach to distribution and their ability to help build the best solutions and deliver the product on time, every time. MiRO is amongst South Africa’s leading distributors of Wireless, Networking, VoIP, Acess Control and IP Video products. MiRO has the experience and a proven track record of supplying powerful, flexible and scalable ICT solutions and backs this up with top-notch services such as solutions planning, strong after-sales service and certified trainings. To deliver on the expectations of this world-class building, Legacy required the support of world-class service providers and wants to thank all the parties involved for their contributions to making the technically advanced Leonardo building a reality.
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the most technologically advanced, environmentally friendly building on the continent.” It’s also a necessary addition to Sandton, Keillen Ndlovu, head of listed property funds at Stanlib told BusinessLive, given the increased densification in the commercial
centre. Sandton City itself is fully let, and yet demand continues to grow for housing stock in Africa’s most highly valued hub. While other developments are on the cards, including Abland’s building of Sandton Gate on the edge of the suburb, Ndlovu said that more people
// WE BELIEVE THAT THE LEONARDO WILL BE THE MOST TECHNOLOGICALLY ADVANCED, ENVIRONMENTALLY FRIENDLY BUILDING ON THE CONTINENT //
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want to live on streets like Maude, given the proximity to their places of work and the prestige associated with the residence and its location. With The Leonardo, the Legacy Group has “changed Sandton’s skyline and created something that is a new symbol for SA”, says Gijs Foden, sales director for the group, which is also responsible for Sandton’s Michelangelo Towers and Raphael Penthouse Suites. “It is an iconic addition to Sandton. When you look out of the window you see The Leonardo. You can’t miss it.”
LEGACY GROUP
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EXTENSIVE REFURBISHMENT Dorrestein hinted at another of Legacy’s operational priorities last year, telling us that, “Legacy’s vision is to manage four and five star properties throughout Africa, either through the development of new mixed-use developments or the refurbishment of existing hotels; those which include the addition of elements that make the ‘live, work and play’ philosophy a reality. “The refurbishment of many of
// THE LEONARDO PROMISES TO BECOME AFRICA’S BENCHMARK MIXED USE DEVELOPMENT //
our products remains a focus and the Michelangelo Towers, the Michelangelo Hotel and the Commodore Hotel in Cape Town are all currently undergoing upgrades and make-overs,” he detailed, and sticking to Dorrestein’s word, the first phase of a multimillion-pound revamp of Crewe’s Wychwood Park Hotel and Golf Club, operated by Legacy Hotels and Resorts, has been unveiled, including the refurbishment of its 110 bedrooms. Robert Glashan, general manager at Wychwood Park, added how these works would heighten the experience for all who choose to stay, and bring it even further in line with the Legacy Group’s lofty aims. “We’re very pleased to be unveiling the first phase of our transformation to the public and mark the start of this exciting new chapter for Wychwood Park.
“Our vision is to create a special place for all of our guests – whether you’re staying with us as part of a business trip or a short break, we want to create a fresh and modern space for all guests to enjoy.” Concluded Rob Ledson, Legacy Hotels and Resorts COO: “This is just the start of an exciting new journey for Wychwood Park. We’re now looking forward to progressing with the second phase of the redevelopment and unveiling the completed project to guests and staff later this year.”
WWW.LEGACYDEVELOPMENT.CO.ZA
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LEGARO PROPERTY DEVELOPMENT
Johannesburg’s New Shining Light in Property PRODUCTION: David Napier
Hyde Park in Johannesburg is home to Africa’s first six-star green rated building courtesy of Legaro Property Development, a young and exciting female-managed business looking to change the face of the upmarket development industry. Managing Director Michele Brookes talks to Enterprise Africa about her desire to create, and her aspiration to leave a lasting family legacy in her hometown. 64 / www.enterprise-africa.net
INDUSTRY FOCUS: PROPERTY
//
In the mid-90s, a South African property business was starting out as a micro operation in a garage in Johannesburg. The family business grew and attracted interest from some of the big names in South Africa’s property development and construction spaces. A careful but ambitious approach saw the company go on to become a JSE-listed, national home builder – one of the biggest and the best. But along the way, the family feel was lost. The business became corporate and, while it operates today as a shining example, the founders wanted to rebuild something with a more personal feel, that had opportunities for future generations to grow into. So, in 2017, Michele Brookes, wife of Balwin Properties CEO Stephen Brookes, established Legaro Property Development, a female owned and managed property business, with a focus on the top end of the market, in some of the country’s wealthiest suburbs. Initially, the idea was to build a new company that differentiated itself from other developers by targeting
// WE ARE ALWAYS TRYING TO TAKE THINGS TO THE NEXT LEVEL AND THIS WILL BE THE SAME IN ALL OF OUR FUTURE DEVELOPMENTS. WE WANT TO INTRODUCE SUSTAINABLE LIVING AND SOLAR; USING THE EARTH AS A MEANS RATHER THAN DESTROYING THE ENVIRONMENT // 66 / www.enterprise-africa.net
specific groups of the economy’s top end, while growing a business that the family could leave its mark on. “My husband is one of South Africa’s big property developers in the mid-range market. He listed his company on the JSE and that saw the loss of the family feel within the business. We have children and we wanted the children to become part of the business but that is not possible with a listed company,” Managing Director, Michele Brookes, tells Enterprise Africa. After launching the business, the first task was to create a home. Brookes had the idea of creating a head office that was environmentally friendly, but also had class, elegance and quality. This was the start of a fantastic relationship with SA-based Italian-bred Daffonchio Architects. Legaro’s head office at 78 Corlett Drive, just north of Johannesburg’s CBD, went on to claim the first six-star green rating for a building in SA, awarded by the Green Building Council of South Africa. The building boasts a carbon neutral design. The majority of waste from demolition and construction was recycled, the building can operate off the grid, it is water efficient, all lighting only reaches a certain energy consumption level, there are charging points for electric vehicles – even interior elements such as paint, adhesives and carpets had to meet strict guidelines. The outcome is a major success and a flagship for Legaro. “We won the first six-star green rated commercial building in southern Africa and the SAPOA award for green building. We are always trying to take things to the next level and this will be the same in all of our future developments. We want to introduce sustainable living and solar; using the earth as a means rather than destroying the environment,” says Brookes. “We are a green company and we are going for top ratings. We are very proud of our awards. We actually beat the Discovery Building in Sandton by
// BEING A WOMAN IN THE CONSTRUCTION INDUSTRY IS NOT EASY BUT I AM TRYING, ALONGSIDE OUR PROJECT DIRECTOR, TO TAKE THINGS TO THE NEXT LEVEL // two points – that is a massive building and we are this tiny new company so I must say I was surprised but proud. “We are now looking to build another commercial building, right next to our head office, with all the same principals but we want to make this a live building. That means that all materials are recycled and all the plants are living and cleaning the oxygen in the air. We are going in-depth with the green lifestyle as I think it is needed. It goes back to us being light – we want to create something that’s new and give a fresh look to everything.” Recognition of Legaro’s success has been international and a visit from global TV brand, The Discovery Channel, has confirmed the building’s status as iconic. The recording about 78 Corlett – where Legaro is the lead tenant alongside more fantastic lettable space – will air locally later this year. UPMARKET Legaro’s first project after its green building HQ success was a residential development in Johannesburg’s Hyde Park – Melville Lane. Situated perfectly between Sandton and Rosebank, this bold idea brings peace and serenity to an otherwise busy neighbourhood. Daffonchio Architects went for a blend of London townhouse with Cape Winelands country feeling. The development was tailored specifically towards a niche local market, and Brookes has gone on to target various
LEGARO PROPERTY DEVELOPMENT
iterations of the same sector with other developments. “Our first development, Melville Lane, sold very well and we have had real demand – we’ve hit Hype Park with a bang,” enthuses Brookes. “We have just launched a new development in Morson Road, Hyde Park. This is one of the more affluent areas of Johannesburg and homes are valued between R7 million and R30 million. I decided to target the downscaling market from this area – that’s people who have these mansions but where children have moved out of home and they don’t need the space anymore. “You can downscale from a large house into a luxurious home, without losing any of the feeling. We launched in August and we sold nine of 12. In the South African economy, which
remains unstable, it shows we have hit the right market.” Sticking to the same principles, just around the block, next to Hyde Park Corner, Legaro is working on the Emerald – an apartment development designed with another very specific market in mind. “Alongside Morson Road, we are building another project called the Emerald. For this, we have targeted the children of elite property owners. Instead of them moving out of the suburb they know and starting up somewhere else, we have created this place where they can live and work, feeling like they are still part of the community they have grown up in. “It’s 292 apartments ranging from one bedroom to three bed and the building has all underground parking. When you look at the development,
you don’t see cars or anything obstructive to the nature in the area. We have also created a lifestyle centre which accommodates people going to the gym. We are putting in a full Technogym, a 25m indoor heated pool, an outdoor pool, yoga studios, cold baths, and a 24-hour concierge – for the growth of online shopping and deliveries,” Brookes explains. These developments, all extremely impressive projects in their own right, are a demonstration of what Legaro is capable of, and, after a lifetime in the industry, Michele Brookes is keen to roll out across South Africa. GOING NATIONAL A project in the pipeline for the company is away from its natural home and the busy surroundings of Hyde Park, in Paarl in the Western
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Cape. Greener, leafier and more rural, the location sits amongst some of the country’s prime real estate and Brookes will bring the same luxury that has been delivered in Johannesburg, focussing on the same top end of the market. “It’s in the pipeline at present and we are busy with council approvals and other issues that are standard for the industry before we can even think about laying the first brick,” she states. “The project is set for Paarl and is situated close to an elite polo institution and lifestyle centre, Val de Vie. Our product is of that calibre and we are absolutely targeting the top end of the market.
“We are still playing with the model but it will be around 220 homes. We are also going to create orchards so people can live off the food that grows. The farmers in the area will take care of the orchards and take the fruit to market to sell.” Expanding out of an area that Brookes knows, and an area where the company has seen significant success in its relatively short life, will be a difficult move. Fortunately, life in the property and construction industry is not new for her and few things can surprise this industry veteran. “While my husband is not involved in the day-to-day operations of the company at all, I am fortunate that I can bounce
// I HAVE TAKEN THE MODEL TO THE NEXT LEVEL BY OFFERING THAT UNIQUENESS AND THAT BESPOKE DETAIL THAT YOU CANNOT GET ELSEWHERE RIGHT NOW // 68 / www.enterprise-africa.net
ideas off him, and I have grown up in property development for the past 18 years where I have eaten, drunk and slept property. “I have taken the model to the next level by offering that uniqueness and that bespoke detail that you cannot get elsewhere right now.” In the longer term, Legaro is looking to KZN and Durban, targeting presence in the country’s three major provinces. Again, the same model would be rolled out if any plan there comes to fruition. “I believe in sticking to a level, I do not believe in going for the cheapest,” says Brookes. “We want to go national. Next year, Cape Town will be our first move out of Johannesburg. We are also looking at a site in the Ballito area of Durban. There is a beautiful colonial building that is going up for sale and we are considering buying and renovating, bringing in a new lifestyle for that area.”
LEGARO PROPERTY DEVELOPMENT
LASTING LEGACY The name Legaro will be entrenched in the history of Johannesburg thanks to the six-star building that the company has masterminded. But Brookes is keen for her business to leave a lasting legacy, beyond just bricks and mortar. The very essence of the business has always been about family, and that is heritage that the company will leave. “We have travelled extensively, and we are fortunate enough to see some of the finer things in life, so I suggested that we create a more upmarket development business. We employed my brother-in-law as Technical Director, as he is fantastic at what he does, and I started as Managing Director with the idea that my step son would take over when he is ready. I would then follow the part I love and enjoy, which is on the
creative side, and my daughter could come in as Marketing Director. We wanted to get back to being a family business with a truly special product. Ever since our establishment, we have grown significantly,” she explains. “This is a family business and I do want it to go from generation to generation as there is a passion for it. The children have grown up surrounded by the industry, they know property, and they fully understand the business.” Although the transition from one generation to another is still a way off yet, when it does eventually happen, the market is sure to receive the same levels of quality that the company has become renowned for. Standards slipping is simply not an option for Brookes. “We are going to be growing but we are going to keep our product at
the same standard. I will never drop the standard of anything, every toilet will always be of the highest quality. Whether it’s 292 apartments or five homes, quality will never drop,” she says. The name ‘Legaro’ comes from Brookes’ own desire to bring a new light to the property development space. Leggero translates from Italian to mean light, and that is very much the image she wants to project – a company which is shedding new light in the industry, and also acting in a light way, not heavy on its feet – quick and nimble in changing market conditions. Ultimately, it is market response that determines your success in the property industry, and Legaro’s feedback has been fantastic. “We try hard and we are competitive. We have taken market share from others in our area and if people want to downsize
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from a R30 million house into a R9 million home, they are now coming to us before other developers.” ALL-ENCOMPASING Legaro has further strength, beyond what you might expect from a company of its age, in the fact that it provides an all-encompassing service, end-to-end, and this is how standards remain so high. From architect to plumber to labourer, the company has built fantastic relationships and a value chain based on trust and quality. So many businesses claim this, but very few make it a reality. “In the building industry, if you can gain respect from the men and women on the ground, then you can definitely take your business forward,” says Brookes. “We have lots to learn but mixing with the right team gives us the
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advantage. Everyone from our town planners to architects to the interior designer to the project director; we have all played a big role getting the company to where it is. “Keeping it all inhouse allows us to be hands on with our projects as opposed to leaving it to tender. We like to make sure things work. When we outsource, we deal with individuals. If someone says they will work with us, that means they will work with us, not their site people or staff. This ensures the highest quality and ensures quality and environmental friendliness for our customers,” she adds. The model that Brookes and team have developed will remain the same, whatever the size of the project. Because quality is paramount, and so far quality has been delivered, right now there is no reason to change. This model has brought success and positioned Legaro, in just two short
years, as an industry frontrunner. “I would like to say we are because of the nature of the awards that we have collected for our green building,” admits Brookes. “I like to think we are considered in line with
// I LIKE TO THINK WE ARE CONSIDERED IN LINE WITH THE TOP BUSINESSES AND TOP PEOPLE. WE ARE CERTAINLY KEEPING WITH TRENDS AND ALWAYS TRYING TO FIGURE OUT WHAT THE CONSUMER NEEDS AND WANTS //
LEGARO PROPERTY DEVELOPMENT
Morsim Road, Hyde Park
Morsim Road, Hyde Park
the top businesses and top people. We are certainly keeping with trends and always trying to figure out what the consumer needs and wants, and trying to help them by offering affordable pricing.” This is a company bucking the trend in an industry which is fraught with challenges. The building and construction industry has been in decline for the past decade, the economic climate in South Africa has halted major investment, and the financial institutions have been looking closer than ever at their lending. But for companies like Legaro, companies with a real strategy and a product that stands out, there is always a market to work with. “We are always on the lookout for opportunities. People will continue to buy homes,” says Brookes. “We have three other projects that we are working on in the Hyde Park node.
We are busy with plans and approvals, some are 150 units and some are 10 units, so we are busy. We have three commercial and one residential project in the pipeline.” The Managing Director understands that the growth of the business will be good for the wider economy and, after meeting with President Ramaphosa, Brookes – a proud South African – is confident about the future, both for business and for the country. “We understand that you have to hit the bottom to get to the top again,” she says of the economy as it sits now. “I met with Cyril Ramaphosa recently and he told me one of the biggest problems we have as a country is infrastructure. He said he needs developers to help the municipalities. He is bringing in the private sector to help the government, but he is aware it will take time.”
Despite the economic conditions in the country, one thing is now clear: If you are an investor, homeowner, first time buyer, or business looking for upmarket contemporary workspace, Legaro has the bespoke solution for you, completed with green design in mind, and finished to highest international standards. Already the envy of many developers in South Africa and around the world, Legaro – a shining light in African development – has achieved so much and is only at the start of its journey. “We feel blessed. Being a woman in the construction industry is not easy but I am trying, alongside our Project Director, to take things to the next level. I am very proud,” Brookes concludes.
WWW.LEGARO.CO.ZA
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THORNYBUSH LUXURY GAME LODGE COLLECTION
Thornybush Hoping for
Spike in Tourism PRODUCTION: Karl Pietersen
Exciting things are happening at the Thornybush Luxury Game Lodge Collection. On the edge of Kruger National Park, the classic bush landscape is home to the Big Five, and guests come from around the world to experience the iconic South African safari while being hosted in the unique Thornybush accommodation. With big investments recently and about to get underway, this is a business moving forwards with confidence. www.enterprise-africa.net / 73
INDUSTRY FOCUS: PROPERTY
//
The Thornybush Luxury Game Lodge Collection in Limpopo and Mpumalanga is opening the door on a new growth phase as it welcomes a new CEO, a recent 50 million Rand investment in Saseka Tented Camp and a further 15 million investment to modernise and refurbish two of its sites. First fenced in 1955 and built and operated since 1961, Thornybush [Please add in that Thornybush is now unfenced, forms part of the Greater Kruger National Park which encompasses Kruger National Park and a selection of private reserves to the west of Kruger National Park. In total the entire area covers 20,000,000 hectares of unfenced, wild reserve with free movement of animals across this entire area. Thornybush, which sits on the verges
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of the Kruger National Park, is the second oldest commercial lodge in South Africa. Its reach spans some 14,500 hectares and its 12 luxury accommodation offerings wow both international and domestic tourists every year. At the beginning of July, Thornybush announced Joanne Dickson as the company’s new CEO. An industry veteran with more than 25 years experience in African travel and tourism, Joanne brings a wealth of knowledge and ideas that will help the business to further improve its reputation with guests. First on her to do list is refurbishments at Chapungu and Waterside, while investigating other new opportunities. “We have two lodges that will be completely overhauled,” she says.
“First is a tented safari camp which is immensely popular but we want to relaunch that with a complete refurb and rebuild in some areas. We are also totally refurbishing Waterside. We are in this for the long-haul, we are passionate believers, and we are strong investors. Our shareholders are not conservative in their investment; they have committed a further R15 million over the next five years to the two refurbishment projects and they are always receptive to new development opportunities, if the business case makes sense to them. “In May, we opened another luxury tented safari camp and we are looking at a couple of other properties and opportunities with land where we could build, but we are not committed to anything at this stage.”
THORNYBUSH LUXURY GAME LODGE COLLECTION
BEST VALUE Joanne describes the Thornybush offering as one of fantastic value. Driving value and enhancing the guest experience are two key areas of concentration for this safari-focussed business. Apart from fantastic accommodation offerings, Thornybush wants to expand upon its current service offering. “As the custodians of our guests precious time and dreams we have a responsibility to deliver magical moments. We want our guests to leave with magical memories that will last a lifetime” she says. “We will remain focussed on the core safari experience but we believe we can add more value there,” she says. “Typically, a safari experience is a morning and evening game drive. This is already an amazing experience but we want to expand on that by possibly
introducing more walking activities, we’re looking at day and overnight residences at waterholes so that people can spend more time closer to the animals, and we are developing key programmes around family travel. Most lodges will tell you that they are family friendly, but we want to do some special things around that. We are also looking at things like special excursions to see big tuskers – we are extremely fortunate at Thornybush and on the adjacent Kruger as we have elephants that have phenomenal tusks – and we are developing the idea of a helicopter tour to see big tuskers if that is a passion for people.” All of these offerings are designed to ensure guests feel they are receiving value for their money. In such a competitive landscape, value is a fundamental trait that helps
companies to differentiate. A trip to a Thornybush lodge is not about just a comfortable bed and a well-decorated bar. The idea is to deliver experiences that go beyond superb accommodation. “We do not see ourselves primarily as an accommodation establishment, we see ourselves as an experiential organisation and everything surrounds the guest experience, which surrounds the safari experience,” explains Joanne. By creating valuable experiences that guests take away and remember for life, spreading the word to friends and family, is one of the primary goals for Thornybush. This is something that so many businesses aim for but few really achieve. TripAdvisor tells the perfect story: “We had the most spectacular and memorable three
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INDUSTRY FOCUS: PROPERTY
days.” “From start to finish, every aspect, every detail, was amazing.” “This trip of a lifetime did not disappoint and we highly recommend,” say genuine Thornybush guests. “The measure of value is what you experience is greater than the perceived investment. That is a consistent focus for us – we want to be perceived as a five-star operator that charges four-star prices but delivers six-star service. Value is at the core of everything we do, and every member of our team is focussed on it every minute of every day. “We also believe we need to deliver value to our own team members, to our local community members, to our guests, and the wider community at large – we have a responsibility to work for the wildlife community in which we operate,” details Joanne
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COMMUNITY BUSINESS The third focus for Thornybush, apart from value and experiential excellence, is its community. By investing heavily in local community upliftment projects, the company expects to build a stronger and more resilient society around it, both regionally and nationally. “More and more now, there is a real focus on optimising job creation from your local communities - we hope to be leaders in our region in this regard,” states Joanne. “For a business like ours, everything from collecting firewood to renovating the lodges to where we procure foods from – we are hugely shifting towards local community service provision versus looking to the big towns around us.” Involving the community in the value chain brings finance and experience to a remote area that
// WE WANT TO BE PERCEIVED AS A FIVESTAR OPERATOR THAT CHARGES FOUR-STAR PRICES BUT DELIVERS SIX-STAR SERVICE // could otherwise become isolated - the Thornybush impact is big, and growing. “We will continue to find ways to bring more of this into our lodges,” confirms Joanne. “Whether it’s construction or wood or other materials – right now we are mostly purchasing through regular channels but we are changing all of that so we can create opportunities, find people, incubate them, and help them to supply services to us and other businesses.
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// WE ARE A KEY PLAYER; RECOGNISED, RESPECTED, REPUTABLE, RELIED UPON AND STRONG // “We will be leading the way about how to really make this a part of the genetic fabric of the business and achieve real depth. It’s a nonnegotiable way forward for us. I will question every single thing that the business does moving forward and ask why it couldn’t be serviced through a local community business or person. I hope that it helps to set the tone and more lodges will think about doing it.” The perfect example of this type of business comes from the Thousand
Herbs and Vegetable Garden. Started almost a decade ago as a CSR project, the garden is now a fully-fledged business, woman-owned by members of the Utah community. “It is just one of our projects, and our position and focus is to be an incubator where we identify people and opportunities and put them together. We put a great deal of work into getting the people and businesses off the ground. We give a lot of mentorship, we help set up distribution channels, we help implement accounting systems - we aim to get them to a point where they are an independent, self-sufficient, sustainable business; that is where we have got to with Thousand Herbs and Vegetable Garden. The ladies there run the business, it is theirs, they are profitable, and they are almost
completely independent. They provide their vegetables and herbs to our lodges and other lodges. They also sell into the Hoedspruit local community to the likes of Pick n Pay and more,” says Joanne. Projects like this have become increasingly meaningful for Thornybush in the past five years. While the company has always been a fundraiser and donor, it is now focussing on community projects on a full-time basis. “A lot has been achieved and that has inspired us to do more,” says the CEO, who also admits that this process of doing things differently is challenging but rewarding. STIFF COMPETITION Internationally, a key driver of tourism into South Africa is its safari experience industry. Long-standing
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INDUSTRY FOCUS: PROPERTY
// WE ARE HUGELY SHIFTING TOWARDS LOCAL COMMUNITY SERVICE PROVISION VERSUS LOOKING TO THE BIG TOWNS AROUND US // and well-serviced, the sector is home to many big-name players who attract guests from around the world. This is a challenge for Thornybush – differentiating itself from the rest. That is why it is investing into additional guest experiences and refurbishment of its lodges. “There is a lot of strong competition,” admits Joanne. “We are
a key player; recognised, respected, reputable, relied upon and strong. There are a lot of people who are looking to enter the industry as, in South African terms, it is a key industry. What you see is affluent people, who come from other industries, have a great deal of interest in this sector and they are often willing investors.” Asked for the way Thornybush will navigate this environment, with growing new and high--quality existing competitors, Joanne is clear that continuing to improve on experiential delivery is the way forward. “I already believe that we deliver a great service, I read every guest feedback review at the end of every month and that demonstrates that we are already delivering an incredible experience but my five-year plan is
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to ratchet that upwards so, if we are delivering five-star now, we want to be delivering six-star. And I don’t mean that in a hotel standard way, I mean that in an experiential way.” Fortunately, the tourism market is one which is receiving significant attention and investment from both the public and private sector and this is a real help for businesses like Thornybush. In April, former Tourism Minister, Derek Hanekom announced a commitment to creating jobs in tourism. “The global focus on creating jobs in tourism fits in perfectly with South Africa’s strategy to tackle unemployment, poverty and inequality through inclusive tourism growth… We are confident that we can achieve the National Tourism Sector Strategy’s target of supporting one million direct jobs in tourism by 2026,” he said.
THORNYBUSH LUXURY GAME LODGE COLLECTION
In August, new Tourism Minister, Mmamoloko Kubayi-Ngubane reaffirmed government’s commitment to tourism while on a working trip in Mpumalanga. “President Cyril Ramaphosa has set a target for us to attain 21 million tourist arrivals by 2030, and this can only be achieved if we work together to create conducive and inclusive environments for tourism to thrive,” she said. This enthusiasm around tourism is invigorating for Thornybush and Joanne is excited about the future. “We are certainly very optimistic but we know there are no guarantees,” she says. “The key tourism stakeholders are hopeful that the government will continue to make inroads that will positively influence tourism. There has been a sense from industry stakeholders that bad decisions were made, in terms of visas and other issues, which didn’t help us. But those have mostly been addressed now and we are actually seeing things go the other way, where visa requirements are being lessened and more countries are coming for a short-term holiday without a visa. The word on the street, and from our President, is that they will be doing everything they can to enhance tourism, and we are hopeful that it will translate into more travellers coming into the country. “Tourism, directly and indirectly, is a major job creator. If you look at tourism across all of its touch points – airlines, car rentals, Uber through to hospitality, restaurants and retail – its reach is enormous and there are job creation opportunities all the way, hence government’s focus on stimulating tourism.” The tourism sector is a shining light in what is a relatively dim economy. In the first half of 2019, economic growth slowed significantly but tourism continued to provide opportunities for business. During tough economic conditions, confidence is lessened and people
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usually hold onto their money, assessing every spend more closely. But Joanne is not concerned about the short-term performance of the SA economy; she lists other issues as the biggest concerns. “There are greater issues, security for example – that is a key consideration for people when looking at our destination. We are also hugely influenced by world events as we are in the international tourism market – over the past 12-months, travellers are down from the UK and Europe, and that is directly associated with Brexit, but arrivals from North America are up.” Despite these worries, Thornybush continues to thrive. Its sustainable and responsible approach to business is positioning it as a regional example to follow. With Joanne’s appetite for
success backed by a resolute ambition of shareholders to continue building a first-class operation, Thornybush is enjoying a strong period. “I knew the opportunities that were available to the business. Thornybush is a beneficiary of a longstanding, solid operation and reputation. In the tough times, the weak flounder and the strong either maintain or flourish. That is the situation here. We are not struggling and not feeling negative at all,” she concludes.
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WIRQUIN SA
Ever-Growing Wirquin Continues on Expansion Journey PRODUCTION: Manelesi Dumasi
Wirquin SA distributes and manufactures plumbing and sanitary products that save water and space, and allow consumers to enjoy their kitchens and bathrooms. In South Africa, the company is a market leader in terms of brand recognition, and so CCO talks to Enterprise Africa about how the company will be expanding over the next two years. 80 / www.enterprise-africa.net
INDUSTRY FOCUS: MANUFACTURING
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With economic conditions remaining somewhat in the toilet in South Africa, very few businesses are finding a strategy that is allowing them to achieve meaningful growth. Although a 3.1% uptick in GDP was registered by Stats SA for the second quarter, this followed a 3.2% slump in 2019’s first three months. The environment remains unpredictable and, as soon as some positivity is injected, it can just as quickly be flushed away. This is similar in global markets where companies are now having to work harder than ever to achieve margins. Plumbing and sanitary equipment specialist, Wirquin SA, provides the perfect case study of a business that is realising growth, but is being held back from achieving its full potential by stagnant economies, globally and locally. Featured in Enterprise Africa in 2017, Wirquin SA – the regional arm of the French multinational – was growing nicely, introducing innovative new products that were helping plumbers to achieve maximum efficiency in bathrooms and kitchens. Today, Chief Commercial Officer, Adler Teubes tells Enterprise Africa that the company’s growth is ongoing and will soon hit top
// WE CONTINUE TO PLUG AWAY, LITTLE BY LITTLE, ALWAYS WORKING ON SERVICE, QUALITY AND INNOVATION, WHILE TRYING TO OFFER OUR CUSTOMERS AND THEIR CUSTOMERS THE BEST VALUE FOR MONEY,” // 82 / www.enterprise-africa.net
gear as a facility expansion is signed off. “We’ve been talking to the board for three years but I think we will get the go ahead next year. As far as we are concerned in South Africa, it’s underway – we are just waiting for the final board approval,” he says. He describes the current situation in the warehouse as one where the company is ‘bursting at the seams’, housing many products to meet insatiable demand. The manufacturing facility is also in need of additional space to install new machines and improve output. “We are looking at taking our space up to 8000-9000m2. It’s a big expansion; the need for extra space comes from increased demand. We are part of an international organisation and we work on economies of scale so certain items become cheaper to import rather than going through the capital expenditure required to produce new moulds etc. As we have been increasing our volumes in the local market, we have also increased our production requirements as we now do the volumes that warrant a capex spend on tooling - it is cheaper to manufacture locally. We have also seen natural growth with other products.” For manufacturers in South Africa, the current economic climate has been prohibitive. Few are willing to invest until long-term government policy is detailed and any investment can be made securely. From the Wirquin HQ in France, where the investment decision is ultimately made, a close eye has been watching over the South African economy. “The entire economy, not just in South Africa but around the world, is taking a dive and that effects the big European companies. Cash-flow, growth and profitability for all European manufacturers are under immense pressure and everyone is turning a dime six times before they spend it - that is the reality of the market. “We have set up everything locally and as soon as we get the go ahead, we can press the button and start building.
The build will take around nine months, and then we will be able to move into the premises. We would plan to get into the new premises in the first quarter of 2021,” explains Teubes. With more space, Wirquin will be more efficient and will be able to automate. Specialist new machines will be sourced from Spain and Italy, demonstrating the company’s desire for excellence. “Since 2017, we have put four new machines into the factory and we
WIRQUIN SA
// WE BELIEVE IN WHAT WE’RE DOING, WE BELIEVE IN OUR PRODUCT, AND WE BELIEVE WE WILL GROW // are quickly running out of space. We need blow moulding and compression moulding machines to continue our growth,” says Adler. ALWAYS INNOVATING One of the strengths of Wirquin, and something which has separated the company from its competition globally for many years, is the fact that it offers such a comprehensive product range, manufactured to the highest of quality standards. The company is also an innovator, regularly introducing new products to solve problems and advance layouts of plumbing and sanitary equipment. “Every year, we bring out at least 10 new products within the group internationally. There are three specific products that we will be concentrating on for the new year in the South African market,” details Teubes. These new products will be for the shower industry, one where Wirquin has enjoyed much success, and Teubes is excited. “One is a ready to install shower tray – that is nothing new in Europe but it’s new for South Africa – a composite material that is just dropped straight into the shower. This is a massive product in mainland Europe. We want to bring it to South Africa to revolutionise the shower tray industry. “A lot of our new products have nanotechnology and that is for space saving, taking up very little space under your basin or bath, or within the slab for a shower. With this new technology, we are able to assist a lot of the developers
in constructing multi-storey buildings with showers where they do not negate the integrity of the slab because they do not need to dig deep into the slab to install the traps. We believe these products will be real winners because of the nanotechnology,” he says. Currently, Wirquin boasts the lowest profile shower waste on the market and a Neo waste trap which offers the assurance of no leaks. The range also includes a toilet seat fixing which comes with lifetime warranty and promises to completely stop any seat movement. It is the company’s ability to solve problems that allows it to keep growing. MARKET STRENGTH Despite economic downturn, and capacity problems, Wirquin remains a growing business. The brand is strong and relationships with wholesalers are
well-serviced. The company has also managed to develop robust export channels and Teubes has no intention of stemming the flow anytime soon. “We have been fortunate in the past three years and we are growing. Our factory is expanding and we are happy with our performance, even with our high expectations. The general market and economy is bad, the building industry is terrible, and overall people are saying that if you are growing on your previous year then you are doing well. “Export is growing, but not in a major way. Our biggest growth is coming from our complete range. We are stealing a little bit of market share in everybody’s market. There are certain areas where we are not so happy - the DIY segment, for example – but overall we are still managing to grow. We
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// EVERY YEAR, WE BRING OUT AT LEAST 10 NEW PRODUCTS WITHIN THE GROUP INTERNATIONALLY // continue to plug away, little by little, always working on service, quality and innovation, while trying to offer our customers and their customers the best value for money,” he says. Going forward, Wirquin will utilise its local manufacturing facility to offer affordable export for markets to the north and across the Southern Atlantic. “I look at southern Africa as part of our local market. Export for me is central Africa and above. We have a few customers in northern Africa and Europe that we supply from South Africa because of our cost of production. That is a market we want to grow but again, we need the
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capacity before we enter those markets. There is massive potential in Brazil – we have all the contacts, but we are unable to approach because we would need more machinery,” says Teubes. Of course, Wirquin will also focus on strengthening relations with its existing clients where it has created lasting partnerships over its 15 years in South Africa. This is paramount for Teubes who is keen on making the most out of the market while the company waits for the green light on expansion. “I wish we could attack new markets and new customer groups but with our production and warehousing constraints we are in a Catch 22 situation. If we get new customers, we won’t be able to deliver service and we’ll lose them. We are trying to focus on our existing customer base and start utilising that market more,” he says. And the reason these customers keep coming back? It’s all to do with quality. Wirquin designs its products to be time, space, money and space
saving, high performing, hygienic and reliable. This aids the company’s growth significantly. “Quality plays a massive role, and with us producing more parts locally – importing from our sister companies less – our costs are lower and that helps our pricing structures to be more competitive too. Combine that with overall customer service, these are the things that are assisting us with our growth,” explains Teubes. POSITIVE FLOW With many home builders, developers, and construction firms reporting extreme pressure in the market, it’s important for businesses to remain upbeat. The vast swathes of negativity coming through the media are enough to make anyone feel challenged, but Teubes isn’t buying into a short-term vision for South Africa. “You have to be positive. If you allow the world to get you down, you will never ever succeed.
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// SINCE 2017, WE HAVE PUT FOUR NEW MACHINES INTO THE FACTORY AND WE ARE QUICKLY RUNNING OUT OF SPACE // “We try and instil into the team to not look at the market conditions,” he continues. “We believe in what we’re doing, we believe in our product, and we believe we will grow. I believe the South African market is going to turn; unfortunately, we are at the end of the building cycle. If we are lucky and nothing happens in the next three months with the government, I’m expecting major
investments in the building industry in the first quarter of 2020 and we will start seeing some of that spin off at the end of 2020, and that means 2021 should show strong growth.” Even in a market that has been very weak for Wirquin, the expectation - and hope – is that the upswing is coming. “The DIY market will recover but people don’t have disposable income to spend. If there are major investments and the entire economy starts turning, I think 2021 and 2022 should show improvements in that sector,” says Teubes. Wirquin is not a company about to be swallowed up by a changing marketplace and an unpredictable economy. This is a business that has seen it all before. When Wirquin’s local facilities are expanded, expect this industry leader to boom.
“There is not another local manufacturer that competes on quality,” says Teubes. “We do have strong European opposition that are in South Africa. All of their products are imported directly from Europe. They are strong here but we have the advantage of manufacturing locally and that is why we are trying to drive volumes here, relying on imports less. The exchange rate has a big impact on the economy and local manufacturing helps us. Other local manufacturers are not investing like we are,” he concludes.
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NATIONAL PACKAGING SYSTEMS
36 Years of Automating Africa’s Food Packing PRODUCTION: Karl Pietersen
For almost any food product that needs packaging, Durban’s National Packaging Systems can provide a solution. Whether you’re a company based in South Africa, on the continent, or elsewhere in the world, this innovative and historic business can deliver. Quality is at the centre of everything it does and CEO John Pelucci tells Enterprise Africa that, thanks to a culture of excellence, everything is going well.
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From its base in Pinetown, KZN, National Packaging Systems (NPS) – the local manufacturer of machinery for use in the food and beverage industry – has grown to become internationally renowned and recognised as a business that delivers excellence. This is quite an achievement for a business operating in what is a
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strained economic environment and a manufacturing sector that is under extreme pressure. Core in the NPS product range is vertical form, fill and seal machines; volumetric fillers; auger fillers; feeding systems and conveyors. The machines are used to sort and package powders, grains, liquids and other food groups. While many international
manufacturers play in this space, there is a clear desire from local companies for a South African-based company to assist, and NPS has obliged. Growing from a small team in a minor facility, the company now boasts a group of industry leading engineers, an innovative and highly technical product offering, a wide range of different machines, an all-encompassing after
INDUSTRY FOCUS: MANUFACTURING
sales service, and a focus on machines built in Africa for Africa. CEO John Pelucci – a mechanical engineer and a veteran of the packaging industry – tells Enterprise Africa that the NPS edge comes from building close relationships with clients which allows for a deep understanding of exactly what is required from a machine. “We have a strong design team and we do a lot of design and development,” he says. “We listen to our clients and listen to their feedback about the machines. Some of our machines in the market are now third generation machines. We only build the machines, our clients run them. If a client says that they don’t like a certain feature, we will take it away for the next design – we are always improving.
// WHEN THE CUSTOMER SEES OUR MACHINE AND WHAT IT CAN DO, THEY USUALLY ASKS FOR A NEW MACHINE FROM US ANYWAY // 88 / www.enterprise-africa.net
“We can take control of a machine from anywhere in the world and we have a system that we can put onto any machine, not just our machines, and it will tell you when the machine starts, when it stops, how many empty sachets come through, how many full sachets – it gives a complete production report to our central mainframe. “We have a lot of feedback from clients right now saying that they want this system on all their machines, not just those manufactured by us,” he adds. Ultimately, NPS machines offer cost savings, efficiency improvements and faster speed to market for customers. With some of the world’s largest food companies as clients, these offerings are vital for the business. “We are into many big brands including Unilever, Cadburys, Sasko, Saint Gobain and Tiger Brands. We have been told we are the biggest manufacturer of packaging machines in South Africa. A lot of our competition build one or two machines but are agents for multiple machines. We are the other way around – we build 40 types of machine with 60 variants and we are agents for just four machines.”
QUALITY & INNOVATION Pelucci states that it is not only customers that understand the level of NPS quality, the rest of the industry is also aware of how innovative the company is. “The quality of our machine is a real difference,” he says. “We recently attended an international trade show and we had Bosch coming to us and congratulating us on the standard of our machine, saying we are working to international standards and claiming that they see our machines everywhere they go. Because we manufacture locally, and we have local back up service, we have a niche in the market. If I can’t supply a part ready for shipping by the next day, I’ll give it away for free.” This commitment to not only a quality product, but also a quality service, gives NPS an advantage in the market and encourages local users to enquire about further service, asking NPS to overhaul machines that they may not manufacture. Of course, Pelucci is happy to assist, happy in the knowledge that every call out on a machine that isn’t made by NPS provides an opportunity. “90% of the time, we can sort a problem with a machine over the
NATIONAL PACKAGING SYSTEMS
phone. If not, we use our digital system, and if that doesn’t work, one of our technicians is on the next flight. “We could work on some machines from Europe and we could overhaul machines from big-name brands, but we will not work on Chinese or Indian machines. When the customer sees our machine and what it can do, they usually ask us for a new machine from us anyway.” The strength that NPS has built its name on comes in the form of vertical form fill and seal machines, often used for the packaging of product into bags. But, even in this sector where NPS is a leader, it is still vital for the company to produce high-quality because of the competitive nature of the industry. “Vertical form fill and seal machines are the most common machine in the world and everyone manufactures them,” Pelucci claims. “The vertical sachet and vertical stick pack machines are different altogether, and very few companies manufacture these,” he adds. “No one in South Africa does it, and only some of the big players around the world do it. When you buy an international machine, you pay through the nose – they are usually three times the price of ours, and you also pay their labour rate when they come over. Also, the backup service is not local and we provide that.” FULLY PACKAGED The packaging industry in South Africa is big business and, according to Deloitte, is showing great potential for growth. Consumer markets in Africa are growing, and a focus on health and wellness alongside urbanisation will see the demand for packaging products and reliable packaging machines expanding. Both East and West Africa remain quickly growing regions and the expectation is that this growth will provide major opportunities for packaging businesses. NPS is already active in Africa and is keen on furthering its export market on the continent. “We deal with a lot of big, corporate
companies and we do 75% export. We export into Africa, Australia, the UK, USA – the African market is ok, we completed a large project in 2016 where we had a big order for 75 vertical sachet machines for export that can produce 360 sachets per minute,” says Pelucci. He explains that the largest project NPS has completed was in Nigeria, a $3.8 million job, for one of the largest companies in Africa. “It is a company that packs milk powder into sachets,” he says. “The beauty of our machine is that, if you buy a foursided-seal sachet machine, and you want to increase from a 60mm wide sachet to a 70mm wide sachet, you’d have to buy a new machine. With us, the Nigerian company can now do a 65, 70, 80 and 120mm in the same machine. No other machine in the world can offer this, and it offers huge cost savings for our customers
with just a 30-minute change over time between sizes.” After more than 35 years in business, the company remains futurefocussed and has lined up a very strong pipeline, both in export and local business. “We have a contract coming up in Papa New Guinea, we are doing work for Walmart, we have just landed a major contract with a large sweet company in South Africa where we competed against five international companies but won the contract. That is for six major lines and we are busy manufacturing right now, ready for installation in November. “We are busy with a machine for De Beers – a diamond packing machine. That is a major project where the first machine is about to be commissioned. They will likely go onto ships that draw
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INDUSTRY FOCUS: MANUFACTURING
diamonds from the seabed and they are then packed through the machine with an RF tracker so they can be traced anywhere in the world. The machine will also be used for land-based mines as well, not just in South Africa but internationally too.” Fortunately for NPS, the country’s exchange rate is promoting export business. The Rand against the Dollar,
// IF WE ARE AT AN EXHIBITION AND SOMEONE APPROACHES OUR COMPETITION WITH SOMETHING SPECIFIC IN MIND, THEY WILL SAY ‘WE ONLY DO STANDARD MACHINES, GO AND SEE NPS’ //
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Euro and British Pound makes South Africa attractive to buy from. “The exchange rate right now is horrific but that is better for us in the export market. We still work in South Africa but 75% of our business is now export. “We are a well-known business on the continent – when it comes to salt or sugar packaging, no one can touch us for speed, not even the big international players. Some machines are doing 50 packs per minute for 500g, 45 for one kilo and 30 for two kilos. We are 55 per minute across all three sizes. We also offer the full turnkey project from raw material coming in to finished product going out of the door,” explains Pelucci. HISTORIC SA BUSINESS Pelucci’s involvement with the company started in 1994 after the initial registration of the firm in 1983. He purchased the company from one of the original owners after the other partner passed away. In 94, the company was a small concern and the new owner was keen to expand. “At the time, the company was
// WE HAVE BEEN TOLD WE ARE THE BIGGEST MANUFACTURER OF PACKAGING MACHINES IN SOUTH AFRICA // building one machine. Today, we build 40 different types of machine and 60 different variants. “In 1994, the business was just keeping its head above water and not much more. It was operating out of a 400m2 premises. In 1996, we doubled the floor space, and in 2001 we moved to a new location with 1250m2. Two years ago, we moved again into 3100m2 and our staff has grown from 10 to 65.” NPS has always been located in KZN and remains a South African business, building machines for the African environment. Pelucci is confident about the future, and he is buoyed by the response to his company’s success by the industry.
NATIONAL PACKAGING SYSTEMS
“We are growing all the time. You just have to look at the others in our industry – one wanted to buy us to close us down because we are affecting them, the other wants to buy us because they can see where we are going. They see our technology and they see the standards we are working to. “Going forward, we would like to push for more business in the UK and USA but we are not too worried about where we sell machines,” he says. MANUFACTURED SUCCESS South Africa’s manufacturing sector has seen mixed success over the past few years. The wider industry is driven by automotive manufacturing, petroleum and chemicals, and food and beverage, but these parts of the manufacturing industry have all realised their own struggles, often shedding jobs and witnessing a decline in contribution. Specialist manufacturing is hit and miss, and if a company cannot deliver for its clients, it can soon pay the price. But NPS is a picture of health and is taking advantage of all of the opportunities coming its way. “In the engineering industry and construction industry, people are struggling. In our industry, everybody has to eat food and it has to be packaged. A lot of the companies have old machines that are having a lot of downtime, so they have to buy new machines. Yes, the economy is upside down and we often do not know what is happening one day from the next, but we are still busy,” says Pelucci. “Africa is growing, Nigeria is going through the roof. We have a project with a major global food company in Nigeria where a bespoke system was needed that didn’t exist. We have designed the system and other players in the industry are looking to us to supply something similar. “We do a lot of bespoke machines. If we are at an exhibition and someone approaches our competition with something specific in mind, they will say ‘we only do standard machines, go and see NPS’. Our machines are specialised
Life up cost down Proud supplier to:
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and customised for what the client wants,” he adds. This innovative and forwardthinking business - whose machines go on to do most of their work behind the scenes in Africa’s food supply chain - has become an example to follow. Every aspect of the company is under one roof and this allows total quality control. “We train people from the floor up. People start at the bottom and work their way up. My current partner started out as an electrician and he is now a shareholder in the company. A lot of people have been with us for 20 years,” says Pelucci. “We manufacture everything under one roof. Raw materials come in, we manufacture all the parts in our machine shop, we handle all fabrication, we assemble the machine, and then run the machine in our factory with the clients materials
and conditions for factory acceptance testing (FAT) purposes, and when they are happy we strip it down, crate it, send it to site, and then we go and install and commission it.” This approach has seen NPS become an integral part of its customers operations, and when a business can achieve this status, growth should come organically. Pelucci is happy with where NPS is now and excited about the future. “I enjoy what I do and if you don’t enjoy it there is no point doing it,” he concludes.
WWW.NATIONALPACKAGING.CO.ZA
www.enterprise-africa.net / 91
THE BIOVAC INSTITUTE
Local Vaccine Manufacture
Returns to South Africa PRODUCTION: Timothy Reeder
After years of negotiation and capacity-building, South Africa has been granted a licence to manufacture one of the world’s most important vaccines, Hexaxim. South Africa’s Biovac Institute (Biovac) will begin production of the vaccine next year, and follow in 2020 with antipneumonia inoculation Prevnar, marking the first local manufacture since the mid-1990s: decreased cost, increased availability and a spurring of economic growth are all set to follow. 92 / www.enterprise-africa.net
INDUSTRY FOCUS: MANUFACTURING
//
Based in Cape Town, the Biovac Institute (Biovac) is a world-class, specialist vaccine manufacturing business based in Cape Town, which sets out to produce important vaccines for both the South African and export markets. Biovac is the result of a public-private partnership formed with the South African government in 2003, to revive the country’s human vaccine manufacturing capacity. “Our vision is to be a health-focused Centre of Excellence rooted in Africa for the development and manufacture of quality vaccines for Africa and the developing world’s needs,” the company sums up of its founding principles,
as it ensures continued and seamless delivery of over 25 million doses of critical vaccines each year to all nine provinces of South Africa, as well as some key neighbouring countries. “As the only Southern African human vaccines manufacturer,” Biovac says, “we recognise the need for a domestic manufacturer of vaccines to enable the Southern African region to respond to regional epidemics and vaccine-preventable diseases.” STEADY DEVELOPMENT When it comes to something as critical as human vaccines, the process is not one to be rushed, and consequently Biovac has had to carefully gather the
knowledge and skills to compete in the complex, challenging and strictly regulated healthcare environment. “While developing our manufacturing facilities,” Biovac explains, “we have been importing, exporting, packaging, testing and distributing vaccines. Our leap of faith ensured that we delivered the required vaccines to the children’s vaccination program, known as the Expanded Programme on Immunisation, in South Africa and the region.” The endeavour to re-equip South Africa and the African continent as a whole with a sufficiently modern manufacturing capability has, in Biovac’s own words, “progressed
MGSA PROJECTSS is proud to be part of Biovac’s success. MGSA PROJECTS looks forward to continuing to supply the equipment, service & support which has contributed to Biovac’s success. One of South Africa’s most charismatic packaging industry sale specialists, Myles Davis has launched MGSA Projects, representing some of the worlds leading players in the pharmaceutical and cosmetic packaging machinery sectors. Over the last 30 years, Myles has gained valuable experience in the packaging machinery sector, representing leading international pharmaceutical and cosmetic machinery manufacturers. He has been instrumental in establishing and coordinating numerous turnkey projects with prominent global brand owners namely Biovac, Aspen, Adcock, J & J, Bio Oil, GSK, to name a few. Our products and suppliers: MARCHESINI GROUP: Supplier to Biovac of Syringe packing line BREVETTI CEA: Supplier to Biovac of Ampoule, vial & syringe inspection equipment. Brevetti Cea is 100% focused on the design and production of inspection machines for injectable pharmaceutical products. Since the 1950’s we have been committed to supporting companies around the world in order to guarantee the use of safer medicines for patient health. Product innovation, deep know-how, continuous investments in research and development, experience and reliability, combined with a full range of Customer pre and after-sales support services highlight Brevetti C.E.A. as the ideal partner for successful investments. TELSTAR: Complete turnkey supplier & processing equipment (Autoclave, Freeze dryers, Isolators, clean air & steam water plants, clean rooms, generators and green fields to GMP, hand over facilities, turnkey project engineers. SERVOLIFT: Lifting & handling, Storage & transfer, Dosing & weighing, Blending & mixing, Granulation & coating, Cleaning & drying. KORSCH: World leaders in Tablet Man equipment EASYSNAP: Innovative & patented single use liquid packaging equipment manufacturer MG2: Leading capsule filling & handling equipment manufacturers ADAMUS: Global tablet tooling & accessories manufacturer UNITED PHARMATEK: Entry level pharmaceutical equipment supplier. For further information on our products, services & supplies please contact Myles Davis. Contacts: Sales Myles Davis Technical Lukas Appel Office Robyn Thomas General Information Website
94 / www.enterprise-africa.net
+27 (0) 82 460 2766 myles@mgsaprojects.co.za +27 (0) 82 410 2554 lukas@mgsaprojects.co.za +27 (0) 66 023 4849 admin@mgsaprojects.co.za info@mgsaprojects.co.za www.mgsaprojects.co.za
THE BIOVAC INSTITUTE
steadily and significantly.” To date, over R600 million has been invested in infrastructure and skills development at Biovac, seeing an economic benefit of more than R500 million per year to the South African economy. “Our sustainable strength, as we progress on our journey, lies in our ability to partner with others,” Biovac makes clear. “Among others, we have partnered with research organisations like the University of Cape Town and international organisations such as the World Health Organization (WHO). We have also looked to industry as well as funding organisations like the Industrial Development Corporation and the Bill and Melinda Gates foundation.” Above all, at Biovac the primary aim is to strengthen the pharmaceutical and healthcare
environment in South Africa and Africa, contributing to the socio-economic transformation of the country and continent. “I am certainly optimistic about times to come,” summed up CEO, Morena Makhoana, when we spoke last year. “Because vaccines are part of a country’s primary healthcare system, regardless of the cycles in the economy, there is always a need to vaccinate children against diseases.”
It is a vital aspect of South Africa’s expanded programme on immunisation, and more than three million children currently receive the vaccine every year. Of the 14 vaccines administered between the ages of zero and two years, four are Hexaxim. The initiative has had a marked effect on the number of children under the age of five that have died, down from 89,418 in 2005 to 47,409 children in 2013. Morena Makhoana revealed earlier this year that, in a huge move for the company and the country, Biovac will start local production of French healthcare leader Sanofi’s Hexavalent vaccine next year, with its plant set to produce four million doses of Hexaxim vaccine annually. Until now, South Africa’s government has had to buy in around 95% of the 25 million doses of vaccine supplied annually by Biovac.
HEXAXIM AND PREVNAR MANUFACTURE The hexavalent vaccine Hexaxim is used to vaccinate children against six life-threatening infectious diseases: diphtheria, tetanus, acellular pertussis - more commonly known as whooping cough - inactivated polio, Haemophilus influenza type b and hepatitis B.
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INDUSTRY FOCUS: MANUFACTURING
“We start production of (the) hexavalent in Q3 2020,” Makhoana confirmed at Biovac’s state-of-the art facility in Cape Town. Set to join Hexaxim for Biovac in 2021 is Pfizer’s anti-pneumonia Prevnar 13 vaccine, for which it expects a full output of three million doses to start in the first half of 2021. Under a five-year agreement signed with Pfizer in 2015, Biovac has to date only packaged labelled syringes but it is now acquiring the formulation and filling processes ahead of the launch. “The technology transfer process has enabled significant knowledge transfer, job creation and direct investment,” said Rhulani Nhlaniki, Pfizer’s country manager. Biovac’s dose of Hexavalent, a six-in-one vaccine for several diseases including diphtheria, tetanus and
96 / www.enterprise-africa.net
// THE TECHNOLOGY TRANSFER PROCESS HAS ENABLED SIGNIFICANT KNOWLEDGE TRANSFER, JOB CREATION AND DIRECT INVESTMENT // polio, is the only one in the world that is fully liquid and unlike other versions on the market, Makhoana added, does not have to be mixed before injecting. This makes it easier to administer in remote and resource-poor clinics across Africa. “On this particular six-in-one vaccine we are the only tech transfer partner with Sanofi in the world, so we are very proud,” Makhoana told Reuters, while for Sanofi, it appears clear that continued investment in South Africa’s vaccine programme will be central to bolstering its own position. “South Africa, and Africa for
that matter, is an emerging market and showing strong growth year-onyear and hence will remain a priority for Sanofi,” said Merilynn Matthew, who heads Sanofi’s South African vaccines unit. HARNESSING LOCAL PRODUCTION Local vaccine manufacture has many foreseeable benefits, including decreased cost and increased availability, as well as the capability to provide vaccines to the region. The local manufacturing process can also spur economic growth, and is a key catalyst and multiplier for job
THE BIOVAC INSTITUTE
00000 Econorisk Enterprise Africa ad September 2019.indd 1
// IMMUNISATION IS ONE OF THE MOST SUCCESSFUL AND COST-EFFECTIVE PUBLIC HEALTH INTERVENTIONS // creation. Business Day has mooted manufacturing as South Africa’s potential ‘sunrise sector,’ and with 9.6 million of its population currently unemployed, there is a huge pool of untapped talent to dip into. Manufacturing vaccines locally firms up a sector which is prone to shortages and price fluctuations, realities which often have severe consequences for public health. Vaccines are supplied into a global
market from a relatively small number of sites and manufacturing problems, mostly linked to issues of quality and safety, occur and not infrequently affect the supply of vaccines to lower value markets. When Biovac was established the annual cost of vaccines was only R188 million, but this has since exploded to R1.75 billion. Hexaxim alone accounts for 37% of the expenditure, and being able to manufacture locally using imported antigens will enable Biovac to ensure a domestic capacity in vaccine production and save an estimated 15% of the cost compared to international procurement. “Immunisation is one of the most successful and cost-effective public health interventions,” Biovac sums up of the reverberations to be felt as a result of its commencing
2019/08/20 10:22
local production in the coming years, “and biotechnology will become a significant growth area and contributor to our Gross Domestic Product.” “We are building a bio-sector from scratch and that feeds into the bio-economic strategy of the country and the region,” Makhoana explained, and now Biovac is closer than ever to being able to effect the economic transformation which will result from this new era of vaccination in the country.
WWW.BIOVAC.CO.ZA
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FRIGOGLASS SA
The Coolest Brands Meet the Coldest Drinks PRODUCTION: William Denstone
Frigoglass is the strategic partner of choice to the world’s top beverage brands. One of the global leaders in the Ice Cold Merchandisers (ICM) market and the principal supplier of glass packaging in the high-growth markets of West Africa, Frigoglass has manufacturing facilities in eight countries. Cemented in more mature European markets, the company is forever evolving and establishing its position in emerging markets and willing to invest heavily to keep itself ahead. “We offer solutions to serve all - brands, customers, the end consumer. We pass on comfort and enjoyment across the world,” Frigoglass sets out. 98 / www.enterprise-africa.net
INDUSTRY FOCUS: MANUFACTURING
//
Frigoglass ensures that the brands it represents are everywhere that drinks are on sale, always on show to the biggest audience possible. Using what it has termed the “Frigoglass Advantage”, it produces innovative coolers designed to enhance branding impact at the point of sale, in turn driving impulse consumption. Its expertise in the field means that Frigoglass has long-standing relationships with blue chip customers in the soft drinks and beverage industries, including some of the household name stalwarts. “Our bespoke Ice Cold Merchandisers enhance our customers’ beverage branding and facilitate immediate beverage consumption,” Frigoglass asserts. “At the same time, our leading innovations in the field of green refrigeration enable our customers to meet their sustainability and carbon emissions reduction targets.” Arguably most well-known for its pioneering
100 / www.enterprise-africa.net
efforts in the field of refrigerated vending machines and display coolers, this is not where Frigoglass’s expertise ends. Alongside the chilling units is a unique, innovative customer solutions offering, which aims to provide customers with excellence in operations and best-in-class services. As well as producing high-spec, branded machines to ensure that beverages are chilled for optimal taste, another important arm of the Frigoglass operations is of course the range and versatility of glass products it has evolved, which offer improved quality, optimised distribution and reduced cost. “Frigoglass can produce a wide range of glass containers, from 30ml to 1.5l in white flint, amber and emerald green colours,” says the company. “We invest continuously to ensure we remain at the vanguard of technical innovation, providing our customers with value added packaging solutions, designed to enhance the sustainability of our customers’ operations.”
ECO PRIORITY Running through the entirety of Frigoglass’s activity are two core principles: innovation and sustainability. “In parallel to maximising merchandising opportunities for our customers,” the company says, “we are committed to providing increasingly
// OUR INNOVATIONS ENABLE OUR CUSTOMERS TO MAXIMISE SALES OPPORTUNITIES AND RESPOND TO THE SPECIAL CHALLENGES OF ELECTRICITY SUPPLY SHORTAGES IN AFRICA //
FRIGOGLASS SA
environmentally friendly product solutions which enable our customers to meet ambitious sustainability and carbon emission reduction targets.” Such is the strength of this commitment, and the success that Frigoglass has enjoyed in implementing such practices, that it was awarded a 2018 gold medal by EcoVadis for its sustainable and socially responsible practices, placing it among the top 1% of companies around the world in the sector and making this the second consecutive year that it has been adjudged to demonstrate the gold standard. “Sustainability is central to our business strategy,” Frigoglass underlines. “It is embedded in our strategic priorities and incorporated in our business activities. We continue to integrate sustainability into the way we do business, making clear progress against our sustainability commitments. Our product portfolio is even greener, our operations even more environmentally friendly and our impact on the world more meaningful.” EcoVadis, the leading Corporate Social Responsibility (CSR) rating platform, is dedicated to producing independent assessments of companies’ CSR performance. The EcoVadis CSR assessment encompasses more than 50,000 suppliers, 190 sectors and 150 countries. In response to the award, Nikos Mamoulis, Chief Executive Officer of Frigoglass commented: “We are delighted to receive the Gold recognition for our sustainable and socially responsible practices for
// WE INVEST CONTINUOUSLY TO ENSURE WE REMAIN AT THE VANGUARD OF TECHNICAL INNOVATION //
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www.enterprise-africa.net / 101
INDUSTRY FOCUS: MANUFACTURING
// WE PASS ON COMFORT AND ENJOYMENT ACROSS THE WORLD // a second year in a row. This award proves our strong commitment and dedication to continuously improve our sustainability performance, adding value to all our stakeholders and to the community.” Last year also saw Frigoglass unveil its Hybrid cooler, a product designed and launched to ensure the availability of cold drinks even during the frequent power outages which plague many of its keys markets. “In ambient temperatures of around 40°C degrees, the Hybrid cooler, using breakthrough
eutectic layouts and energy efficient components, keeps products cool and allows customers enjoy refreshment and quality,” detailed Kostas Mitsotakis, Frigoglass Innovation & Product Development Director. The solution is available in both the Smart and ICOOL product families and, like other Frigoglass cold merchandisers, is equipped with a glass door and LED lights, ensuring that excellent product visibility is maintained and giving full illumination during power off cycles. “Our customers in emerging markets face a major challenge: loss of sales due to lack of cold product for immediate consumption.,” the company goes on. “Frigoglass, committed to offer innovative, bespoke solutions, has successfully launched the Hybrid cooler, which is
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designed to mitigate the impact of electricity outages. “Our innovations enable our customers to maximise sales opportunities and respond to the special challenges of electricity supply shortages in Africa.” NIGERIAN GLASS INVESTMENT One of Frigoglass’s most important announcements last year came in December, as it unveiled a €25-30 million investment to expand its furnace capacity at the Beta Glass Guinea plant in Agbara, Ogun state. The investment will increase capacity at the plant by 35,000 tons per year, and will provide for a new furnace, an additional production line, upgrades to existing production lines and new inspection equipment to strengthen the plant’s capabilities. This strategic investment will drive continued growth in the company’s glass business across the West African region; the new furnace is expected to be productive for more than 12 years, and its installation demonstrates the commitment to both existing and new customers across West Africa. “This new larger furnace secures the livelihoods of our existing employees in Agbara, and creates not only additional jobs but also shareholder value and contributes
// OUR PRODUCT PORTFOLIO IS EVEN GREENER, OUR OPERATIONS EVEN MORE ENVIRONMENTALLY FRIENDLY AND OUR IMPACT ON THE WORLD MORE MEANINGFUL //
FRIGOGLASS SA
THE O N E ST O IND UST P R SHOP W IAL ITH A SER V IC E TO MATCH !
CK TOOLS AND INDUSTRIAL SUPPLIES
T: (011) 494 1788 | (011) 494 5672 | F: (011) 494 1787 E: claytonm@telkomsa.net no 4 Samuel Evans Road, Aeroton, Johannesburg, 2190
positively to the development of the local community,” said Darren Bennett-Voci, Glass Division Director of Frigoglass and Managing Director of Beta Glass Plc, the Nigeria Head Office. Nikos Mamoulis underlined the importance of ploughing capital into these improvements to support the Group’s further growth. “This strategic initiative demonstrates our commitment to implement investments that will enable the Group’s future growth. It supports the growth of our international and regional beverage customers in the high growth potential West African region,” he mused. “We continue to implement investments to better cater to the growing needs of our customers for glass packaging. This investment will significantly increase our annual
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capacity, allowing us to meet growing demand, not only in Nigeria, but in many countries across West Africa,” added Abimbola Ogunbanjo, Chairman of Beta Glass Plc. This has all added up to some impressively strong results for Frigoglass in the second quarter of this year. Highlights included double-digit sales growth and expansion in its earnings before interest, tax, depreciation and amortisation (EBITDA) margin. Commercial Refrigeration sales growth momentum continued, up by 14% year-on-year and driven largely by increased customer cooler investments in Europe and a sturdy performance from Frigoserve. “We delivered another solid set of quarterly results with doubledigit sales growth and comparable
EBITDA margin expansion, alongside strong free cash flow generation,” was Mamoulis’s take. “Results demonstrate our consistent focus on the execution of our commercial strategy to best cater our customers, as well as, cost reduction initiatives. “Following our year-to-date performance, we expect to deliver a second post restructuring year of top-line growth and profit margin enhancement, also supported by savings related to manufacturing footprint improvement.”
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NAMPAK BEVCAN
Can Do Approach
Keeps Nampak At the Top PRODUCTION: Timothy Reeder
Nampak is Africa’s largest diversified packaging manufacturer, and this year celebrates 50 years on the Johannesburg Stock Exchange (JSE) following its listing in 1969. Its Bevcan arm boasts a long tradition of continuous improvement and business excellence, and continues to be one of the key drivers behind strong performance for the Nampak group.
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Nampak has grown into a giant of the packaging world, operating from 25 sites in South Africa and 18 sites across the remainder of the continent, bolstered by a further eight locations in the United Kingdom. South Africa is without question the dominant force, contributing more than half of the overall revenue of the group on its own. “We leverage the skills of our 5,641 people and capitalise on our substantial investment in state-of-the-art production facilities,” Nampak says of the driving forces behind its success. “Our worldclass research and development facility based in Cape Town provides technical and innovative product development support to our businesses, as well as
to our customers - many of which are among the world’s largest fast-moving consumer goods companies.” DIVERSE OPERATIONS Nampak’s subdivision are all leaders in their class, with diverse and wideranging specialities characterising each. It goes without saying that these centre around Nampak’s expertise in the food and beverage sector, which is in good health in South Africa today and ripe with opportunity for a forward-thinking packaging monolith such as this one. The South African industry reported impressive growth in the industry of 2.9% in May 2019, when compared to the same period the year before, coming on the back of a colossal
7.8% increase in March and marking the 10th consecutive month the food and beverage sector has shown comparative growth. The two key contributors to this rapid and sustained growth are, encouragingly, two that are set to be stalwarts for the foreseeable: restaurants and coffee shops and takeaway and fast food outlets, Nampak Glass is based in Roodekop Gauteng, and produces a diverse range of glass bottles for the full range of alcoholic drink and processed foods markets. “We have a committed and innovative approach to our customers and their requirements,” Nampak Glass says. “Our Continues on page 108
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When it comes to security, would you choose prevention or protection? The ideal solution would be a combination of both. In today’s modern world, with an increasing number of breaches and crimes being reported on a daily basis, protection of your people, your possessions and your property has become more important than ever. Over two million crimes were reported in 2018/19, according to figures recently released by the SAPS and Stats SA. Mark Taylor, CEO of Nashua, says, “It’s our job to study the human elements that commit these crimes and breaches, and create boundaries that anticipate and proactively provide alerts for absolute prevention and protection.” Nashua’s Surveillance Monitoring Solution has applications in business, in residential estates, in agriculture and in fleet management. It provides protection of premises, perimeters, specified areas and fleets of vehicles. Nashua can also provide the connectivity necessary for the offsite monitoring. The solution makes use of camera systems with inbuilt analytics that are used to determine the parameters for events that trigger alarms – and prevents false alarms. Taylor explains, “When a camera identifies an alarmable event, the view from that camera pops up on the screen that’s being monitored and the person can notify the appropriate individuals. This allows response teams to arrive on the scene while the event is in progress, instead of watching the camera footage after the event. A daily summary of alerts and events over the past 24 hours is generated. The cameras are monitored at an offsite secure location by a third party, preventing collusion with security companies.”
BUSINESS PROTECTION One of a business owner’s many responsibilities includes the protection of their business against intruders, potential theft and other acts that could cause business vulnerability. Taylor says, “We don’t believe in vulnerability. We do believe in responsibility and ours is to keep you and your business safe. You keep your eye on your business and we will see to your security and the safety of your offce, building or offce park, even whilst you’re away or asleep.” Nashua Surveillance Monitoring Solution is able to monitor your surveillance system 24/7/365. “Our solution takes the guess work out of securing your estate. Perimeter monitoring is key to ensure you are protected and keeping undesirable elements off your property and preventing breaches before they happen.”
RESIDENTIAL PROTECTION Residential estates are a popular urban dwelling choice for a large portion of South Africa population, although often providing residents with a false sense of safety and security. Having an electric fence and a
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guarding solution is not always enough. Unfortunately the modus operandi of many criminals is to act with the people who work in and have access to gated security estates. Nashua’s Surveillance Monitoring Solution offers 24/7/365 monitoring of your estate perimeter, entrance and exit points. It also has the ability to monitor the guards on site to offer residents peace of mind and the quality service that you rely on. The monitoring of entrance and exit points and other areas of interest are easily achieved with the solution. Alerts are real-time and are communicated immediately to the appropriate individuals, such as the premises’ security response company or the estate manager.
A high tech integrated system of hardware, video management software, the internet and a state of the art control room monitoring centre work together to detect, assess and alert of any incident. All triggers are assessed and responses and alerts activated immediately, as defined by you. An optional extra is cloud storage of trigger events, incidents, alerts. Keep your fleet, business and residential estate protected with Nashua’s Surveillance Monitoring Solution. This real time technology solution combines intelligence and human ingenuity to create a comprehensive surveillance platform that prevents, protects and provides you with the right data at any given time.
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Whether your company´s fleet consists of 5 vehicles or 500, light delivery vans or heavy transport trucks, Nashua has a real time and scalable fleet surveillance solution that sees everything. With Nashua’s Surveillance Monitoring Solution, vehicle tracking, driver behaviour, cargo and the fleet of vehicles are monitored 24/7/365, through strategically placed cameras that monitor and record activity. The solution uses GPS location to monitor your vehicle and cargo movements. For ongoing safety and security, driver responses and reactions are observed, alerting you when aggressive acceleration, harsh braking, cornering or collisions are detected. Drivers can also raise an alarm through remote or wired panic buttons.
The benefits of this technology include: • 24/7/365 remote monitoring of premises, fleet drivers and cargo • Proactive monitoring and event/trigger alerts • Perimeter protection for residential and business premises • Entry and exit monitoring of residential and business premises • Ability to do live camera view and GPS location for fleet tracking • Cloud backup option for events/trigger alerts optional • Automatic number plate recognition (ANPR) optional
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INDUSTRY FOCUS: MANUFACTURING
Continued from page 105 business has recently evolved through significant investments in capacity and technology. Through our people, we are committed to serving our customers with excellence.” Nampak Plastics, meanwhile, produces everything from bottles and plastic closures to tubes, crates and drums for the entire range of soft drink and household markets, among others. Nampak Paper stands alone as the only division based in the rest of Africa - in Kenya, Nigeria, Malawi, Zambia, and Zimbabwe - and produces paper sacks for the flour and sugar markets and cartons for the alcoholic beverage, tobacco and dairy markets. Metal is arguably the most precious element for Nampak, however, underpinning two of its most important divisions. Established in three regions in South Africa, DivFood offers a large range of diversified aluminium and tinplate cans and is the leading manufacturer of food cans and ends, aerosols and metal containers in South Africa.
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BEVCAN LEADS THE WAY Often held up as the jewel in the Nampak crown is its Bevcan arm, the famed producer of aluminium and tinplate beverage cans made to house all beverages from alcoholic and carbonated soft to vegetable juice and ice tea. Like DivFood, as a creative and innovative manufacturer Bevcan leverages the latest technology and equipment, thanks in large part to a longstanding association with Crown Holdings Inc. Together with exceptional print quality, Bevcan has all the tools to remain the top beverage can producer in sub-Saharan Africa. “As the preferred beverage can manufacturer in sub-Saharan Africa, we pride ourselves on delivering absolute customer satisfaction,” Bevcan says, with its teams dedicated to delivering valueadded products and services to both national and international customers. Never an outfit to stand still, Nampak Bevcan’s latest move is to convert from steel to aluminium beverage can manufacturing, serving to further increase the range of liquids that can be put in its cans to include wine,
// WE WILL CONTINUE TO INVEST, TO ENHANCE THE PERFORMANCE OF THE BASE BUSINESS IN SOUTH AFRICA, WHILE ACCELERATING INVESTMENT IN THE REST OF AFRICA // milk-based products and even mineral water. The advantages of metal over other potential packaging materials have long been touted but those in the know, and perhaps the most compelling in the current climate are the environmental considerations. Consumer packaging accounts for the largest amount of plastic and paper waste, which in turn makes up around 20% of all landfills. Plastic is full of toxins that are either carcinogenic or affect the reproductive system, and most packaging is not biodegradable and
NAMPAK BEVCAN
affects the existence of both humans and animals, including marine life. Metal’s reusability is also a significant boon, not simply in the quest to be ecofriendly but also in greatly extending brand exposure. Metal is also a uniquely sustainable material because it can be recycled any number of times without any loss of material quality. While Nampak was not wholly immune to the currency volatility and adverse macroeconomic conditions of the times, Bevcan’s performance remained strong for the first half of 2019 with double digit growth in volumes by both Bevcan Nigeria and the general metals business. This came alongside 3% revenue growth by Divfood as well
// AS THE PREFERRED BEVERAGE CAN MANUFACTURER IN SUB-SAHARAN AFRICA, WE PRIDE OURSELVES ON DELIVERING ABSOLUTE CUSTOMER SATISFACTION //
as robust volume growth by the Paper and Plastics operations in Zimbabwe. “The outlook in key markets and businesses remains largely driven by macro-economic factors, explained CEO André de Ruyter. “While the entry of a third manufacturer in the beverage can market is expected to put pressure on Bevcan SA’s volumes, we have implemented mitigating initiatives to deal with lower volumes. We are encouraged that robust demand for metals packaging in Nigeria is expected to continue due to the emerging recovery of that economy.” JSE HALF-CENTURY Celebrating half a century of any association is always a momentous occasion, and this year marks the 50th anniversary of Nampak’s listing on the JSE. Nampak’s history has encompassed a plethora of acquisitions, disposals, expansions and new developments to bring it to this point, resulting in a valuable contribution to the SA economy, employment and customers. Now with 49 manufacturing operations across 13 countries, such a landmark year brings good cause for reflection and refinement of vision moving forward. Nampak’s vision is to be Africa’s leading diversified
packaging manufacturer, and according to de Ruyter, “to do this, we need to continually develop and create world class packaging products, to not only meet the demands of our customers and the needs of their consumers, but being mindful of the impact on our environment. “We can advocate for, and with, consumers to influence customers/ retailers to moving towards sustainable packaging and reduce the overreliance on plastics as a substrate, where alternatives with a better environmental footprint are available. “Evolution and a continually changing landscape is the name of the corporate game and ongoing transformation is vital to Nampak’s continued existence and sustainability into the future,” de Ruyter adds. “We will continue to invest, to enhance the performance of the base business in South Africa, while accelerating investment in the rest of Africa. We are excited about our future.”
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AMI MANICA
Local Knowledge
Takes Freight Global PRODUCTION: Timothy Reeder
“With a local footprint in 15 countries and 50 offices worldwide, we make our collective knowledge, expertise and global network available to our clients,” states AMI Worldwide. Taking care of the entirety of customers’ logistics needs, AMI Manica is on hand to fulfil freight transport, warehousing and distribution, project management, storage and many other value-added services. www.enterprise-africa.net / 111
INDUSTRY FOCUS: TRANSPORT / LOGISTICS
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“AMI Worldwide provides global logistics solutions” - for a company which specialises in some of the most technically challenging freight movement imaginable, its mission statement is surprisingly straightforward. It is one which AMI lives and breathes; these are global freight services for everyone, and across its sea, air, land transportation, and warehousing and distribution divisions AMI has all bases covered. Manica, for its part, has strong roots in sub-equatorial Africa, and has built itself up to be a key player and supremely established brand. Primarily involved in the logistics business and customs clearance, it has an unparalleled office and facilities network paired with experienced and skilled personnel, helping it stay ahead in an ever-demanding environment. AMI IMPACT The addition of Manica to the AMI stock has been one of the most important milestones in a long and
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distinguished history, which Enterprise Africa asks Arjun Menon, General Manager of AMI Manica’s South Africa arm, to unpick further. “Manica was originally started by a Portuguese family based in Mozambique in the late 1800s,” he outlines. “The business grew into Zimbabwe and through Zambia and Malawi; there was a lot of movement through the hinterlands. It then expanded into South Africa. “It went through a couple of different iterations, and also gained offices in Namibia. The company was then bought by Bidvest in 1988, and continued under Bidvest management until late 2016 when AMI bought the company. This was actually the culmination of a process which had begun some 20 years previously, which saw AMI build up a solid reputation of handling cargo coming into central Africa from Dubai - in Uganda, Rwanda and North-eastern Congo areas. “They had established offices in Kenya, in Tanzania and in Mozambique, and saw southern Africa as the next
logical extension to the existing model,” Menon continues. Manica Freight Services was one of the largest Mozambican companies with a distinguished history in the market of shipping agencies, shipping and freight services, which fitted perfectly with AMI’s business model. “In setting up their own operation, AMI decided to work on acquiring an
// THEY HAD ESTABLISHED OFFICES IN KENYA, IN TANZANIA AND IN MOZAMBIQUE, AND SAW SOUTHERN AFRICA AS THE NEXT LOGICAL EXTENSION TO THE EXISTING MODEL //
AMI MANICA
// THE EXECUTIVE COMMITTEE BELIEVES THAT A GOOD IDEA IS JUST THAT, NO MATTER WHERE IT COMES FROM // established outfit, which happened to be at a time when Bidvest was interested in selling the company. The sale went through in January 2017, and ever since then we have been running under the AMI Manica banner.� AMI’s history is only slightly shorter, founded in Belgium in 1919 since when it has embarked upon its growth into a leader in the freight forwarding and transport industry.
“There was so much brand equity already there that the Manica branding hardly changed at all,� underlines Menon of the impact of the acquisition and the merging of these two legendary outfits. “The name contains so much legacy and heritage. If you travel into central Africa, or Zimbabwe, or Zambia, people know automatically. We could not lose that.� Menon goes on to delineate how the pairing of these two formidable forces has helped AMI Manica to craft valuable niches in the African market. “The South African freight industry is quite dynamic. We do not occupy the space of a tradition European or American freight forwarder. This is where we see our greatest opportunities; because of our footprint in Southern African and the eastern seaboard of Africa, we find that there
are a lot of opportunities which are very unique to us. We do not have very much competition in those areas. “Within Zimbabwe we are also quite asset-driven,� Menon continues of what sets AMI Manica apart from the crowd. “We have our own warehouses, our own heavy lift equipment, and the necessary partnerships in place with the government rail companies of Zimbabwe, Zambia, Mozambique, Botswana and South Africa to make that strategic relationship work as well. “With AMI’s acquisition of Manica we found that there was a real introduction of an international way of thinking, or ethos,� Menon rounds off on his overview of the business. “The urgency of accomplishment and wanting to get things done were renewed, while from a technological point of view AMI brought a lot of their
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INDUSTRY FOCUS: TRANSPORT / LOGISTICS
// WE HAVE OUR OWN WAREHOUSES, OUR OWN HEAVY LIFT EQUIPMENT, AND THE NECESSARY PARTNERSHIPS IN PLACE WITH THE GOVERNMENT RAIL COMPANIES OF ZIMBABWE, ZAMBIA, MOZAMBIQUE, BOTSWANA AND SOUTH AFRICA TO MAKE THAT STRATEGIC RELATIONSHIP WORK AS WELL //
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Dubai-based thinking and was able to adapt it for the South African context, a mature African market and a lot more developed than a lot of its neighbours.” POWERING THROUGH CHALLENGE The Kazungula Bridge project is just one of the recent major success stories for AMI Manica, where it provided its unparalleled fourth party logistics services, managing resources, technology and infrastructure on the awe-inspiring bridge linking Botswana and Zambia over the Zambezi River. “Large listed engineering companies reach out to us directly,” Menon explains, “or we have the world’s largest freight forwarders reach out to us in order to achieve last mile fulfilment in southern and eastern Africa. These are complicated markets where not everything goes to plan all the time, and so we are chosen to get things done because of our long expertise in these areas. “A large Indian engineering firm was contracted to build a 600 km
power line in northern Botswana, and we were awarded the job to move those containers from South Africa into remote locations in Botswana and then return the empty containers to Durban.” Alongside what Menon calls AMI Manica South Africa’s ‘bread and butter’ work - moving tobacco from Zimbabwe and Malawi, tea from Malawi, polymers and packaging material from South Africa - currently emerging is a trend which sees it taking on more and more work linked to major power projects. In Botswana, it provided transport of large amounts of materials and equipment from the port to the Palapye project site, also facilitating the port collection of the containerised consignments and break-bulk transportation to Palapye. “We are also busy with the feasibility of a potential hydroelectric project which will potentially commence in Malawi almost on the banks of the lake,” Menon adds. “At present, as well, we are doing the
AMI MANICA
// WITH AMI’S ACQUISITION OF MANICA WE FOUND THAT THERE WAS A REAL INTRODUCTION OF AN INTERNATIONAL WAY OF THINKING, OR ETHOS // initial study into the movement of coal from Zimbabwe to India, via Durban - 50,000 tonnes of it. We are now waiting for the kick-off of the transit of the coal.” None of these is a simple, everyday task in an easily accessible location. Each requires every ounce of AMI Manica’s combined experience alongside the crucial local knowledge it can offer. “It’s all about improvising and having ideas to hand,” sums up Menon of AMI Manica’s approach to the nearconstant challenges it faces. “We figure a way out. It’s about having a back-up plan, and a back-up to the back-up, and then a fourth fallback plan.”
ECONOMIC IMPACT AMI Manica has remained sturdy and profitable throughout the recent financial volatility spanning the territory. Partly down to the strength of its service offering, and partly because of the major jobs it is picking up which are funded by private entities and large banks, rather than local governments. “We came through the recent difficulties in the country without being knocked out,” sums up Arjun Menon. “However, it had some impact on our business, especially because to a large extent we are restricted in our movement,” he qualifies. “I cannot just transport cargo as I please; I have to be mindful of the fact that there are protesters and others looking to torch trucks and to steal loads.” Summing up the typical AMI Manica resourcefulness in the face of adversity, though, Menon adds: “We ran a lot of our trucks at night as a result. “The economic and political uncertainty has put something of a dampener on future prospects, as people are not prepared to spend too much or to gamble on something that is not a sure bet,” he continues. “They are very wary of spending any money; everybody is looking to continue doing what they are currently but better, and leaner.
“Especially in places like South Africa, however, these things always manage to course-correct through the sheer will of people. These times of disruption, and of turmoil, are exactly the times we should be going out and buying, too, as when the inevitable upswing comes around, we will be perfectly placed to profit.” Arjun Menon lets slip the secret to AMI Manica’s success to date, and what will inevitably keep it ahead even during times when spends are low: it lies in the perfect marriage between the two formerly separate businesses. “I have a lot of freedom as the senior most manager for South Africa, in terms of decision making,” he enthuses. “The executive committee believes that a good idea is just that, no matter where it comes from. If something makes sense, and the merits of it have been assessed, then there really is no reason why we shouldn’t be acting on a great idea.”
WWW.AMI-WORLDWIDE.COM
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SHELL SOUTH AFRICA
Strategically Growing
in Upstream & Downstream PRODUCTION: David Napier
Shell is one of South Africa’s most important and most historic oil and gas business. With activity across a range of sectors, and a large and talented employee base, Shell is significant for both the energy business in SA as well as the country’s economy. With exploration and investment ongoing, Shell will undoubtedly continue to dominate in this lucrative sector. www.enterprise-africa.net / 117
INDUSTRY FOCUS: TRANSPORT / LOGISTICS
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Now is an exciting time for global energy business, Shell. The company, which undertook a consolidation strategy throughout 2018 – selling off a number of key assets around the world, is investing in new growth, and working towards a future where carbon emissions are lower and its projections for 2020 (set out in 2017) in terms of cashflow, dividend and investment will be met. Globally, the company has achieved a number of milestones already in 2019. In February, Shell announced the start of deep-water production at the Lula North field in Brazil. In April, the company announced a significant discovery at the Blacktip prospect in the deep-water U.S. Gulf of Mexico. Also, in the Gulf of Mexico, in May, Shell announced the start of production at the Appomattox floating production system, months ahead of schedule. Importantly, in June, the first shipment of LNG cargo was shipped from the Prelude FLNG project in Australia – a flagship project for Shell. These successful projects have helped to boost the business during challenging macro-economic conditions and provide proof that investment into upstream activity is not something that will slow anytime soon. Following a strong set of results released for Q1, where cashflow was sitting at $12.8 billion, Q2 also delivered pleasing figures for Shell. “We have delivered good cash flow performance, despite earnings volatility, in a quarter that has seen challenging macroeconomic conditions in refining and chemicals as well as lower gas prices,” said Shell CEO, Ben van Beurden. “This quarter, we achieved some key milestones, such as the start-up of Appomattox and the first LNG cargo from Prelude. These add to our competitive portfolio, which is expected to generate additional cash in the coming quarters. The resilience of our Upstream and customer-facing businesses and their ability to generate
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SHELL SOUTH AFRICA
cash, support the delivery of our 2020 outlook, which remains unchanged.” The company announced $10.5 billion of cashflow from operations (excluding capital working movements). “This, with the average oil price of $69 per barrel for the quarter,” said van Beurden “shows the strength of our strategy and our portfolio.” DOWNSTREAM In South Africa, Shell remains a favoured brand and a historic investor in the country. Starting operations in the country in 1902, Shell’s operations began as a supplier of kerosene and paraffin. Today, the company has a national footprint with retail sites across the entire country, depots in almost every province, and a shared ownership interest in Durban’s SAPREF refinery alongside BP which refines around
180,000 barrels of oil per day. Shell is recognised as a premier oil company, and an agent of change in South Africa with interests in a range of both upstream and downstream operations. In August, Lightstone – a data analytics organisation – published a report detailing the largest fuel networks in South Africa. The report finds that the country’s network of more than 4000 service stations is dominated by six major brands: Engen, Caltex, Shell, BP, Total and Sasol. Shell comes in third place with just over 600 service stations, behind Caltex and Engen with 683 and 998 respectively. Competition is intense, with a number of major international brands jostling for market share. This is why Shell South Africa took the strategy a number of year ago to make service stations about a full product offering,
// SOUTH AFRICA IS A COUNTRY WITH GREAT POTENTIAL AND AN ABUNDANCE OF OPPORTUNITIES // rather than just acting as a fuelling stop for motorists. An important milestone came for the company in 2013 when Shell embarked on a strategy in partnership with Vida e Caffe – a leading coffee brand in the country – to introduce a range of outlet styles on Shell forecourts. By 2016, more than 100 Shell service stations had integrated Vida e Caffe outlets, and the company reported an increase in the overall basket size. Buoyed by its success with coffee, Shell
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INDUSTRY FOCUS: TRANSPORT / LOGISTICS
invested further into quick service food across its network, while also partnering with the likes of Clicks and others to drive loyalty programmes. The result of this drive was Shell being recognised as one of the country’s most valued brands, according to the Sunday Times Top Brands Awards. On the retail side, the brand was further boosted when forecourt attendant Nkosikho Mbele made global headlines after an extreme act of selflessness saw him pay for the fuel of a driver who showed up at his service station in Cape Town but forgetting her bank card. “I didn’t care about the money. I saw the gratitude in her eyes. I saw that she appreciated what I did. That made me happy,” he said. The brand recognition, strong forecourt network, global knowledge, and high-quality product range have positioned Shell as a true industry leader in South Africa and, in August, a Pretoriabased portfolio manager highlighted that Shell’s annual revenue was now equal to South Africa’s entire GDP. As an investor in the country, and a company which claims it is ‘proud to be a part of South Africa’s heritage’,
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Shell is an important partner for local companies and initiatives that aim to better the industry. One such organisation is The ROSE Foundation Recycling Oil Saves the Environment. Founded in 1994, The ROSE Foundation is a business designed to help reduce the irresponsible dumping and burning of used lubricating oil. Shell is a member of the foundation and, alongside other big names from the industry, invests in the success of ROSE. This year, ROSE celebrated 25 years of success and announced that through its life, more than 1.5 billion litres of hazardous used motor oil has been kept out of the environment. “Recycling used oil not only protects the environment, but also creates cost-efficient products for our economy, which is exactly what sustainable recycling should achieve,” says Bubele Nyiba, CEO of ROSE. “All recycling models need to be sustainable and need to work towards a circular economy to be viable in the long term. ROSE has proved that recycling protects the environment, creates widespread employment opportunities and
has a knock-on financial benefit for many. ROSE spearheaded Extended Producer Responsibility – an essential requirement in waste management – 25 years ago, long before it was a legal requirement in South Africa. The organisation is a case-study example of a successful EPR programme that was voluntarily implemented,” Nyiba adds. “With the reality being that one litre of used oil has the capacity to contaminate one million litres of water, coupled with the fact that oil can be recycled many times over, without losing its efficacy – there is an absolute necessity to responsibly collect and recycle used oil. ROSE champions the Petroleum industry’s ‘cradle to grave’ philosophy for used oil management and we are confident of the success of ROSE’s future and look forward to accounting for the collection of many more millions of litres of used oil,” he says. Shell refines a number of products, through the SAPREF refinery that could be recycled or safely disposed of, including petrol, diesel, paraffin, aviation fuel, liquid petroleum gas, base oil, solvents and marine fuel oil.
SHELL SOUTH AFRICA
UPSTREAM Like many international oil majors, South Africa has piqued the interest of Shell in recent years, after large discoveries off the coast. Total, the French oil and petroleum company, made the Brulpadda discovery in February and has labelled its find in the Outeniqua Basin as a “new world-class gas and oil play.”
// WE STRIVE TO EXPAND OUR DOMESTIC FOOTPRINT AND, ABOVE ALL, WE WANT TO CONTINUE TO BE VIEWED BY OUR COMMERCIAL CUSTOMERS AS THE NUMBER-ONE PREFERRED PARTNER IN THE SOUTH AFRICAN OIL AND GAS INDUSTRY //
Reports suggest the find could result in one billion barrels of oil equivalent. President Cyril Ramaphosa said of the discovery: “This could well be a gamechanger for our country and will have significant consequences for our country’s energy security and the development of this industry. Government will continue to develop legislation for the sector, so that it is properly regulated for the interests of all concerned.” In May, it was announced that Shell had plans to acquire stakes in blocks off South Africa’s west coast. Reports suggest that deep-water blocks 5,6 and 7 are of interest to Shell, in the Atlantic off Cape Town. Shell previously had exploration licenses in the Orange Basin but did not renew them because of policy uncertainty and low oil pricing. The company cited the same reasons for pulling out of shale gas exploration in the Karoo desert, in South Africa’s Northern Cape. With a number of big companies in the upstream and downstream sectors, and with an economy that has much room to grow, there is certainly potential for Shell in South Africa. Chairman, Hloniphizwe Mtolo, told
Energy Boardroom that the country represents a real opportunity for Shell. “South Africa is a country with great potential and an abundance of opportunities, with the business sector excited to be part of the nation’s transformation and build on our economic growth momentum,” he said. “At a company level, we strive to expand our domestic footprint and, above all, we want to continue to be viewed by our commercial customers as the numberone preferred partner in the South African oil and gas industry.” Global expertise, local knowledge, very strong reach, and a brand that ranks among the best, Shell is perfectly positioned to grow in South Africa and, as the country changes its legislation to welcome further oil and gas exploration, it looks like a blank canvas for Shell to further stamp its mark.
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Photo - ZEISS - Invertertube® – Ergonomically correct seated position for surgeons
ZEISS SA
See Beyond
What Meets the Eye PRODUCTION: William Denstone
ZEISS has been partnering with local distributors to bring its famous and worldrenowned technology and solutions to its African customers for over 75 years. With its solutions, the company constantly advances the world of optics and helps shape technological progress, and recent results bear testimony to the strength of its work. www.enterprise-africa.net / 123
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//
Founded in 1846 by optician Carl Zeiss and now an organisation spanning the globe, ZEISS has had representation for the past 75 years on the African continent via a wholly owned subsidiary based in South Africa. This arm of the business has expanded its reach during its lifetime to serve customers across Angola, Kenya, Namibia and Zambia. The ZEISS Group is represented in more than 40 countries and has over 50 sales and service locations, more than 30 manufacturing sites and some 25 research and development centres throughout the world. “ZEISS has been contributing to technological progress for more than 170 years,” it begins, “with solutions for the semiconductor, automotive and mechanical engineering industries, biomedical research and medical
technology, as well as eyeglass lenses, camera and cine lenses, binoculars and planetariums.” One of the world’s leading manufacturers of spectacle lenses, ZEISS is committed to delivering maximum precision and comfort through an exhaustive product and service offering. OPTICAL INNOVATIONS “We possess excellent knowledge in various fields of optics gained during 170 years of experience in research and innovation, and a company history that has created milestones and changed lives.” ZEISS has been responsible for many of the most crucial innovations in optical design and engineering. Ever since the enlisting early in the company’s lifetime of Dr Ernst Abbe, a renowned scientist
Photo - ZEISS - Z-Point on Blaser R 93 hunt drive rifles
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recruited to elevate ZEISS beyond its many competitors, new and ground-breaking products have been launched in rapid succession to bring ZEISS to the forefront of optical technology. The spirit of change and development is an ethic ingrained at the company’s heart, as Dr Michael Kaschke, President and CEO of ZEISS, outlines. “Innovation is a way of life at Zeiss; you might even say it is in the company’s genes. “Optical technologies are key technologies for our future, and their technological and scientific applications will increasingly appear in our daily lives.” ZEISS South Africa zeroes in on several of the key aspects of the ZEISS portfolio. With its experience in lithography optics and other optical systems, ZEISS’s
ZEISS SA
Semiconductor Manufacturing Technology enables customers all over the world to produce extremely powerful microchips. Crucial to the technologies at the heart of the modern world, the semiconductor equipment developed and manufactured by Zeiss forms the basis of the microchips used in nearly every technical device today, and a large proportion of all microchips around the globe are produced with optical technologies from ZEISS. ZEISS’s Spectroscopy Solutions are again universal in their application, be this agriculture, food, glass, solar or the chemical branch. The use of white light interference is a proven excellent method for measuring layer thickness, while NIR spectroscopy is a well-established technology for achieving accurate online moisture measurement. “As the world’s leading manufacturer of precision optics, we combine technical expertise and innovative ideas into exceptional visual experiences,” ZEISS says of its Vision Care arm. A more important concern than ever before as the influence of digital devices such as smartphones and tablet computers continues to grow, a typical user will now look at a digital display between 60 and 80 times a day. Today, around 200 million people worldwide wear spectacle lenses from ZEISS. Some 10,000 specialists in over 30 countries work together every day for better vision, engaged in developing not only high-precision spectacle lenses, but also measuring equipment and diagnostic tools. In the area of optics, Carl Zeiss Vision is among the world leaders. ASTRONOMICALLY GOOD It is not purely the science on which ZEISS focuses, however; the human, emotional touch it brings to the application of the technology is another feature unique to this giant of the industry. “What do you remember
We are the first company in Africa to have a Business Partner Agreement with ZEISS Industrial Metrology to perform Service Level Agreements on the worldrenowned ZEISS inspection equipment in Africa, Europe and the Middle East countries. Through Carl Zeiss’ support we have grown from strength to strength. Operating from our main office in Hartbeespoort, our team operate our core business of Installations, Commissioning and Calibrations of Co-ordinate Measuring Machines (3D).
info@mullercon.co.za +27 12 492 5950 www.mullercon.co.za
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Photo - ZEISS - Dr. Ludwin Monz
about your life? It’s those important moments that will stay with you forever,” ZEISS sets out, and this cannot be disputed. “You remember the surroundings, the lights, the people. You remember the feelings you had and how they shaped you. And you keep snapshots of these moments in your head. With ZEISS you can see all of them clearly. You can rely on the perfect view: with the highest quality lenses you focus
// INNOVATION IS A WAY OF LIFE AT ZEISS; YOU MIGHT EVEN SAY IT IS IN THE COMPANY’S GENES // 126 / www.enterprise-africa.net
on what really matters.” Arguably the most important landmark of human achievement in living memory is the moon landing, which marks its 50th anniversary this year. The limits of what seemed possible were redefined, with the iconic image of a footprint symbolising the achievement. Thousands of engineers and technicians across all disciplines and countries became involved in the dream of sending man safely to the moon and back, and ZEISS became one of the crucial participants in this challenge, crafting camera lenses specially designed for space to capture these iconic images. This is what ZEISS means by what really matters: today, the images from the moon missions
still resonate across the globe and the generations, in part due to their exceptional quality. After one of the first missions the importance of photography in space was realised, prompting a collaboration with ZEISS to develop photography systems specifically designed for space and its extreme conditions. More than 500 million people around the world were spellbound by the images brought back to earth on July 20th 1969. ZEISS had conducted thorough research and created a total of eight lens models used in the Apollo program, with many of the preeminent achievements down to Dr. Erhard Glatzel, and his team, Johannes Berger and Günther Lange. In the 1960s, Glatzel’s creations were world-renowned. In honour of
ZEISS SA
Photo ZEISS - ZEISS lenses with DuraVision™ Platinum Technology
Photo - ZEISS - ZEISS Conquest HD
// WHAT DO YOU REMEMBER ABOUT YOUR LIFE? IT’S THOSE IMPORTANT MOMENTS THAT WILL STAY WITH YOU FOREVER // his accomplishments in designing special lenses for the moon missions he received the Apollo Achievement Award. Under his leadership, ZEISS developed more than 100 lens designs, with the photographs taken during the moon missions going on to be published around the world and to make history.
MEDITECH STRONG GROWTH Another key arm of the overall group, Carl Zeiss Meditec AG is one of the world’s leading medical technology companies and has been represented in South Africa since 1939. It was able to report a continuation of its strong growth trend in the first nine months of the fiscal year 2018/19, generating revenue of €1,027.6m, corresponding to an increase of 10.9% compared with the same period of the previous year. Earnings before interest and taxes (EBIT) increased significantly, to €184.2m, compared with €134.8m, while the EBIT margin also increased, to 17.9%. “All strategic business units made valuable contributions to this very encouraging increase in revenue and earnings. Once again, revenue from
consumables for ophthalmic surgery increased the most,” concluded Dr. Ludwin Monz, President and CEO of Carl Zeiss Meditec AG. “Our main objective is to increase our long-term competitiveness. “As already communicated when we published our half-year results, we plan to capitalise on the current favourable earnings situation to also step up investments in research and development. This applies in particular to the area of digital solutions for ophthalmic surgery, in which we aim to further extend our innovative edge.”
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INTERSWITCH
The Key to Africa’s
Electronic Payment Revolution PRODUCTION: Benjamin Southwold
Interswitch is an Africa-focused integrated digital payments and commerce company, focussed on facilitating the electronic circulation of money between both individuals and organisations on a timely and consistent basis. Interswitch is often spoken of as one of the most important companies in Africa’s digital and economic boom, continuously launching products and services to help people get their money to where it needs to be in a market rife with opportunity. 128 / www.enterprise-africa.net
INDUSTRY FOCUS: TECHNOLOGY
//
You would be hard pressed to name a more pertinent concern for a business of any size than electronic payments. Everything where an exchange of money is concerned is affected, in every sector and industry; it is fast becoming the sole payment method of modern society. Africa is an especially key market, having enjoyed an enviable streak of strong economic growth. For the past almost 20 years, the region has maintained an average GDP growth rate of 5%, which has outperformed the global average by some 2% per annum. However, disruptions in global commodity prices and greater competition for global trade have made attaining future economic growth more uncertain: electronic payments offer as smooth and fast highway to access that crucial future growth. As reported by World Economic Forum, a Visacommissioned Moody’s Analytics study into the impact of electronic payments
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on economies around the world found that, in emerging markets between 2011 and 2015, a 1% increase in card usage produced a colossal $29 billion increase in consumption. For Africa, the potential is tremendous. According to the World Bank, roughly two-thirds of adults on the continent remain unbanked while card penetration is extremely low. By improving access to electronic payments and financial services in general, more people will be able to contribute actively to robust, sustained economic growth, and improve their lives. It is an ambitious vision of the future, but one with vast potential to unlock. DIGITAL BOOM Interswitch started life in 2002 as a transaction switching and electronic payments processing company, and has come to be known today as a key player that builds and manages payment
infrastructure, as well as delivering innovative payment products and transactional services throughout the African continent. Interswitch is a Pan-African, integrated, transaction and payment processing company, with a business model that covers shared, integrated e-payment solutions for financial and non-financial institutions. It enables electronic payments to facilitate e-commerce, and provides value-added services as well as real-time online electronic reporting and monitoring to various corporate organisations. Founded by Nigerian engineer Mitchell Elegbe, after his realisation that piles of cash were being used to pay for everything, from groceries to utility bills, Nigerian consumers and businesses today make more than 300 million digital transactions a month across a suite of Interswitch-enabled channels. “With a strong competence in
INTERSWITCH
// WE WANTED TO PROVIDE SAFER, EASIER, FASTER AND MORE COST-EFFECTIVE WAYS OF PAYMENT EXCHANGE. IN TEN YEARS THE BRAND HAS SURVIVED, GROWN AND BLOSSOMED INTO THIS FORMIDABLE STATURE, AND WE CANNOT BUT SHARE OUR STORY WITH NIGERIANS // providing secure and continuously available information technology and infrastructure solutions and services, Interswitch helps customers reduce costs, increase revenues, tighten security, expand product offerings, and improve service levels on technology,” says Interswitch of its exhaustive range of capabilities. “Our direct connection with leading banks and other international payment platforms enables customers
to have secure, continuous access to all the ATMs on the Interswitch network irrespective of ownership and location.” An authority in the burgeoning African electronic finance game, Interswitch is uniquely placed to offer training and advisory services in the e-payments and e-business industry. “We advise clients how to get the best return from their investments in electronic payments, and train to bridge identified gaps in knowledge, learning
and development,” the company outlines. “Our vast knowledge and experience in e-payments consistently sets us apart from other e-payment training providers. No matter how big you are, public or private, and in what industries or sectors you do business, we can help you work smarter and reach your goals.” It is surprising, given how quietly it has taken place, but Africa is digitising rapidly, a trend which has largely escaped the view of many global investors and executives. The continent already has 122 million active users of mobile financial services, more than half the global total, and smartphone connections and mobile data traffic are increasing rapidly. “Clearly, there is significant latent demand for digital payments in many markets of sub-Saharan Africa, and widespread consumer acceptance of
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INDUSTRY FOCUS: TECHNOLOGY
mobile-communications technology is highly encouraging,” opined McKinsey and Company. “For players that are able and willing to move in the near future, there are also opportunities to win important first-mover advantages.” CROSS BORDERS Interswitch delivers digital business and consumer services through its Quickteller Paypoint solutions, and in June announced that it was to partner with International Airtime Top Up to facilitate cross border airtime transactions. Originating from Uganda, these will reach over 150 destination countries supported including, China, Ethiopia, Ghana, India and South Africa. “Quickteller is a robust consumer services platform for convenient Airtime Recharge, Funds Transfer, Bill Payments and Western Union Transfer,” its creators set out. International Airtime Top Up, meanwhile, is East Africa’s largest international mobile top up service for
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traders, tourists, business travellers and many more. Currently connected across over 370 mobile network operators in East Africa and spanning 150 countries, it can reach more than three billion mobile subscribers worldwide. According to Peter Kawumi, Interswitch Uganda, Country General Manager, “the service will build on our growing agent network to offer real airtime top up convenience to consumers across the country. With the costs of cross border roaming and calls falling rapidly, we are excited about this partnership that allows us to deliver even more relevant services to these customers.” 10 YEARS OF VERVE “As an Africa-focused integrated digital payments and commerce company, we have continued to set the pace through strategic partnerships and the introduction of innovative products and services that are tailored to the African market. Our ability to understand the
uniqueness of our market and create bespoke products and services that optimise business processes is a key strength,” Interswitch says. Perfectly exemplifying this is Verve, a leading payments technology and card scheme business in Africa, launched by Interswitch Group to reduce the burden of cash payment settlement in Nigeria. Celebrating its tenth anniversary this year, Verve classic
// OUR VAST KNOWLEDGE AND EXPERIENCE IN E-PAYMENTS CONSISTENTLY SETS US APART FROM OTHER E-PAYMENT TRAINING PROVIDERS //
INTERSWITCH
// OVER THE PAST 10 YEARS, VERVE HAS BEEN REINVENTING THE PAYMENT INDUSTRY LANDSCAPE AND PROVIDING NIGERIANS WITH MORE SEAMLESS PAYMENT EXCHANGE OPTIONS SUCH AS E-CASH, PAYCODE, USSD, AND CHIP+PIN CARDS // card is today accepted in Nigeria and 21 African countries, and the recently launched Verve Global Card is taken in 185 countries, including Nigeria, Africa and ever popular travel destinations such as US, UK and Dubai. Speaking as the decade was notched up, Cherry Eromosele, Group Chief Marketing and Communications Officer at Interswitch, encapsulated how instrumental Verve had been in transforming payments on the continent. “Great brands are great stories; we are proud of the story and
proposition we have created. Our story is one of resilience, and Verve card has helped to solve the inefficiencies of cash handling in a very big way. At its inception in 2009, our intention was to use technology to drive the financial service industry in Nigeria. “We wanted to provide safer, easier, faster and more cost-effective ways of payment exchange. In ten years the brand has survived, grown and blossomed into this formidable stature, and we cannot but share our story with Nigerians.” Mike Ogbalu III, Verve International
Divisional CEO, concluded with his excitement about this milestone occasion, noting that Verve Card scheme was launched to re-define the face of payment landscape in Nigeria, Africa and beyond. “Mission accomplished! Over the past 10 years, Verve has been reinventing the payment industry landscape and providing Nigerians with more seamless payment exchange options such as e-cash, paycode, USSD, and Chip+pin cards.” Verve Card scheme will now be key to Africa’s embracing of FinTech, moving beyond Africa to the rest of the world and establishing footprints in US, UK, Dubai and many more international locations.
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EXHIBITION CALENDAR
KEY UPCOMING EVENTS ACROSS THE INDUSTRY Our regular update to help you keep track of important events and exhibitions taking place across the spectrum of industry sectors. AFRICAN PORTS AND RAIL EVOLUTION OCT 15 – 16 | DURBAN African Ports and Rail Evolution is a two-day trade exhibition and conference, gathering the largest group of transport professionals in the African market. Over the past eight years, the event has accelerated new business opportunities in the port and rail sectors. Furthermore, it has featured south-after African and international speakers discussing strategic and technical matters transport and logistic matters. This year, African Ports and Rail Evolution will provide a truly comprehensive platform to reach the entire African port and rail value chain. With the Africa on its way to becoming a free trade zone, development plans across the continent are prioritising transport infrastructure projects. Against this backdrop, Africa’s mega transport event welcomes professionals to: • Discover Africa’s trade potential and wealth of new investment and partnership opportunities arising out of Africa Continental Free Trade Agreement and other open border initiatives • Find out which infrastructure projects are currently open, where assistance is needed and how to become a leading partner in development for Africa’s multibillion-dollar transport industry • Meet with key industry stakeholders and leading decision-makers African Ports and Rail Evolution will take place at the Durban International Convention Centre in Durban, South Africa from 15 to 16 October 2019. Join the platform that aims to accelerate economic growth across Africa.
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IMESA CONFERENCE 2019 OCT 02 - 04 | DURBAN IMESA (Institute of Municipal Engineering of Southern Africa) promotes the interests of municipal engineers and their profession with the aim of expanding the knowledge and best practices in all Local Government municipalities. The annual conference creates opportunities for individuals to gain valuable information and insight into issues facing the municipal engineering fraternity including the presentation of topical papers, product exhibitions and an opportunity to share and discuss ideas with like-minded engineers, municipal representatives and non-technical associates. Papers presented are from a wide spectrum of engineering fields. The Conference is CPD Accredited with delegates able to earn up to 2,5 CPD points for attending. WINDABA CONFERENCE & EXHIBITION OCT 08 - 09 | CAPE TOWN Windaba Conference and Exhibition has firmly established itself as the‘Must-Attend’ Event for Wind Energy stakeholders active on the African continent. Taking place on 8-9 October, the 9th Annual Windaba is hosted by the South African Wind Energy Association (SAWEA) in proud partnership with the Global Wind Energy Council (GWEC). Year-on-year, the conference brings together some +600 conference delegates and industry exhibitors. The conference will continue to provide the most relevant and current Wind sector information to aid in strategic decision making. Windaba offers several opportunities to engage with customers, stakeholders and peers to ensure a strengthened African wind industry.
IMESA CONFERENCE 2019 DURBAN ICC OCT 02 - 04 90TH ANNUAL CIGFARO CONFERENCE 2019 DURBAN ICC OCT 07 - 09 OIL & GAS AFRICA CAPE TOWN CONVENTION CENTRE OCT 08 - 10 WINDABA CONFERENCE & EXHIBITION CAPE TOWN CONVENTION CENTRE OCT 08 - 09 AFRICAN PORTS AND RAIL EVOLUTION DURBAN ICC OCT 15 - 16 FINANCE INDABA AFRICA SANDTON CONVENTION CENTRE OCT 16 -17 HR INDABA AFRICA SANDTON CONVENTION CENTRE OCT 16 -17 23RD ANNUAL CONGRESS OF THE SACSC CAPE TOWN CONVENTION CENTRE OCT 16 - 18 FIBO GLOBAL FITNESS AFRICA TICKETPRO DOME OCT 25 - 27
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