South Africa Magazine Issue 30 by TNT Multimedia Limited

PeOPle culTuRe TRAvel PROPeRTy Business Wine sPORT enTeRTAinmenT

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securing A

n A T i O n

ADT south Africa has a complete range of security solutions

earth shifts under the Tripartite alliance

the lines between government and business have been blurred

Giving something back

the struggle between mineworkers, mining companies and the government has raised a number of fundamental questions

sa faces lending crisis

the current pace of growth in unsecured lending is “unsustainable” says transunion’s Geoff miller

african tiger ready to roar

Zimbabwe has the potential to grow and become industrialised like most Asian countries says michael mutyambizi

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EARTH SHIFTS unDER TRIPARTITE AllIAncE South Africa’s Trade and Industry Minister Rob Davies attended a series of investor meetings in London recently in an attempt to quell nerves after the fatal shooting of 34 miners by South African police on August 16 at Lonmin’s Marikana mine. Another ten people – including two police officers – died in the week leading up to the shooting and a further person has died since. “We have not seen an impact on foreign direct investment,” Davies asserted. “The impact has largely been felt in the shares of the companies concerned.” South Africa Magazine’s Susan Miller investigates his claims on page 14 and examines whether the earth is shifting under the Tripartite Alliance. This month we also look at why business people have an obligation to give back to the communities they rely on, learn how a landmark court ruling for Grandmark International is great news for SA consumers and we bring you all the latest business and lifestyle news. Finally, we’ve an exclusive interview with ADT South Africa’s Martin Ochien’g and we’ve got all the business profiles you have come to expect from one of South Africa’s leading b2b magazines. Enjoy the magazine!

Ian Armitage Editor

EDItoRIAL

Editor ian Armitage Sub editor marie Toms Editorial Assistant clare Durrant Writer susan miller

BuSINESS

Advertising Sales manager Andy Williams Researchers elle Watson sandra Parr stuart Platt Tom lloyd Sales administrator Daniel George

AccouNtS

financial Administrator suzanne Welsh

PRoDuctIoN & DESIGN magazine design Optic Juice

Production manager Jon cooke Images: Getty, Thinkstock News: nZPA, AAP, sAPA

DIGItAL & It

Head of digital marketing & development syed Ahmad

tNt PuBLISHING

cEo Kevin ellis chairman Ken Hurst commercial David Alstin Publisher TnT multimedia ltd TnT multimedia limited, unit 209, 16 Brune Place, london e1 7nJ tntmagazine.com

ENQuIRIES

Telephone: +44 (0) 1603 343502 fax: +44 (0) 1603 283602 andy.williams@tntmultimedia.com

SuBScRIPtIoNS

call: +44 (0) 1603 343502 andy.williams@tntmultimedia.com

www.southafricamag.com www.southafricamag.com

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Contents 06 14 18

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NEWS all the latest news from south africa

cuLtuRE Earth shifts under the tripartite alliance The lines between government and business has been blurred LIfEStYLE Giving something back do businesses have an obligation to give back to the communities they rely on? coVER Securing a nation adT south africa has a complete range of security solutions says martin ochein’g focuS RecRuiTmenT You’re hired! ingrid Kast, Ceo at daV professional placement Group, chats to ian armitage focuS AuTOmOTive Court ruling set to ‘reshape’ auto industry Grandmark international’s steven ongchin on how a landmark court ruling could pave the way for a more competitive motor industry African Tiger ready to roar Zimbabwe’s future is bright says duly Holding’s acting md michael mutyambizi Drive into new markets sa-based automotive services holding company autovest continues to expand focuS evenTs No white elephant stadium management south africa’s Jacques Grobbelaar on post-world Cup life for soccer City focuS PROPeRTy Source IBA continues to expand The good times continue to roll for this Cape Town-based interior architecture and design firm

66 72 80 86 90 96 104 108 114 122

focuS finAnce SA faces lending crisis The growth in unsecured lending is “unsustainable” says Transunion’s Geoﬀ miller Corporate finance made easy south africa magazine talks to psG Capital’s Johan Holtzhausen Credit where credit’s due south africa magazine catches up with Cas Coovadia the head of the Banking association of sa focuS AlTx Nursing Africa’s SMEs The Jse’s altx oﬀers a compelling proposition to family-owned and growing businesses Full steam ahead railway engineering specialist racec steams ahead following successful refocusing Blue profits soar after turnaround south africa magazine examines the remarkable turnaround of Blue financial services focuS ReTAil Shop ‘til you drop westgate super regional shopping Centre is the Johannesburg metropolitan area’s third-largest shopping centre focuS mininG The Mountain Kingdom’s (not so) little gem diamond mining company Letseng diamonds is nestled high in the breathtaking maluti mountains focuS suPPly cHAin Consider a supply chain rethink… The real competitive edge in business lies in having a better supply chain says iLs Haul the way Concargo celebrates its 25th birthday www.southafricamag.com

All the latest news from south Africa strike season

sTrikes sPreaD To anGloGolD

ashanTi’s koPananG mine Workers at AngloGold Ashanti’s kopanang mine, roughly 200km southwest of Joburg, have joined rebels at other mines around the country in going on strike. This comes despite an end to strikes at Lonmin’s Marikana mine, and a pledge by President Zuma to deploy troops in troubled areas. AngloGold Ashanti said on September 21 that workers for the night and day shift didn’t come to work. The mine employs about 5,000 people. Four mines currently remain closed at Anglo Platinum and one at Gold Fields, where miners are demanding higher wages. Last month 3,000 rock drillers at Lonmin downed tools to demand a salary

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increase. On September 19 the company agreed to 11-22 percent pay increases, and many in the industry predicted the agreement could lead to further strike activity. AngloGold Ashanti said in a statement that, “the strike is currently confined to this single mine” adding, “Management’s priority is to maintain safety, peace and stability at the site and to continue a constructive dialogue with all employees, their representatives and other stakeholders.” It said the company is following the necessary procedures and an update will be provided at the appropriate time. The Kopanang mine produced 90,000 ounces of gold in the first half of this year, which was about

four percent of AngloGold Ashanti’s total production over that period. AngloGold Ashanti’s South Africa operations accounted for approximately 32 percent of total group production during the first half of the year. AngloGold said workers’ demands haven’t yet been submitted to the company. Meanwhile, strike leaders at Anglo Platinum’s Rustenburg mine have vowed not to go back to work until the firm has considered their demand of a R12,500 basic wage. Talks are also continuing at Gold Fields’ KDC West mine near Carletonville where about 15,000 miners have been on a wage strike for the past two weeks. They’re demanding the same R12,500 basic wage.

strike season

marikana Probe

marikana

To sTarT sTrikes enD: neXT monTh Workers aCCePT lonmin’s

final Pay offer The commission of inquiry into the violence and 46 deaths at the lonmin Marikana mine will begin holding public hearings into the tragedy on october 1. Last month police shot and killed 34 workers and injured another 78 as tension at the Lonmin mine escalated. In all, 46 people were killed, and the labour unrest also spread to other mines. Addressing a news conference, Justice and Constitutional Development Minister Jeff Radebe said, “The commissioners have commenced with their work and have had a few meetings, including the meeting with parties. Public hearings are scheduled to commence on October 1 2012. The commission will announce their directives and timetable soon to give details of its schedule for public hearings.”

The deadly Marikana strikes are over and workers returned to work on September 20 after accepting the employer’s 22 percent final wage offer. Strikes started at Lonmin’s Marikana platinum mine last month and have resulted in the deaths of 45 people. Thousands of striking workers gathered at the local Wonderkop stadium in song after accepting the offer. The strike cost Lonmin millions of rand and forced the closure of its K4 shaft. The shaft’s closure resulted in the cancellation of a contract with Murray & Roberts, which provided 1200 workers to the mine. Of the new offer, a Lonmin statement said: “The agreement includes a signing bonus of R2,000 and an average rise in wages of between 11 and 22 percent for all employees falling within the Category 3-8 bargaining units , effective from 1 October 2012. This includes the previously agreed 9-10 percent rises for these employees due to come into effect in October 2012. It also addresses issues of promotion for some categories of workers as well as other allowances.” Acting Chief Executive Simon Scott added: “These have been difficult and tragic weeks for everyone involved with the Company, the communities living around our operations and the South African nation as a whole. Tonight’s agreement and the subsequent return to work is only one step in a long and difficult process which lies ahead for everyone who has been affected by the events at Marikana, but it is essential in helping secure the futures of our tens of thousands of employees and all those who rely on Lonmin in the region.” www.southafricamag.com

Politics

malema faCes arresT: saPa After police prevented former Anc youth leader and firebrand politician Julius Malema from addressing striking miners at the Marikana mine, it has emerged he faces arrest. According to the Sapa news agency, Mr Malema could be arrested soon by South Africa’s elite police unit, the Hawks.

Citing an Eyewitness News report, Sapa says that the law enforcement body is close to completing an investigation into allegations of corruption against Malema. The Hawks probed Juju’s Ratanang Family Trust, alleged tax irregularities and possible tender fraud. It was alleged previously that Malema had about R15

million in unpaid taxes owed by On-Point Engineering, a company partly owned by Malema’s family trust. Mr Malema has said he will cooperate with any investigation into his finances and has dismissed claims he did anything wrong. The Hawks declined to comment on the report, according to Sapa.

Zuma DefenDs

m i n e ClamPDoWn South Africa’s President Jacob Zuma has denied government embraced apartheid measures in a crackdown on protesting mineworkers. Zuma insisted the state was not taking sides in the spate of unrest hitting the key mining sector after ordering police raids on workers at the Marikana platinum mine amid threats of a general strike. “Government respects the constitutional rights of Marikana residents but has to promote peace and order,” the president said in a statement delivered on the eve of the annual congress of the Cosatu trades union confederation.

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“Government cannot allow a situation where people march in the streets carrying dangerous weapons. We cannot allow them to intimidate others or incite violence, and we also have to protect the rights of those who do not want to be part of their protests or the strikes.” Police successfully blocked a march by protesting miners after a security crackdown, while they raided the hostels with the support of the army confiscating the weapons and firing tear gas and rubber bullets after an announcement by the government that it will no longer tolerate the growing mines troubles.

Travel

SAA-Qantas Tolls not alliance to reality: continue to 2014 Cosatu

Qantas Airways and South African Airways (SAA) have been granted a two-year extension on their codeshare alliance on flights between Sydney and Johannesburg. Qantas had asked for an extension until March 2016 but the International Air Services Commission (IASC) was not satisfied that the codeshare would be of benefit to the public beyond December 2014. “The Commission considers that they are likely to be marginal public benefits gained from approving the codeshare until the end of 2014,” the IASC said. “After 2014, the Commission considers there is a greater prospect of either entry and/or more competition between the incumbent airlines in the absence of the codeshare.” Qantas and South African Airways have partnered on flights between Australia and South Africa since December 2000. Qantas operates flights between Sydney and Johannesburg, while South African Airways flies between Perth and Johannesburg. They are the only two carriers offering direct services between Australia and South Africa. The IASC had initially approved an extension to the codeshare alliance until the end of 2012.

While Gauteng motorists can expect to start paying to travel on most of the province’s highways soon, the plans still face heavy opposition. The most vocal is from Cosatu secretary-general Zwelinzima Vavi who has said that should the ANCled government implement the tolls it stands a huge risk of crossing swords with its own people. Vavi’s warning follows judgment in the Constitutional Court that the government had a right to determine policy within the framework of the constitution - a decision that now paves the way for the South African National Roads Agency to implement e-tolling on certain Gauteng roads. Vavi said he was not surprised by the judgment, but that it was “immaterial” to his federation’s opposition against e-tolls. “We are still in discussions with the government, and it has not said it is going to steam ahead with [e-tolls]. “But we want to warn the government: don’t even think about it because you are just going to bring in an unnecessary conflict between yourselves and the people that voted for you,” he said.

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World

bskyb ‘fiT anD ProPer’ bae sysTems,

says reGulaTor BSkyB is a “fit and proper” company to hold an operating licence, British regulators say. Media regulator Ofcom carried out the review of the firm after News International was forced to shut the News of the World in the wake of a phone-hacking scandal. Ofcom concluded that BSkyB was fit and proper to hold its licence although it said that BSkyB’s former chairman James Murdoch’s conduct as chief executive of News International repeatedly fell short of the standards expected. Rupert Murdoch’s News Corporation owns a 39 percent stake in BSkyB while James Murdoch, his son, was chairman of the broadcaster before he stepped down earlier this year in a bid to distance the company from the scandal. Ofcom said there was no evidence that

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James Murdoch knew of widespread wrongdoing at the News of the World or that he was complicit in a cover-up. However, as a company director who has a duty to supervise, Ofcom was critical of James Murdoch’s failure to uncover wrongdoings earlier. It said: “We consider James Murdoch’s conduct, including his failure to initiate action on his own account on a number of occasions, to be both difficult to comprehend and illjudged.” Sky welcomed the licence decision and said Ofcom was right to conclude that it was a fit and proper broadcaster. It said in a statement: “As a company, we are committed to high standards of governance and we take our regulatory obligations extremely seriously. “As Ofcom acknowledges, our track record of compliance in broadcasting is good.”

eaDs in

merGer Talks

British arms maker BAE Systems and European aircraft manufacturer EADS are in talks over a possible merger that would create a global leader in aerospace, defence and security. “Further to the recent movement in BAE Systems’ share price, BAE Systems plc and EADS confirm that they are in discussions regarding a possible combination of their businesses,” the companies said in a joint statement. According to reports, BAE Systems would own 40 percent of the enlarged group, with EADS holding a majority 60 percent stake. “The potential combination would create a world class international aerospace, defence and security group with substantial centres of manufacturing and technology excellence in France, Germany, Spain, the UK and the USA,” the statement added. Both groups have a long history of collaboration and are current partners in joint ventures including the Eurofighter project and the MBDA missile systems firm.

World

German court ruling breakthrough for euro Economists have hailed a landmark decision by a German court that has cleared the way for the launch of the European Stability Mechanism (ESM). The ruling means key parts of the EU debt crisis jigsaw are falling into place following months of unremitting bad news and anguish. However it won’t be all plain sailing from here - with details needing to be nailed down and much haggling expected as member states

make the painful compromises necessary to make the new system work. But the decision by Germany’s top court to reject a raft of challenges against German ratification of the ESM and the fiscal pact that will put a brake on accumulating more debt. It has sparked a positive response on the markets where borrowing costs for weaker eurozone states continued to fall. Spanish Prime Minister Mariano Rajoy said he will wait

and see about asking for a full bailout, after getting EU help for its stricken banks, keeping an eye on the nation’s borrowing costs in the meantime. “I still don’t know the conditions nor whether it is necessary for Spain to request it,” he told parliament. “We will see how the risk premium develops and the financing differentials ahead.” Italian Prime Minister Mario Monti described the German court ruling as “excellent news”.

Russia to sell Sberbank stake Russia’s central bank has announced plans to go ahead with the long-delayed auction of a 7.58 percent stake in main lender Sberbank following a recent improvement in global markets. The Bank of Russia said the sell-off would leave the state holding a 50 percent stake plus one voting share in the country’s main financial institution. The stake will be auctioned off in both US dollars as global depository shares (GDS) on the London Stock Exchange and roubles as ordinary shares appearing on Moscow’s MICEX exchange. “The offerings represent an opportunity for us to further diversify Sberbank’s investor base and secure an international stock exchange listing,” said Sberbank chief executive German Gref.

“We view this as a critical step in our broader plan to reinforce Sberbank’s position as the leading Russian financial institution, and transform it into one of the world’s top performing banks in terms of profitability, operational efficiency and service quality.” Sberbank provides emergency credits to other lenders and holds more than half of the country’s savings.

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lifestyle

sa raPPer

Crime leVels

nominaTeD

fallinG

for ToP aWarD Rapper Spoek Mathambo stands a chance of becoming the first South African to win a Music of Black origin award after being nominated for the Best African Act category. The awards evening will take place at the Echo Arena in Liverpool in the UK on November 3. The 27-year-old faces stiff competition from the likes of Amadou & Mariam, D’Banj, P Square, Fally Ipupa, Camp Mulla and Cabo Snoop. The rapper, whose real name is Nthato Mokgata, was also nominated in the 2011 edition of the Mobos in which he and another local dance outfit, Liquideep, lost to Nigerian pop star WizKid.

South Africa’s latest crime statistics show a reduction in all seven categories of contact offences in the year up to last March, but the country remains plagued by high levels of criminal activity. Releasing the 2011-12 annual crime statistics at parliament in Cape Town, police minister Nathi Mthethwa said that contact crimes, including murder, sexual offences, assault and aggravated robbery, had fallen by 35 percent compared to figures eight years ago. All provinces except the Western Cape, the Free State and Limpopo, saw the number of contact crimes decrease.

sport

hunDreDs GaTher aT sa ParalymPiC

homeCominG Hundreds of people turned out on September 11 to welcome home South Africa’s paralympic heroes, following the end of the london 2012 Paralympic Games. OR Tambo International was filled with the sound of vvuvuzelas as supporters waved South African flags to welcome the athletes home. 12

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South Africa finished in 17th position overall, securing 29 medals, including eight gold, 12 silver, and nine bronze. Record-breaking performances and packed venues made the London Paralympics the most successful ever and it has hopefully changed the way many look at disability.

lifestyle

shell’s karoo fraCkinG

Dream a sTeP Closer oil giant Shell cannot frack in South Africa’s karoo Basin yet, the government’s multidisciplinary task team has said. Only “normal” geological exploration will be allowed for now, says its recommendation, the executive summary of which was released by Mineral Resources Minister Susan Shabangu in Cape Town. “Allow normal exploration (excluding the actual hydraulic fracturing), such as geological fieldmapping and other datagathering activities, eg hydrological studies, to proceed under the existing regulatory framework,” the document says. The team acknowledged an extended or outright ban on fracking (aka hydraulic fracturing) was inappropriate. “While considering the implications of hydraulic fracturing, it is important to note that the effect of an extended ban, moratorium or stringent regulation

can best be described as a reduction of economic opportunity. “Such measures would delay or prevent an improvement of the understanding of the real extent of the potential resource and remove the potential economic benefit to severely deprived communities.” The recommendation warned however that, “in the event of any unacceptable outcomes, the process may be halted.” The report was endorsed by Cabinet, which agreed to lift the moratorium on shale gas exploration in South Africa. “Shell welcomes this

decision,” Shell SA said in a statement. The government’s multi-disciplinary task team was established by Ms Shabangu 14 months ago, after Cabinet declared a moratorium. The minister told journalists that some drilling would be involved in the exploration process, but no fracking. “We’re talking about the initial process. Drilling will happen... but what we’ve agreed at Cabinet is that the actual fracturing... cannot be done now.” Drilling was necessary to establish the size and potential of the shale gas reserve, she said.

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earth shifts under the

Tripartite alliance

The lines between government and business have been blurred says Gareth newham, Head of the crime and Justice Programme at the institute of security studies (iss) in Pretoria. By susan miller

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outh Africa’s Trade and Industry Minister Rob Davies attended a series of investor meetings in London recently in an attempt to quell nerves after the fatal shooting of 34 miners by South African police on August 16 at Lonmin’s Marikana mine. Another ten people – including two police officers – died in the week leading up to the shooting. “We have not seen an impact on foreign direct investment,” he asserted. “The impact has largely been felt in the shares of the companies concerned.” However, the impact has been felt elsewhere – horror at the police action has been expressed worldwide. In South Africa civil leaders like Desmond Tutu spoke out and Financial Mail editor Barney Mthombothi wrote ‘we cannot, as has been our won’t, apportion blame, or hide

Earth shifts under the tripartite Alliance cuLtuRE

behind the tattered skirts of apartheid and its legacy. Is this what we struggled for?’ And it’s at the very heart of government that many fingers have been pointed. Mthombothi pointed to the governance of the Tripartite Alliance - the ANC, SACP and the Congress of South African Trade Unions (Cosatu) - as ‘a temple of nothing but greed, self-serving avarice’. And as worker relations sour, Cosatu’s role in the Tripartite Alliance is coming increasingly under the spotlight. After all as Gareth Newham, Head of the Crime and Justice Programme at the Institute of Security Studies (ISS) in Pretoria

ideally government should be a kind of mediator between labour and business

says, the lines between government and business have been blurred by the ANC’s investment arm Chancellor House, hugely active in the mining and construction industries. “Ideally government should be a kind of mediator between labour and business but in South Africa it gets conflated because of the conflation of big business and the ANC,” he said. Newham said increasingly the ANC’s interests were thought “to be too closely aligned to management and business – and Cosatu and its affiliates (like the National Union of Mineworkers) are seen in the same light.” NUM’s waning influence was illustrated when only 6.3 percent of shift workers reported for work at Lonmin on deadline-day Monday September 10th. And this after Lonmin management, the NUM, Solidarity and Uasa signed a peace accord, which the newly active Association of Mineworkers and Construction Union (AMCU) refused to sign, saying it had not been part of the process leading to it. And Davies is right the continuing strike has impacted on business – Lonmin’s London listed shares plunged 6.8 percent on August 16 and another eight percent the next week. Importantly the gold industry www.southafricamag.com 15

Reverend Tutu

has been affected. A third of the workforce at Gold Fields, the world’s fourth-largest bullion producer, downed tools in an illegal strike on September 10. This was only days after its management resolved an earlier illegal strike by 12,000 of its workers at its KDC East mine over worker discontent with the local branch of NUM. Gold Fields share price shed more than 2.5 percent as news of the latest wildcat strike spread. Reuters reported that this discontent with NUM has allowed AMCU to recruit on Lonmin, Impala Platinum and Aquarius Platinum. They are also active at Anglo American Platinum. And it’s not just the miners but poor communities around South Africa who have been protesting – often violently – about service delivery, including the provision of electricity and water, and the slow rate of change. 16

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The ANC has improved living standards since coming to power 18 years ago but 60 percent, or about 23 million, still live in poverty and 28 percent are jobless, according to government data. “The dividends of development weren’t spread across the population as a whole,” Dirk Kotze, a politics professor at the University of South Africa, told Bloomberg. “There is a high explosive potential. It is just not a labour dispute anymore, it is much more emotional.” Township residents staged 113 protests against a lack of housing, sanitation and other services in the first seven months of this year, more than in any other year since monitoring began in 2004, according to Municipal IQ, an independent local government research group. At the heart of these protests is a lack of skilled and engaged leadership, says Newham.

Earth shifts under the tripartite Alliance cuLtuRE

“Protests usually only break out or become violent after people have tried numerous times to speak to a local councillor or to get to the mayor to address their concerns. At the heart of a lot of the stuff is that lack of response and we also saw that with Marikana.” Newham suggests that recent events illustrate “that certain groups don’t think that Cosatu are representing them”. “Marikana is an expression of that – AMCU and many other unions are just completely opting out of the labour system with their grievances. They don’t even bother using the labour legislation to try and strike – they have wildcat strikes –like Nactu, the breakaway group from Sactu. The pressure within the alliance is now building.” The shooting of the miners – and alleged torture of miners in custody – shocked South Africans who thought they had seen the back of state violence after 1994. However, Newham says that it “all starts on top. The people in charge of the police know virtually nothing about policing”. It’s the reason why “the police don’t go to a crime scene, the reason why they have such a low conviction rate if cases get to court, there’s police corruption and other abuses.” While economic analysts did not immediately predict a drop in investor confidence in South Africa, Peter Attard Montalto, Nomura’s Londonbased emerging-market economist, told the Wall Street Journal that if strikes spread and the Lonim situation wasn’t resolved it could lead to a downgrade of South Africa’s sovereign credit ratings.

Rob Davies

Newham believes the consequences of Marikana will be felt for some time. “ Would you really want to start up mining in a situation where there is a possibility that your entire workforce will go on a wildcat strike and start killing people or that they will get shot dead by the police?” And what about brand South Africa? “With the police, the only way they knew was to shoot people dead and then charge them with murder! It sounds internationally that there is something seriously wrong in this country,” says Newham. END on Sept 19 workers accepted lonmin’s 22 percent final wage offer. The strikers at its Marikana platinum mine resulted in the death of 46 people. www.southafricamag.com 17

Back GivinG sOmeTHinG

The struggle between mineworkers, mining companies and the government has raised a number of fundamental questions about life here in south Africa. Gary lubner, chairman of Afrika Tikkun uK, believes business people have an obligation to give back to the communities they rely on.

By susan miller 18

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Giving Something Back focuS lifesTyle

ary Lubner, Chairman of Afrika Tikkun UK, is CEO of Belron, a leading vehicle glass repair and replacement company that operates in 34 countries. After graduating from UCT he qualified as a Chartered Accountant with Arthur Anderson and completed his MBA at London Business School, joining Belron soon after. The Lubner family’s ties with the Afrika Tikkun charity are incredibly strong as it was started by Gary’s uncle Bertie Lubner and the late Chief Rabbi Cyril Harris soon after the emergence of democracy in South Africa. The current CEO of Afrika Tikkun is Marc Lubner, Gary’s cousin, and Gary’s father Ronnie donated money for the Ronnie & Rhona centre in Alexandra. Gary has donated personal funds towards the Gary Lubner Foundation ECD centre at the Uthando Centre, which recently opened in Braamfontein. I asked him about the charity, about the ties that bind him to South Africa and whether businesses can make a difference. Afrika Tikkun aims to help children in a holistic way. How? In ’94/95 the Aids epidemic was pretty much out of control. The charity tried to help children who had been affected, whether they had it themselves or were part of a household where the parents had died. We are still focused on children but over the years have evolved into an organisation that offers a broad range of child development programmes from crèches to afterschool programmes and libraries.

Who else do you help? At some of our centres, like the one in Alexandra, we provide for old age pensioners too. A lot of our work is going out into the communities. We spot children who are at risk and make sure that they are looked after. So, while we are directly dealing with about 17,000 kids every day, the impact is probably ten times that in terms of the number of people that we touch in one way or another. How many centres are there? Six, four in Johannesburg – in Alex, Diepsloot, Orange Farm and the centre in Hillbrow (recently relocated to Braamfontein) - and two in Cape Town at Delft and Mfuleni. What is the centre you’ve just opened going to focus on? The same kind of work; it’s a childhood development centre. The Children’s Hospital in Hillbrow went into disrepair and we’ve been reclaiming that site and we’ve now built this Centre. We predicted how many people would be coming in on day one and after a week it had already doubled so the need is just massive. You are over-subscribed? That’s a constant challenge, particularly for a charity that depends on funding. Isn’t this a gap that should be filled more by Government? Definitely, absolutely. The simple answer is YES. It feels completely mad to me that unless we intervene, children in some cases would not be fed or educated in those early years, which we know are so critical www.southafricamag.com 19

for their development and I think that is the State’s role. Having said that, there is a gap and we can’t stand on our high horses and have political discussions. In fairness we have got a number of programmes where the government supports us, so they give an amount per child, they help with capital projects etc. It could be much, much more and it could be much quicker. How do you get funding? I’m chairman of the UK charity and we try and raise as much money as we can, which goes directly to South Africa. Belron’s core charity, supported over the last 10 years, is Afrika Tikkun. What I do every year with Belron – we started this 11 years ago – is compete in the London Triathlon. In the first one there were 10 of us who competed. Last year we had a thousand people from Belron coming in from 17 different countries across the world. We managed to raise a million euros for Afrika Tikkun. In South Africa they raise money from different sources, companies, the Lottery, they try and get funding from Government: Basically, wherever we can get it.

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You’ve emigrated but are still intimately involved in SA? I’ve been living in the UK for nearly 23/24 years but I have both a very strong emotional pull to SA and I also have a very strong feeling that I have a strong obligation to continue supporting SA. In what way? Regardless of where you live, I feel very strongly that if you were born and raised in South Africa you have an obligation to give back, and that’s the passion that drives me. Do other South Africans feel the same way? There are a lot of charities based in the UK set up by South Africans and we try and work closely together. Many South Africans are very supportive. Are they all? No. It’s frustrating to be told that ‘we are not interested in SA and it’s a corrupt country’. I always say ‘those things may be true but it’s very hard to explain that to a three-year-old child who needs to be fed and educated’. If we are not helping to develop those young kids then the future remains bleak in South Africa and I don’t want that.

Giving Something Back focus lifestyle

So you’ve got family still there? Yes, very much so and a lot of friends. I go back at least once a year. Did you leave for business reasons? Both my wife and I came to further our studies. I came to do an MBA and frankly we had no intention of staying but I was offered a fantastic job at the company that I am still with and ended up saying ‘well, let’s try it for a few years’, had kids and you get onto the treadmill if you like. Should business play a role in upliftment? There is always a role that business can play in trying to bring about change. Businesses have to be responsible and make sure they are cognisant of what’s going on in the communities where their employees are from. At the same time talk to government about economic policies and the things that government should or

could be doing better – around competition policy, corruption – there’s a huge role that business can play. And that’s not only in SA, that’s in any country. Over the last few years I have seen business playing a much bigger role, particularly in the corporate responsibility area around giving back and the environment. I think that is a trend which has slowed down a bit particularly in Europe because of the economic crisis. What would your message to business be? I think we as business people have an obligation to give back to the communities that we rely on for business. It’s as simple as that. Being a business and saying I have no responsibility for the conditions that people are living in, or the way people are getting to work, is naïve and frankly it’s bad for business. Visit http://afrikatikkun.org for more details about the charity’s work. www.southafricamag.com 21

securing A

n A T i O n

martin Ochienâ&#x20AC;&#x2122;g, marketing and strategy Director at ADt South Africa tells us more about the firmâ&#x20AC;&#x2122;s complete range of security solutions, from electronic article surveillance (eAs) to access control, fire detection and suppression systems and remote monitoring.

By ian Armitage 22

www.southafricamag.com

ADt South Africa coVER

hen thinking about security, you have to ask two fundamental questions: What means most to you in the world? And what would you do to keep it/them safe. You’d do pretty much anything, right? With crime a constant threat, it is only natural to worry. ADT, South Africa’s leading fire and security company, has a solution – or rather several. It offers the sophistication of a major international corporation and the home-grown knowledge of a local organisation. ADT’s leadership position wasn’t built overnight. For many years now it has been protecting the homes and businesses of South Africans. “Since ADT entered the South African market at the turn of the millennium by merging and welding together what were some of South Africa’s leading local security companies then, we’ve grown dramatically,” says Ochien’g. “We are the market leader in this space across many disciplines including the monitoring and response business in the residential and small business sectors, and are an increasingly strong player in the commercial and retail security space as well. This leadership isn’t just about penetration

and market share, but also about broad services, customer care, and value addition for our customers. Our response times are industry leading, as are our training standards for our armed response officers. These combined with a desire to always improve on the customer service side, encourages us to keep re-inventing ourselves to ensure that we stay relevant with the ever-changing clients’ needs in this space.” According to Mr Ochien’g, ADT’s security systems are in every major city across South Africa and play a crucial part in people’s lives when it comes to security, monitoring, response, medical emergencies and fire alerts. ADT provides fire and security services to both business and residential customers around the country. “ADT is the largest private security company in South Africa and a specialist in this field. We are very strong in the residential market, where home security systems are a valued part of home protection, and we are also driving security and loss prevention solutions in the retail and commercial sectors where businesses value their assets.” A couple of years ago, the firm launched into the commercial sector with an intense drive to bring

since ADT entered the south African market at the turn of the millennium by merging and welding together what were some of south Africa’s leading local security companies then, we’ve grown dramatically

www.southafricamag.com 23

ADt South Africa coVER

internationally tried-and-tested, holistic, security solutions to South African businesses. “In the retail sector, for example, we offer in-store protection for our clients and their customers to enhance not only the performance of the retailers but also to secure the shopping floors and uplift the shop profile for a better shopping experience. “Almost half a million South African homes and businesses trust ADT to protect them and their assets. This growth and strength has been paralleled by accelerating growth in the business and commercial sectors,” says Ochien’g. “While commercial security solutions have been the major focus and area of success for ADT worldwide, for ADT South Africa the focus has been on residential security. The opportunity

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13353 OFyt

For further information, call ADT Business Solutions on 086 12 12 410 or visit www.adt.co.za

Registered as a security service provider by the Private Security Industry Regulatory Authority Reg. number 765528.

ADt South Africa coVER

to use the expertise gained from that sector to help drive growth in the commercial and retail sectors canâ&#x20AC;&#x2122;t be over-emphasised. â&#x20AC;&#x153;ADT today provides commercial security solutions to thousands of South African businesses in all major urban centres. We offer a comprehensive range of dedicated and integrated security solutions combining manned and electronic platforms with guards, access control systems, burglar alarms, installations, monitoring/ armed response and Video services including remote video surveillance, as well as bespoke integrated systems and fire solutions for specific businesses. Our solution range in the retail 28

www.southafricamag.com

ADT is the largest private security company in south Africa and a specialist in this field. We are very strong in the residential market

Tel: + 27 31 701 6213 Fax: +27 31 701 6337 PO BOX 10605 Ashwood, 3605 KZN, South Africa sales@globalarmour.co.za www.globalarmour.com

sector is comprehensive and we have been investing a lot in driving solutions that not only improve store performance but enhance shopper experience as well.” Not only does ADT have the drive, manpower and technological intelligence to offer these solutions, it also has a comprehensive array of products and service offerings to suit the commercial markets in South Africa. “Our approach is to use our local experience, coupled with global knowledge, to put into practice locally what has worked globally especially in the commercial sector while being flexible to offer local solutions for South African specific challenges.”

www.southafricamag.com

AT A GlAncE... ADT GloBAl ADT, which operates as a subsidiary of Tyco International Ltd, is as old as the security industry itself. In fact, ADT invented home security. The story began in the US in 1874, when the American District Telegraph Company, A -D -T, was formed through the amalgamation of several small telegraph delivery companies. ADT claims to be the world’s largest and most technologically advanced security company, operating in over 50 countries and watching over seven million commercial and residential clients. With over 100 years of industry experience and innovation in every aspect of security and fire protection, ADT is the world’s blue chip provider. The company helps protect 80 percent of the world’s leading retailers, two million commercial enterprises, 75 percent of the world’s commercial shipping, over 300 airports and transit hubs, thousands of commercial buildings, and more.

ADt South Africa coVER

Almost half a million south African homes and businesses trust ADT to protect them and their assets

Away from business, Ochien’g was keen to mention ADT’s CSR record, and specifically a programme the firm runs in Johannesburg and Cape Town called ADT Teach. “ADT Teach is an innovative computer skills and education programme for high school learners. Through the programme, high school learners from under-privileged schools gain computer skills, helping them prepare for more advanced training and education, and entry into the workforce in this critical resource area.” Trainers visit the schools in ADT Teach mobile computer labs, which are equipped with laptops, a generator and routers. Since its launch, the programme has benefited more than 600 learners. END To learn more visit www.adt.co.za.

yOu’Re HiReD! ingrid Kast, ceO at DAv Professional Placement Group, chats to south Africa magazine.

By ian Armitage

ngrid Kast knows that attracting and keeping top talent is key challenge. Having the right people is fundamental to the success of any company. Her firm is a recognised leader in the recruitment industry and a company that attracts as many sector excellence awards as it does top candidates. Ingrid founded DAV Professional Placement Group in 1975. It has offices in Johannesburg and Cape Town and is a leading player in the engineering and ICT industries. It also has specialist divisions in the financial markets, office support, German and foreign language speakers to mid- to top-level management. “Our recruitment process, benchmarked against the best in the world, identifies the most exceptional candidates - the top 20 percent - and we place them with companies,“ says Kast. 32

www.southafricamag.com

DAV focuS RecRuiTmenT

I was fortunate enough to ask her a few questionsâ&#x20AC;Ś Ingrid, great to speak with you; tell me a little bit more about the industry? Have things turned around? Recruitment is still recovering from the effects of the 2008/2009 recession, which was the worst in more than a decade. Our business volumes dropped by 30 percent, but we were one of the best performers during that time. Remember that during a recession, candidates become more risk-averse by holding on to their current jobs. The incentive of companies to hire during a recession is reduced and candidatesâ&#x20AC;&#x2122; willingness to change jobs is also reduced. It took two-and-a-half years from August 2008 to February 2011 to reach the peak volumes that we achieved before the recession. Many staffing companies are still struggling, particularly the smaller ones who do not have the sophisticated candidate databases and technology of the larger agencies. According to staffing industry association APSO, the number of agencies in the country dropped from 3,200 to 2,600 between 2008 and 2011. At the same time, membership with APSO increased from 720 to 800. The recession induced pressure on the smaller agencies to consolidate or become compliant by joining the industry association and those who did not tended to go out of business. The recession has made the industry more professional and competitive by driving out less reputable agencies and increasing the use of those staffing agencies that have high standards and a stable track record.

We have grown substantially despite the very sharp recession

Are there lots of opportunities for DAV then? Tremendous opportunities! We have grown substantially despite the very sharp recession. Since the bottom of the cycle reached in 2008, we have nearly doubled our volumes. We have a unique business model in terms of the candidates that we attract and the staff that we retain. We differentiate ourselves by offering the best candidate and client experience. What are some recent trends? One is that there is strong employment growth in the professional and management categories. In South Africa the unemployment rate for professionals â&#x20AC;&#x201C; doctors, lawyers, engineers, finance specialists, www.southafricamag.com 33

DAV Company focus name Recruitment focus ???????

skills shortage has put enormous upward pressure on remuneration and benefits - not just monetary benefits, but also recognition, responsibility, time off and other things. What’s more, our universities cannot cope with the demand for skills. The net growth of entry-level candidates in the accounting and legal fields (i.e. newly qualified people less exits of retired people) is just 0.5 percent per annum, although the demand is growing at seven to eight percent per annum. technology professionals, economists, and so on – is very low, around 1.4 percent. There is also a shortage of talented and experienced management candidates, driven by employment equity laws, emigration of skilled people, and other factors. Staffing agencies that focus on professional and management positions have tended to do very well, because their clients (the employers) do not have access to large pools of skills in these areas. Another trend is that candidates have become very discerning. The new generation of jobseekers is much more likely to change jobs than previous generations. In contrast with their parents, today’s men and women have shared responsibilities for childrearing and housekeeping. This makes the search for “work-life balance” much stronger than it was before. The new generation is very choosy when it comes to taking a new job and, at the same time, they are happy to change jobs every three to four years, or even less. That sounds like quite a challenge? The shortage of skills certainly is. According to Adcorp research there are currently 829,000 unfilled vacancies in the country. These are positions that could be filled fairly easily if only the candidates with the right skills were available. The 34

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It seems strange then that new restrictions on immigration have been brought in? Yes, restrictions on immigration are a challenge. Companies can no longer apply for quota work permits. Each application must be dealt with individually. These restrictions will have a significant impact on the availability of high-skilled people in South Africa because high-skilled immigrants make up more than 10 percent of total placements in the country. If we aren’t growing a sufficient number of high-skilled candidates internally within the country, and we can’t import scarce skills from abroad to the extent we are used to, this will compound the shortage of skilled people. An interesting observation however is the number of South Africans returning from abroad. Over the past year, more than 120,000 South Africans living and working abroad have returned home. This has been driven by difficult economic conditions in the world’s major English-speaking economies but also the so-called “brain drain” appears to be slowly and steadily reversing, due to the stabilisation of crime rates, sharp increases in local vis-à-vis international wage levels relative to the cost of living and the growing availability of high-quality private schooling options for South Africans.

As South Africaâ&#x20AC;&#x2122;s #1 quality candidate provider, all of us at CareerJunction invest a great deal of time and effort in making sure we build strong long-lasting relationships and trust with all our clients. Weâ&#x20AC;&#x2122;ve been very fortunate to have DAV Professional Placement Group as a client for many years and look forward to contributing to their continued success. Happy online recruiting.

Visit us at www.careerjunction.co.za Please join us on

and

In the last year you’ve launched a new division specialising in recruitment in Africa and emerging markets. Tell me more? We have. With the growth explosion in emerging markets, the shortage of top talent is already a major challenge - businesses that are expanding, establishing or simply maintaining operations are fast realising how critical it is to have top talent on the ground to achieve long-term success. This division is perfectly positioned to identify and assess the right skills for operations outside of South Africa and they have had a fantastic, successful year, mostly placing into Egypt, Ghana, Swaziland, Morocco, Mozambique, Namibia, Nigeria, Tanzania, Zambia and Zimbabwe. You’ve also got a level 2 AAA rating EmpowerDex. You must be please with that? Delighted! We were thrilled when for the first time DAV received a level 2 AAA rating from EmpowerDex. In addition, DAV is classified as a ‘value adding supplier’, allowing our clients to claim back 156,25 percent against their own procurement scorecard. 2012 has been something of a year for awards too? It has. We received six Diamond Arrow Awards from PMR who surveyed staffing solutions companies with clients all over South Africa. That is the highest number of awards any company has ever received in this survey, which has been conducted annually since 2004. In addition, we received two Golden Arrow Awards and one Silver Arrow Award from PMR and we were Winner of the “Diversity in the Work Place” Award from National Business Awards. 36

www.southafricamag.com

Ingrid, you’ve built a superb company, but is there anything you would like to improve? Continuous improvement is completely entrenched in our culture – we never think “we have arrived” and we know that our business will only stay successful as long as we have great, motivated people and we strive for on-going world class training and improvement. Resting on our laurels is never an option. We are constantly looking for ways to do things in a better way so we can keep delivering a fantastic service to our clients and candidates! What’s next for DAV? We are doing well, we are above target for this year so far, in fact we are on an expansion drive right now, which means that we want to grow every one of our divisions - engineering, IT and telecoms, German speaking professionals, financial markets, office professionals, Africa and emerging markets, mid- to top-level management and executive search. We have historically always made placements into Africa especially in our engineering and IT and telecoms divisions but have never had a team that focuses solely on Africa and other emerging markets. Our aim is always to innovate, using new technologies, recruitment training and approaches to stay ahead of market trends. We also aim to continuously grow and develop our people and so we invest a lot of time and money into training. New technologies cannot replace selecting the right people for the right positions but technology and social media add a new dimension and make the hiring process even more complex. Our aim of course is always to exceed our target to give our shareholders a good return on their investment.

DAV focus Recruitment

We are constantly looking for ways to do things in a better way so we can keep delivering a fantastic service to our clients

Finally, is there anything youâ&#x20AC;&#x2122;d like to add? Yes! Being on an expansion drive we are looking for great people to join DAV, the kind of person who truly wants to make a difference in this world to candidates and clientsâ&#x20AC;&#x2122; lives. We have created an unbelievable culture, where people truly care about each other and every client and candidate and have an outstanding work ethic. The person who wants to leap out of bed in the mornings, run into the office and do their work with passion, purpose and enthusiasm. South Africa has a shortage of talent so the recruitment consultant who can identify, assess and place top talent into the ideal job with DAV will have a very fulfilling career. END To learn more visit www.dav.co.za.

Grandmark ruling set to â&#x20AC;&#x2DC;reshapeâ&#x20AC;&#x2122; auto industry

www.southafricamag.com

Grandmark International focus automotive

South Africa Magazine talks to Grandmark International’s Steven Ongchin about how a landmark court ruling could pave the way for a more open and competitive motor industry.

By Ian Armitage

randmark is a South African company that imports and sells automotive replacement parts. In July, it won a legal battle against BMW SA, one of the world’s largest motor manufacturers. The decision, which centred on BMW’s claim that Grandmark infringed on its intellectual property rights by importing and selling spare parts that were fitted to BMW models, could pave the way for a more open and competitive motor industry. “We won the case in the North Gauteng High Court which dismissed BMW’s claims,” Mr Ongchin, the firm’s chief operating officer, says. He says the decision was significant. “It is a landmark decision. The matter, which BMW have taken on appeal, revolves around body parts of the BMW vehicle. BMW believe we are infringing aspects of its design and other intellectual property rights by providing alternate replacement parts.” Replacement parts are vehicle parts that aren’t manufactured by the original vehicle manufacturers but by independent companies. Many of the parts imported by Grandmark could be bought for less than half of the price charged by the OEMs such as BMW, Toyota and VW without a compromise on quality. For obvious reasons, OEMs aren’t fans, and there has been considerable legal skirmishing, with claims of both design and trademark infringement.

www.southafricamag.com 39

Grandmark International focus automotive

“BMW SA claimed that we had infringed four specific aesthetic designs, another 150 less clearly defined designs and certain of BMW’s trademark registrations. In a nutshell the judge ruled in our favour on all counts. Specifically on the design aspect, the judge ruled that BMW had not proved any aesthetic features of its parts that warranted protection in the aesthetic register under the Designs Act. “This ruling has the potential to loosen the monopolistic stranglehold that OEMs have on the parts market, should it be upheld though the appeals process. “This is about having choice in the marketplace, 40

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We continue to grow in an economy that is somewhat tepid in its overall GDP growth

fair competition and free enterprise. We are only asking that the consumer has a choice and if the ruling is upheld it would open up the market as established parts distributors could stock a greater variety of replacement parts for various OEM brands and models.” Ongchin says this would enable significant reductions in the cost of spare parts and increase availability and product offerings as both OEM and aftermarket parts would be suitable options for replacement parts. “Our decision to continue with this legal battle has been driven by our desire

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to create a more competitive marketplace in the local motor industry. Following the judgement we feel vindicated in our decision to dispute the legality of the design rights and seek to have them revoked. We’re excited by what lies ahead, both for consumers and the local motor industry.” Grandmark is a company on the up. “We continue to grow in an economy that is somewhat tepid in its overall GDP growth” says Ongchin. “One important initiative is our expansion into the windscreen fitment market. In the past, the market has been predominately dominated by local manufacturers and we have, over the last year, started to penetrate that market. We have our own offering which has been approved by a number of insurers after extensive due diligence processes on the quality of our windscreens. We effectively save the insurance companies almost 50 percent off the current cost for windscreen fitments while ensuring windscreen safety. That means that in many cases the insurers are waving the excess to the end consumer and in the long run the less the insurers 42

www.southafricamag.com

Grandmark International focus automotive

Following the judgement we feel vindicated in our decision to dispute the legality of the design rights and seek to have them revoked

have to pay to repair peoples’ cars, the more positive the impact on insurance premiums.” This is another example of why replacement parts manufacturers are great news for consumers. “Historically South Africa has been a market where consumers have been taken advantage of by the fact that there wasn’t a lot of competition. There were a lot of strong local players but not a lot of strong competition so now that there’s more competition in the market place, it is about these companies becoming more competitive in what they do.” Grandmark has expanded over the last 24 months as a result. “We opened up a few branches within

the last year. We are now in all of the major cities in SA and we’re currently the only company in SA that has a national footprint that offers what we do. Not only do we do automotive body parts, we also do automotive glass, automotive cooling products, mechanical and engine parts. We probably have the widest product range of any automotive supplier in SA.” The firm is essentially a onestop shop and the plan now is to consolidate and maximise the investments already made to service the South African market. END To learn more visit www.grandmark.co.za. www.southafricamag.com 43

african Tiger

ReADy TO ROAR

The Zimbabwean economy has the potential to grow and become industrialised like most Asian countries, despite the challenges that it is going through says Duly Holdingâ&#x20AC;&#x2122;s acting mD michael mutyambizi.

By ian Armitage

www.southafricamag.com

Dulys focuS AuTOmOTive

imbabwe is a country on the verge of transformation. It has the potential to grow and become industrialised like most countries in Asia, despite the challenges that it is going through. Those aren’t my words. They’re the words of the World Bank. In July, while taking a seminar, former World Bank senior vice president for development economics and also chief economist Professor Justin Lin said the country’s economy was poised for growth describing Zimbabwe as “an African Tiger”. “There is possibility for the Zimbabwean economy to become the best on the continent and become an African Tiger,” he said. “The economic transformation has large room to develop the country.” Lin explained that most of the Asian countries that are now big players in the global economy were once like Zimbabwe, using China as an example. “If a country experiences economic stagnation for years, right policies can change its fortunes. Most countries were poor at one point,” he said, adding that Zimbabwe should target a seven percent economic growth for 25 years. “China is what it is today because of a 9.9 percent growth rate for the past 32 years.” Zimbabwe certainly seems to have taken inspiration from economic development experiences of East Asian powerhouses. However. Zimbabwe isn’t there yet and its economy is still recovering from over a decade of economic meltdown. “The economy is experiencing some difficulties, repeated challenges,” says Mr Mutyambizi, acting managing director of Duly Holdings Limited, a leading player in the country’s auto industry. “That has led to an unstable political environment,” he says. “As a business we’ve been able to keep our head above water but the situation is very tight. “We believe that if we sort out the political scenarios, things will start working. They are now talking of a new constitution and it looks

like we’ll have elections by June next year. But until this process is completed things are going to remain very tight.” Duly Holdings specialises in the retailing of Ford vehicles, UD trucks and a range of Mazda vehicles. Despite the obvious challenges, it is “holding its own”. “We are the sole agency for Ford and UD in Zimbabwe. We offer a professional aftersales service for all our brands throughout our branch network – branches are located in Harare, Bulawayo, Mutare and Gweru. Compared to our competitors we are holding our own; that’s my view. We sell mostly Ford vehicles and UD trucks. Ford launched a new vehicle (a redesigned Ford Ranger), which is in demand here. It is so popular we have not been able to meet demand because of the resulting supply constraints. There is overwhelming demand the world over including South Africa, so there are only a few units, but whatever we get we’re selling as soon as they arrive.” He is convinced of Zimbabwe’s mediumto long-term potential and hopeful of a very bright future. “Long-term we believe there are vast opportunities in this country. If we can deal with the political issue the economy will really take off. There is also good potential for new investors who are sitting on the fence at the moment. Once the economy starts moving up we will be geared towards handling whatever challenges and opportunities will come our way, as far as the business is concerned. The company and the sales volumes will grow quite significantly. “We have set a conservative and realistic target in terms of revenue for this year and we hope to achieve it. We hope to sell around 1,200 vehicles and 200 trucks.” Most of Duly’s customers are corporate clients. “It is a 80/20 split between corporate clients and individuals,” Mutyambizi says. www.southafricamag.com 45

Dulys focus Automotive

“Our environment means it is difficult for individuals to buy an automobile so we deal predominantly with corporate clients. There are some individuals with money that are buying, but it is not at the level which we would like and we are trying to attract them.” Duly is renowned for its CSR. It likes to give back. This is an important consideration for corporate clients. “Every year we come up with a different theme,” Mutyambizi says. “This year we helped a sanctuary for sick and wounded animals. We actually built a pond for the birds to help them recover when they are undergoing treatment. Last year it was disadvantaged street kids. We always come up with a project every year. It is part of the annual Ford Global Week of Caring.” Ford Motor Company plays a significant part in Duly’s success and the pair have an extremely close relationship. “In terms of supply, we always give them our projections every month for three to six months’ supply pipeline. The bulk manufacturing of the kits takes place in Thailand

www.southafricamag.com

and Ford South Africa assembles the vehicles, so depending on the supply pipelines from Thailand and the overall global demand, Ford South Africa allocate vehicles to distributors in the southern Africa market. When Ford Motor Company South Africa assembles vehicles they always allocate some units to us. South Africa is the bigger market so naturally they will give them higher volumes.” Ford used to manufacture vehicles in Zimbabwe, and some way down the line, it could do so again, Mutyambizi says. “Ford Motor Company built an assembly plant in Zimbabwe, which was officially opened by Henry Ford (the second) in 1961. The plant was sold in 1965 and became Willowvale Mazda Motor Industries. They are still assembling Mazda vehicles, which they get from Japan. At one stage when the economy was still stable we bought Ford vehicles kits, which we sub-contracted them to assemble. The affinity is still there but we believe we get the higher quality product when it’s done in South Africa as they have modern

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Croco Commercial

Email: sales@crocomotors.co.zw

Dulys focus Automotive

assembly machinery compared to what we have here in Zimbabwe. Some way down the line though, you never know.” So what’s the secret to Duly’s success? “We have a good reputation as far as added-value is concerned and good corporate governance is always encouraged and is the theme of our operations. We are proud of our reputation in this economy. Most customers prefer to deal with us, which indicates the value that they see in us. Whatever we sell into the market we are committed to looking after it through aftersales, support and maintenance and repair. We have really worked hard over the years to build a good reputation in this market. “We have always emphasised that we are a professional organisation and our staff are committed to ethical practice. The board does drive effective corporate governance, and although we operate in an under-developed African economy, where there are challenges, we have been able to maintain our reputation.” Training he says is vital. “We offer reliable backup services using genuine Ford, Mazda and Nissan Diesel parts and accessories as well as providing quality motor vehicle repairs and maintenance services of world class service and repair standards. In addition to these brands, the group has a Panel Beating Shop, which restores all accidentdamaged vehicles to their original finish. 48

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“Because of that, the most important area for training is the mechanics. We take on a minimum of at least 10 apprentices every year who are trained over a period four years. This is an important area for our operations, effectively looking after the product we sell. “As we deal and sell international brands with international reputations there are standards that need maintaining and that is why training is so important.” He says an additional challenge exists at c-level. “On the management side, on the top rank, it is quite challenging. Over the past 10 years we have had three managing directors leave and currently we don’t have one. The board is in the process of trying to identify a suitable guy and I’m officially looking after things until they find the right candidate. Our previous managing director left in March and filling the top level is very difficult as a lot of the good guys have left to go to Europe, Australia and South Africa.” Mutyambizi ruled himself out of the running for the job. “I’m not a sales and marketing guy, I’m basically a finance guy at heart. I don’t have the flair for sales and marketing, although I’m trying!” END To learn more visit www.dulys.co.zw

new markets DRive inTO

in 2011 private equity firm RmB corvest picked up a 28 percent stake in south Africa-based automotive services holding company Autovest. The funds raised are helping the firm expand.

By marie Toms

www.southafricamag.com

Autovest focuS AuTOmOTive

utovest is the biggest original equipment manufacturerapproved supplier of automotive accessories in South Africa. It was created by Nedbank in 2007 and the first company to be rolled into the Autovest holding was Maxe Stainless Steel. Headquartered in Durban, Autovest supplies automotive accessories through close to 200 franchised fitment centres and a number of dealerships. In addition to Maxe, which is a manufacturer of stainless steel auto accessories, Autovest holds SA Canopy, a producer of vehicle canopies. Kilber Products, Rhino Linings, StarTrek, Auto Armor and Bucco, another canopies maker, are also part of the group, which is eager to expand. In August last year RMB Corvest brought a 28 percent stake Autovest, in a secondary buyout deal from Nedbank Capital Private Equity. The deal value was not disclosed, but it was significant. Autovest has used the funds to good effect, aiding expansion. Autovest’s other shareholders are Collins Private Equity, which is part of Collins Properties, and Imbewu Capital Partners, a black-owned private equity and investment holding company. Management are also shareholders. RMB Corvest said at the time it was backing the company to support further expansion. “We fully support Autovest’s expansion strategy in the automotive sector, and therefore believe that our decision to invest in the company is going to be a positive one,” said RMB Corvest’s Genevieve Alberts. RMB Corvest is a unit of FirstRand Group that invests in medium-sized businesses with a track record of solid performance. Shortly after the RMB deal, CEO Ted Waldburger told Business Day that the group aimed to make acquisitions in the parts and truck and bus sectors. He said in an interview that Autovest www.southafricamag.com 51

Autovest focuS AuTOmOTive

Compass Glass Compass Glass (Pty) Ltd is a wholly-owned subsidiary of the Mazor Group and was established in 2008 in first-class premises at Brackenrite Business Park in Brackenfell , Cape Town. Through diligent and energetic planning and mobilisation, Compass Glass are already a leading provider of architectural flat glass in South Africa and offer a comprehensive service to the Construction, Automotive and Industrial Sectors through a network of branches in George, Port Elizabeth, East London and a state-of-the-art factory in Johannesburg.

We fully support Autovest’s expansion strategy in the automotive sector, and therefore believe that our decision to invest in the company is going to be a positive one

www.southafricamag.com

Compass Glass have assembled a strong team of professional managers, supervisors , foremen and operators with an extensive range of experience in the Flat Glass Industry and the downstream processing of primary float glass into value-added products to service the Regional Market. Our large pool of skills at every stage of our operation ensures that Customers will benefit in terms of quality and service exceeding best expectations and at competitive market-rates.

would also focus on organic growth and that the funds from the purchase of the shareholding would help to accelerate the acquisition strategy. “Although we enjoyed a successful partnership with Nedbank, they were approaching the end of their investment horizon, having been invested in Maxe prior to the inception of Autovest,” he said. Mr Waldburger added that Autovest would acquire businesses that might have become too big for a single person to manage, or where Autovest could provide some financial or purchasing assistance, strategic growth or management opportunities or other resources to a smaller company. And Autovest has delivered, making acquisitions and launching new platforms. Indeed, the first half of 2012 proved to be an exciting one for the Durban-based firm. In June it announced the launch of a new concept in franchised automotive accessory fitment centres branded as Auto Enhance. “Gone are the days when new and used vehicles have to visit multiple suppliers to get their accessories fitted. Auto Enhance is a one-stop shop offering

COMPASS GLASS Pty Ltd Unit A6, Brackenrite Business Park Kruis Rd, Brackenfell TEL: 021 9817785 FAX: 021 9827059

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South Africa’s top OE approved brands including Bucco Canopies, SA Canopy, Carryboy, Rhino Linings, Securi-Lids, Kilber bull bars and roll bars, StarTrek Towbars and Auto Armor vehicle protection products. Auto Enhance will be primarily focused on providing a professional accessory fitment service to the motor dealerships for a range of top quality products, under one roof and thereby minimising vehicle movement and consequent risk of damage.” explained Waldburger. “Ultimately it is our aim to offer more choice, convenience and quality when it comes to accessorising a vehicle. We are extremely excited about the opening of our first two Auto Enhance fitment centres, which have been strategically positioned to service the www.southafricamag.com 53

Autovest focuS AuTOmOTive

greater Durban area”. Auto Enhance opened the doors to its first two pilot fitment centres at their brand new premises in Umhlanga and the newly converted Bucco Pinetown premises in May, with more franchised fitment centres due to roll-out nationally during the course of the year. “The group’s recent acquisition of Auto Armor, with a national footprint of 32 fitment centres, takes the group to, in excess of, 150 franchised fitment centres operating under the SA Canopy, Bucco Canopies, Rhino Linings or Auto Armor brands. This provides the group with a strong national footprint which will support the roll-out plans for Auto Enhance,” said Waldburger. 54

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Auto enhance is a one-stop shop offering south Africa’s top Oe approved brands

This isn’t the end - further expansion is on the cards. “In time Autovest will add further top quality vehicle accessory brands which will complement the Auto Enhance range, essentially making it a true one-stop shop,” Waldburger added. “The launch of Auto Enhance once again emphasizes our desire to invest in growth and although it will require a significant investment from Autovest, we are extremely confident that this will be a successful venture.” The Auto Enhance fitment centres will not only offer the top vehicle accessory brands under one roof, but will also adhere to the highest standards of service, will be fully insured and essentially offer peace of mind to vehicle dealers and owners alike. END To learn more visit www.autovest.co.za.

elephant nO

WHiTe

What is post-World cup life like for soccer city? south Africa magazine asks Jacques Grobbelaar, ceO of stadium management south Africa, how he is filling seats.

By ian Armitage

www.southafricamag.com

Stadium management South Africa focuS evenTs

he Soccer City Complex in Soweto is a worldclass sport venue. Renovated specifically for the 2010 FIFA World Cup, it is no “white elephant” and its success as a venue looks set to continue. The 94,000-capacity stadium, also referred to as “The Calabash”, hosted the opening game of the 2010 FIFA Soccer World Cup as well as the final between Spain and the Netherlands, both sell-outs and huge successes. But the question following the event was, what would this and the other massive stadiums be used for next? Stadium Management South Africa already had some answers, having spent months before the tournament planning for life after the World Cup and securing new contracts. The forward planning obviously paid off. “The Stadium was built in the late 1980s on the brink of Soweto. It hosts major sport games like the Soweto Derby between Orlando Pirates and Kaizer Chiefs as well as international football and rugby matches,” says Jacques Grobbelaar, CEO of Stadium Management South Africa (SMSA). SMSA manages the Soccer City Complex, FNB Stadium, Soweto’s Orlando Stadium,Volkswagen Dobsonville Stadium and Rand Stadium in southern Johannesburg. “The Complex and the main stadium is a first class stadium, with a super atmosphere.” In addition to soccer and rugby, world-famous entertainers also perform at the venue. “We’ve hosted the 360 degree U2 concert, Neil Diamond, Coldplay www.southafricamag.com 57

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Stadium Management South Africa’s Portfolio: The Soccer City Complex, FNB Stadium (National Stadium) Situated off Nasrec Road on the outskirts of Soweto, the 94,000 capacity FNB Stadium hosted the opening ceremony, opening match, four first-round matches, one second-round match, one quarter final and the final of the 2010 FIFA World Cup.

Orlando Stadium Demolished and rebuilt from scratch, the new Orlando Stadium, in Orlando East, Soweto, was one of the training venues for the 2010 FIFA World Cup. The stadium houses 40,000 seats, 120 hospitality suites, 2 VIP suites, One VVIP suite, Conference facilities, a Gymnasium, and a 200-seat auditorium.

Volkswagen Dobsonville Stadium Tucked away in the township of Dobsonville is one of Soweto’s famous football stadiums, the Volkswagen Dobsonville Stadium. Situated on Main Road, between Montlahla and Majova streets, the stadium has underwent refurbishments to the tune of R69 million in preparation for the 2010 FIFA World Cup.

Rand Stadium One of Johannesburg’s oldest stadiums, Rand Stadium, underwent a R76 million revamp in preparation for the World Cup. Located just a few kilometres from the central business district and a stone’s throw from the Turffontein Racecourse, Rand Stadium has a contemporary design and a highly technical nature. A roof covers the 3,000 spectators who can be accommodated in the grandstand and houses a total of 25,000 fans.

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and Kings of Leon,” Grobbelaar adds. “So, although there were initial concerns that the World Cup stadiums wouldn’t be used to their full potential, this is definitely not the case with the stadia we manage.” 2010 FIFA Soccer World Cup tournament CEO Danny Jordaan promised South Africans that the new facilities would leave a legacy for generations to come. “To ensure a lasting legacy and the commercial viability of the stadiums, they will be used for both rugby and soccer,” he said before the World Cup. “This country has also used sports stadiums for major political rallies, concerts and church events. They can, therefore, also be used for other events outside of sport.” Grobbelaar says Stadium Management South Africa has a 10year plan for the Soccer City Complex. “We have been given full responsibility to run the Stadium, which is owned by the City of Johannesburg and I think we are doing a great job. Perhaps our biggest problem is that there are just too many events, but it is a good position to be in.”

Stadium Management South Africa focus EVENTS

This country has also used sports stadiums for major political rallies, concerts and church events

Stadium Management South Africa receives no funding from the City for maintenance. It accepted full financial responsibility of the venue and Grobbelaar doesn’t have any concerns about future sustainability. “We know that the stadium will be utilised,” he says. “Stadium Management South Africa is a dynamic and capable team that manages flagship sport venues and that is exactly why I believe that the City of Johannesburg appointed us.” Evolving from a facilities management service, Stadium Management South Africa is now a multimillion Rand operation consisting of safety and security management, marketing, tourism, hospitality, sponsorship, commercial and events management. One of the challenges faced by The Soccer City Complex is the low game attendance in the PSL league. To tackle it, SMSA has created series of creative initiatives such as allowing two people into the stadium on one ticket purchased for certain games. Happy hours with beers costing less than they would at local shebeens is another way to encourage fans to come to the stadiums early. END To learn more about Stadium Management South Africa and its fabulous sport venues visit www.stadiummanagement.co.za. www.southafricamag.com 61

Cape Town firm

So u r c e I B A c o n t i n u e s t o e x pa n d

The good times continue to roll for Source Interior Brand Architects (Source IBA), an interior architecture and design firm which offers a total design package across the hospitality, leisure, corporate, civic and retail industries.

By Marie Toms 62

www.southafricamag.com

Source IBA focus property

ith investment into the African continent booming, this is a good time for property developers and interior architecture firms alike. One of Cape Town’s most famous, Source IBA, is a specialist interior architecture group whose approach to design is to remain internationally relevant, whilst drawing on Africa as a constant source of inspiration. Needless to say, it is a firm in demand. The group’s portfolio includes a host of corporate and hospitality developments, such as 15 on Orange, The Westin Cape Town, Arabella Sheraton Kleinmond Spa, Kempinski Mokuti Lodge, Park Inn by Radisson Sandton, Radisson Blu Hotel Port Elizabeth, Southern Sun Hyde Park, Virgin Atlantic Lounge, Virgin Spa as well as offices for JP Morgan, Mastercard, Tebfin and Fusion – all successfully completed using a unique methodology, which has become the hallmark of the Cape Town-based firm. “In our view, a designer acts as a filter for various inspirations and ideas, creating something unique and new,” says Jeremy Stewart, the firm’s founder. “We are inspired by Africa yes, totally, and other influences, and we believe our role or mission is to create new, modern design styles, recognising all influences, such as European, classical, colonial and African. But we aren’t copycats. We want a unique feel. “I see things as more of a methodology, filtering ideas, looking for what works, rather than a specific design or style.” This method has worked well for Source IBA, which was set up in 2002 after the team saw a gap in the market for “South African and African design with integrity”. “Our brand originates out of the belief that Africa is a fountain of creativity and inspiration. We have studios in both Cape Town and Johannesburg and the team consists of many multi–disciplined and

talented staff members; it is the most talented team I have ever worked with.” The work is flooding in, more and more of which is coming from Africa. “We continue to expand across Africa. When we started, I’d probably say 90 percent of our work was within the borders of South Africa. Now, 70 percent of our work is outside our borders. There is still growth in Africa as whole and South Africa is a gateway to that huge opportunity.” There are growth opportunities closer to home too, Stewart says. “Generally speaking things are very good given the global economic situation. We’ve maintained growth, but the areas of growth are slightly different. On the hospitality side for instance, most work would come from hotels directly, through the relationships we’ve built up. Now we’re getting access to the developers and funders of potential projects directly and so the circle is starting to close in the sense that our name is starting to come up on both sides of the development relationship. That’s been good for us so we’ve increased our market on that level. “We’re also starting to find that the market in South Africa is picking up slowly and business is picking up. We have picked up accounts with MasterCard, for example, and we’re looking at doing offices for those and others also. Corporate business is improving.” Stewart says the advantage of working with multinationals is that as they grow, you can grow with them. “As these firm’s grow and you build a relationship, they recognise you can handle their interior solutions. It can be very rewarding.” Mr Stewart is very proud of the work Source IBA does and is always on the lookout for new, challenging projects. “A main criteria for deciding to come on board a project is that it has to be stimulating and challenging – a process that will teach us something. www.southafricamag.com 63

“For example, when Virgin approached us for the Virgin Atlantic Lounge we had never done anything like it before and took it on wholeheartedly – for us the most exciting projects are types we have never embarked on before. We started by analysing the profile of a typical traveller and then set about designing a space that would suit their needs. In a space as stressful as an airport lounge, it is all about helping the traveller to chill out. It was challenging and very, very interesting.” One challenge is communication. The firm has been picking up work in a number of French and Portuguese speaking nations – and language can be a barrier. “We are typically used to operating in English. We now find ourselves predominately working in French and Portuguese, so the focus the past year has been looking for staff who have those language skills. We do have a staff member who can speak Portuguese in our Johannesburg office, and we have resources to translate our documentation into French. Currently we have someone

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in the Netherlands who translates our documentations for us, he’s actually an exstaff member who had to relocate back to the Netherlands.” He says another challenge centres on having “the right people on the ground”. “You need someone on the ground that can represent you everyday and that can drive the momentum on a daily basis while we’re off jetting around looking for new projects. It’s a challenge but we’re getting there slowly.” What’s the secret to the firm’s success? “We’ve been fortunate,” Stewart says. “You’ve got to have your foot on the pedal all the time with the way the market is at the moment. You’ve got to be very careful about growth and you’ve got to be careful because growth, with the current market, can be detrimental. Last year we had three major projects slip away. Those three major projects would have represented jobs and opportunities for three staff members. It seems like small numbers but it terms of designers it’s quite significant.”

Source IBA focus property

Despite the obvious success, Stewart doesn’t have an ego. And it isn’t all about him. He and his partners – Evon Smuts-Rogers in the Cape Town studio and Andrew Merrington and Peta Bank in the Johannesburg studio – always attribute Source IBA’s successes to the team as a whole. “A combination of interior design and interior architecture, Source IBA is involved in maximising the architectural envelope by designing from the inside out. Each designer plays a huge part in that. “We have an ethos of doing the best work with the best brands, working on the right challenging project and that, I think, is what is behind our success – we push ourselves and strive for better; we never stop developing or pushing the envelope in interior design.” Stewart has always had a passion for art and architecture and says that awareness of the services Source IBA offer has much improved over the last decade. “Most people ask the question ‘what does an interior architect do?’ and they are always surprised by just how much goes into what we do and how far it goes. For us, the process starts early on, when we meet the architects and come up with a design that starts from the inside out in an attempt to maximise the building’s functionality. I have to stress that we are not architects – we would never pretend to be and we’d never pretend we had the same skills as them, as we don’t; rather, we work with them to maximise a building’s potential.” END To learn more visit www.sourceiba.co.za

SA faces

The current pace of growth in unsecured lending is “unsustainable” says TransUnion’s Geoff Miller – but is South Africa facing a lending crisis?

By Ian Armitage

www.southafricamag.com

redit information giant TransUnion’s latest Consumer Credit Index (CCI) has a stark warning to lenders and households – beware the dangers of using credit to fund short-term consumption. The CCI fell into negative territory for the first time in more than three years in the third quarter of 2012, coming in at 48.6 points from 51.2 points in the previous quarter. South African consumer credit health has “deteriorated” says TransUnion Credit Bureau’s CEO Geoff Miller. “Our index was influenced by two factors: the number of consumer loan accounts that have lapsed meaning 90 days in arrears - grew by five

TransUnion focus finance

percent year on year. In addition, we are seeing a rise in the use of credit cards on year over year basis with utilisation increasing eight percent in 2012.” He called the current pace of growth in unsecured lending “unsustainable”. “Of note is the fact that there are more people that are delinquent. Delinquencies are increasing. The numbers of customers who aren’t paying back is increasing. “Unsecured lending is up 20-30 percent so there’s a lot more credit out there, a lot of banks are out there pushing for easy-to-get unsecured credit and so consumers are feeling a little stressed. We’ve seen a move away from 30, 60, 90 day loans to 12, 24, 36 and 48+ month loans and so consumers are having to manage longer lending term relationships and with the economy the way it is, overall, that is causing a bit of stress. TransUnion doesn’t think there’s a credit bubble, but that the level of growth in the unsecured lending space can’t continue at its current pace.” He says big lenders are well protected, however. “If you look at the balance sheets of the big four banks, their exposure to unsecured credit only makes up between four to seven percent of the total

debt outstanding. Therefore, even if delinquencies rise substantially, it won’t hurt them too dramatically. The other banks that are more reliant on unsecured lending haven’t shown any stress either, but they’re more open to potential future stress. “However, you have to look at it from the consumers’ side also. There were Parliamentary hearings a couple of weeks back looking at credit amnesty. From our perspective it‘s not something that will have the desired effect that the government is wishing for. “Regardless, the decline reflects worsening loan repayment behaviour and a greater use of revolving credit by South African households to supplement monthly budgets. “All things said, while the national consumer credit market as a whole does not appear to be undergoing acute levels of distress, there are indications that certain market segments are indeed coming under pressure. “South Africa is not one household but millions of households, and within the broader view of consumer credit health, one must bear in mind that different households or groups of households may experience very different degrees of financial distress around servicing their debt obligations.

Regardless, the decline reflects worsening loan repayment behaviour and a greater use of revolving credit by South African households to supplement monthly budgets

www.southafricamag.com 67

TransUnion focus finance

“The index tells us that should unsecured lending continue to grow at similarly strong rates to the past 12 to 24 months, there exists the potential for a mismatch to develop between consumer borrowing and underlying consumer credit health.” TransUnion data shows that impaired accounts now comprise around 1.8 percent of total accounts. While this figure has been rising, it remains below the distressed levels of 2009 when impairments increased to 2.2 percent of total accounts. “The number of impairments would have to increase by about 20 percent to get back to 2009 levels,” says Miller. “Credit providers make provisions for loan impairments, especially in light of the growth in their unsecured credit business, which inherently carries a higher risk of impairment than secured credit.” What is TransUnion’s CCI? Well, it is certainly unique. The CCI is driven by objective market data rather than consumer surveys or questionnaire responses. “Our indicator combines actual consumer borrowing and repayment behaviour obtained from the TransUnion credit database with key, publically available macro-economic variables impacting household finances,” says Miller. 68

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Released on a quarterly basis to the public, the TransUnion CCI measures aggregate consumer loan repayment records; tracks the use of revolving consumer credit facilities as an indicator of distressed borrowing; estimates household cash flow as a means of determining financial pressure/relief; and quantifies the relative cost of servicing outstanding debt. These aspects are then combined into a single numeric score of consumer credit health. The index is compiled by TransUnion, with technical support from market intelligence firm ETM Analytics. “Unlike other indices it’s not a survey based,” says Miller. “There are two major components. One is macro-economic

Business Connexion Business Connexion is a black empowered integrator of innovative business solutions based on information and communications technology (ICT). We run mission-critical ICT systems and manage products, services and solutions for JSE listed and key public sector organisations, parastatals and medium-sized companies. Application Development through the expert use of technology is a key differentiator for customers in their industrial markets. Business Connexion structured a National Centre of Excellence for Application Development, allowing us to become one of the largest software development companies in South Africa, uniquely positioning us to provide a quality and consistent service across the entire Application lifecycle.

Business Connexion and TransUnion Don’t Get Fooled Again Negotiating with a used car salesman is the stuff that jokes are made of. But it’s no laughing matter when he gives you a pittance for your loyal old car and the trade-in costs more than expected.

If only you had one of those handy guidebooks of used car prices to make sure you were getting a fair deal. Well now you can, because Business Connexion has developed a nifty little application that delivers all the prices to your cellphone. The Dealer’s Guide app tells you what a car of any make, model, age and mileage is worth. It also lets you look up a vehicle by its number plate to see if it’s been stolen, been to the panel beaters, or mysteriously has fewer kilometers on the clock than it did a year ago. Armed with that knowledge you won’t get fooled again. The consumer version is due for release at the end of October, and you’ll pay around R50 in advance to run background checks on five vehicles. The data is never downloaded to your handset, so it doesn’t hog memory space. Only the app resides on the phone, and summons the required data over the network when you type in a vehicle’s details. The app is so ingenious and so useful that it recently won MTN’s App of the Year Award as the best Android app, second place for the HTML5 category, and third place for the Apple App of the Year. That means the software works on almost all handsets, whether it’s an iPhone, Blackberry, a model using the Windows operating system or an Android like the Samsung S3. Business Connexion initially developed the app for TransUnion, which produces the Dealer’s Guide used by car salesman everywhere. The companies have a long relationship, with Business Connexion developing TransUnion’s website, hosting its

1K0244/E

technology systems in its data centres and supplying technical and networking support. One thing that hadn’t entered the mobile age was the Dealer’s Guide. “The last thing you want is to have a salesman leaving his customer on the forecourt, going into his office and trying to find his book,” says Eric Stokes, Business Connexion’s business unit manager for mobile services. “So we developed an app that lets them look up all this information quickly and easily on their phone.” Business Connexion developed the software for free as a proof of concept, with an agreement that if TransUnion liked the product they would share the revenue it generates. It costs each dealer only a few cents for every check, but with thousands of dealers checking cars every day, the revenue for both partners is potentially huge. When the two companies realised what a winner they had, they decided to make it available for consumers too. The software has been enhanced several times with new features extending its usefulness. The number plate tracking feature was an early addition, with the software interrogating back-office system run by the police, insurance companies and panel beaters to check a vehicle’s history. “It links to a lot of back-office systems and eliminates all the phone calls and checks you used to have to make. You can look up a vehicle and if it’s been stolen that will be flagged with a red light,” says Stokes. “If someone tells you it’s never been in an accident this will show you immediately if it’s been in an insurance claim.”

The user can email the results for each car and its value to themselves or to the potential buyer as a permanent record. If a dealer doesn’t want the car a customer is offering to trade in he can email the details to other dealers, and if someone offers to take the car, the deal is done. In the consumer version, the email ability means you can send the details to your insurance company to see what it will cost to insure the car you are planning to buy. You’ll find it in a variety of apps stores, including the Apple, Blackberry, Android and Windows stores, and can download it for free. Then you register and decide how many cars on the forecourt or advertised in magazines you’re likely to research. “Consumers will be empowered by this. When you walk into a dealership the salesman may tell you the car he’s selling is worth R300,000 and this app will tell you it’s worth R250,000. That gives you a lot of negotiating power so the R10 you spend looking it up might save you R50,000,” says Stokes. Armed with a cellphone and the Dealer’s Guide app sitting in your back pocket, negotiating with a used car salesman finally might be fun.

data and the other is data from the TransUnion Credit Database. On the macro-economic side we look at things like money supply, inflation, debt servicing costs that are sourced from Stats SA and SARB and compiled by our our partner ETM Analytics. We aggregate some of those numbers to arrive at something that’s more relevant for consumer credit and then the other half is from our database. TransUnion has a database of every credit active consumer here in SA. We get data from over 1200 financial institutions here as well as telecommunications

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companies and insurers. We look at stuff like credit card utilisation, which is basically your current balance versus your available limit. On a year-on-year basis we have seen that go up eight percent, so consumers are using more credit for their purchases. “I guess what is unique is that it’s the only index out there that’s looking at consumer credit behaviour. Other industries are typically more service based and rely on feedback from individuals. Ours are all statistics or reliable data assets. We have done some studies, we’ve looked at it against retail sales, cars sales, GDP and it

The index is compiled by TransUnion, with technical support from market intelligence firm ETM Analytics

TransUnion focus finance

seems to correlate quite well to the business cycles. In some cases, what we’ve seen is that the index is actually leading and showing where certain things are going. It seems to trend quite nicely with other key indicators in the country.” According to Miller, the economy is “bumping” along. “It’s growing a little but not much. “I don’t think there’s huge pessimism, but also there isn’t huge optimism. I think the thing that would turn things into a positive nature would be some finality to what is happening in the Eurozone. With all the uncertainty there, it has hurt SA. If there’s some definitive way forward that creates stability then some of that trade will pick up and that will flow down to the rest of the economy. “I think there is some reason for relative optimism for the remainder of 2012. The Reserve Bank cut interest rates by 50 basis points in July, which should ease repayment burdens slightly on outstanding floating rate loans. In addition, there are signs that price inflation is abating, which may provide some welcome relief to consumers for the remainder of 2012.” TransUnion is proof of the value of data capture. South Africa is its largest operation outside of the U.S. and as well as capturing information on consumers and businesses from a credit perspective, the firm has maintained a database on almost every automobile in the country. “We have an agreement with the original equipment manufacturers that every time they import or manufacture a vehicle here in South Africa they give us the information around the VIN number and the make model of that vehicle,” Miller says. “We then get information from dealers, from the police and other areas, to do a couple of things. One is verification of the vehicle to ensure that it hasn’t been stolen or it’s not wrecked and is now re-titled, as well as providing valuation

services - so it’s from a used car perspective. We partner with the dealers and find out, for example, what did this BMW sell for? And we’ll actually model what the used car value should be based on the extras, mileage and all those other things.” In April TransUnion Auto Information Solutions, the firm responsible for the capture of automotive information, developed an award-wining and innovative mobile app with the help of Business Connexion. “The app allows dealers to punch in a registration or VIN number and find out information about that vehicle instantly as opposed to having to look it up in a guide or on the internet etc. We will be extending this service directly to consumers in the near future,” Miller says. The app provides subscribed dealers with practically instant information about specific passenger and commercial vehicles, as well as motorbikes, giving them the information they need to make an informed buying or selling decision anytime, anywhere. “Our core business is data,” Miller says. “We provide lenders with the tools and data to make effective and efficient lending decisions.” END To learn more visit www.transunion.co.za www.southafricamag.com 71

Corporate finance

made easy in business relationships matter and they occur naturally in boutique corporate finance company PSG capital says the firmâ&#x20AC;&#x2122;s managing director and co-founder Johan Holtzhausen.

By ian Armitage

www.southafricamag.com

PSG capital focuS finAnce

SG Capital is the boutique corporate finance division of the PSG Group, an investment holding company with a market capitalisation of approximately R10.7 billion, and it provides a complete suite of corporate finance and advisory services to a broad spectrum of public and private clients. They are the people business turns to to fund short- and long-term investments, operating needs, working capital commitments and major reorganisation initiatives such as mergers or acquisitions. That financing could be achieved by issuing stocks, bonds, quasidebt products on public securities exchanges, or by selling such products to private investors. “We have a whole suite of products and a successful track record in supporting and growing companies,” says the firm’s managing director Johan Holtzhausen, who with a colleague helped establish PSG Capital In 1998. He believes the firm’s strength lies in its experience. “We understand the individual nature of advice and work closely with management teams to help them develop and deliver their objectives. We support growing companies in all sectors and offer advice according to their individual needs. We work closely with management teams to help them develop and deliver their objectives.” PSG Capital is a trusted advisor and sponsor, providing a full range of services including mergers and acquisitions, initial public offerings (IPOs), fundraising, debt advisory, market intelligence, BEE transactions, privatisations, management buyouts/

We started our business of providing value-added corporate finance advisory services and today we provide a complete suite of services

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PSG capital focuS finAnce

PwC over the past 15 years Pwc Deals have worked with PSG capital on various listings, acquisitions, investments and restructurings, assisting them through performing due diligence investigations, valuations, JSE support services and providing technical accounting advice. The Pwc Deals team focuses on enhancing value to our clients throughout the deal continuum. “I have known Johan Holtzhausen since he and a colleague formed PSG capital in 1998 and have worked with him and the PSG capital team on various transactions. I share his sentiment that ‘Relationships Matter’. At Pwc, we believe in investing in relationships and are dedicated to PSG capital to assist them on their path of growth into the future” Anneke du Plessis, Associate Director Pwc Deals team.

buy-ins and restructuring. “We started our business of providing value-added corporate finance advisory services and today we provide a complete suite of services,” Holtzhausen says. “We have a formidable team.” PSG Capital has worked with a number of JSE and JSE AltX listed clients including Steinhoff, Mvelaphanda Group, Blackstar, Oasis Crescent Property Fund, KAP International, Zeder Investments, Paladin Capital, Pioneer Foods, JD Group, mCubed, Capitec Bank, and DiamondCorp. The list continues to grow. “We’ve got a broad spectrum of clients including public and private companies, BEE and private equity houses, financial 74

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institutions, asset managers and hedge funds,” Holtzhausen says. The company employs a team of highly skilled professionals and the people aspect is an important one for Holtzhausen – he says PSG Capital focuses on “attracting, developing and retaining the best talent for our business, challenging our people, demonstrating a “can-do” attitude and fostering a collaborative and mutually supportive environment”. “The people aspect of our business is vital.” Why focus on people? Because, they are the face of the business and they form lasting relationships. “Relationships matter. They occur naturally within PSG Capital where clients are assured of unrelenting focus and

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commitment directed at each of their unique business needs, so as to provide innovative and customised corporate finance solutions. We deliver the results and the solutions.” Holtzhausen highlights PSG’s work with Blackstar as a great example of this in practice. “Blackstar is a case in point. Last year, we, together with their management team, conducted road show presentations around South Africa with the aim of raising over R100 million. In less than two weeks, during significant market volatility, that target was achieved. “How did we do it? Well, we are a company that fully understands the essence of a successful corporate finance firm is delivering value-adding, lasting corporate finance solutions to its clients. We relentlessly focus on finding these solutions with an aim to consistently deliver value.” PSG Capital isn’t afraid of a challenge or investing time into a project. www.southafricamag.com 77

PSG capital focuS finAnce

“We’re dedicated and have the willingness to take on big challenges and see them through. It can be a long, lengthy process just to get through the regulatory environment.” Mr Holtzhausen knows his stuff. He is a qualified attorney and has been involved in corporate finance since 1995, having implemented various corporate finance transactions and listings since then. “What PSG Capital’s secret? I have to stress that it comes down to dedication. We are selfless and have incredible focus and commitment. We’ve also got the might of PSG Group behind us. “We are excited by the future. Africa is full

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of potential and we look forward to helping our clients fulfil it by providing funding, advice and access to markets. “There are lots of opportunities.” END To learn more visit www.psgcapital.com.

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Credit W H e R e

credit’s Due

cas coovadia, head of the Banking Association of south Africa, talks to south Africa magazine about a host of issues including unsecured lending, the eurozone crisis, regulation and the banking sector’s role financing a new wave of infrastructure projects. By ian Armitage

he unsecured credit market is a growth area for South African banks and according to those that know more and more of us, from all walks of life, are doing more of this type of borrowing. If you don’t know who or what the unsecured borrower is, they are individuals that take credit from a bank or lender, but have no security or collateral against the loan.

www.southafricamag.com

These loans are riskier, but they are highly appealing to banks, as they are allowed to charge more interest (however they are capped at 32 percent under the National Credit Act). Although the banks love them many are worried by the trend, fearing that the local banking sector could be on the road to a meltdown. According to credit information giant TransUnion Credit Bureau’s latest Consumer Credit Index (CCI) South Africa’s consumer

Banking Association focus finance

credit health is deteriorating, and it blames a rise in the number of people using credit to fund short-term consumption. The CCI fell into negative territory for the first time in more than three years in the third quarter of 2012. “Our index was influenced by two factors: the number of consumer loan accounts that have lapsed - meaning 90 days in arrears - grew by five percent year on year. In addition, we are seeing a rise in the use of credit cards on year over year basis with utilisation increasing eight percent in 2012,” says TransUnion Credit Bureau’s CEO Geoff Miller (see article titled ‘SA faces lending crisis’ on page 66). He called the growth in unsecured lending “unsustainable”. So what does the chief of the Banking Association of South Africa think about it all? “It’s quite a hot topic both for government and for us,” Cas Coovadia says. “In a meeting that we had with the Government Minister of Finance a few weeks ago it was still very much on the agenda. It has gone up considerably, but it still forms only between eight and 10 percent of total credit.” Mr Coovadia says that looming international regulation in the form of the Basel III banking accords and lower credit take-up from South Africa’s cash-rich corporates are two of many reasons why South African banks seeking growth in the unsecured credit market. “In the broader sense unsecured credit is still a small proportion of total credit. Having said that, we are all concerned that is has gone up and we are certainly doing some work in the industry to understand the phenomena. “Current trends indicate a range of reasons why consumers are taking up unsecured credit. For a start, banks had been more cautious with long-term loans. With banks less willing to extend 100 percent mortgages, for example, consumers were opting to borrow the difference through

unsecured loans. Loan consolidation is another factor and a third trend involves consumers taking on unsecured credit to pay for building and renovations. Unsecured borrowing to pay for consumption or everything from food to clothes is perhaps more worrying. People are also borrowing unsecured credit to pay for education, furniture and that sort of thing. Regardless of what it is being used for, I think that banks to a certain extent are beginning to shift their business models in anticipation of Basel III where long-term lending is going to become quite difficult. It all depends on Basel III and how it is implemented - and we are talking to the authorities about that - but they are to an extent anticipating a need for a shift.” How worried should we be? “Most of my members tell me that 90 percent of the lending is to existing customers. We’ve agreed with the National Treasury, the Reserve Bank and with credit regulators that we will watch this and constantly get data to ensure that we’re not getting into any problems and when we do pick up problems we will deal with them together. That’s where we are and it’s something that we need to watch. We don’t want it to grow into a situation where it becomes irresponsible. It’s a trend that we will keep on top off.” Okay, so that’s the spike in unsecured credit covered but how about the euro crisis? What’s the latest there? “It’s a roller coaster ride still, but any bit of positive news we will obviously take very well. Europe is one of our biggest trading partners and while the banking sector in SA has withstood the crisis reasonably well, business activity has gone down because our economy has contracted as a result of the problems in Europe. It is obviously a concern to us from a growth point of view and it’s something that we watch very carefully. Our government through the G20 and other structures are obviously in discussion related to this. The government has committed $2 billion towards the IMF www.southafricamag.com 81

Banking Association focus finance

firewall to stop the crisis spilling over into the rest of the world. “The longer it takes for problems there to be resolved however, including the problems in the banking sector, the more the threat of additional regulations and that has a knockon effect on our sector. It is of interest to us and we’re watching it very carefully to see what the continuing impact could be. SA is beginning to shift our trade relationships to Asia and that takes a long time. We’ll only begin to see the benefit of that in a few years. What happens in Europe is critical to us.” Coovadia says the banking sector plays a central role in supporting South Africa’s real economy and went on to explain that more probably needs to be done to support it. “Overregulation is always a concern; we need some sort of coordination and appropriate regulation to enable the banks to continue to grow, to enable them to remain at the cutting-edge of international best practice,” he says. “The sector also has a vital

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role to play in the ongoing transformation of our society, and our desire to bring a better life to all of our people. We certainly have raised issues about regulations in the sense that there are a plethora of regulations in the banking sector coming from different departments. What we’re calling for is greater coordination around that. “There’s no doubt that the regulatory burden is increasing because of the uncoordinated regulation, but also because of Basel III and those sorts of things. At this point in time we don’t see a significant change in policy, despite the rhetoric about nationalisation.” Coovadia says the relationship between our banks and the Government is “very good” and that “meetings take place regularly”. “Discussion is always important. For example when the ANC’s economic policy discussion documents were released ahead of the ANC’s policy conference in June, we felt it appropriate to meet with them (members from the ANC economic transformation committee) and had a meeting, a closed meeting, where we discussed some of our views on the policy documents. We discussed a range of issues. It was in good spirits and there was an understanding that, for national agenda issues, we need to meet more often and work together to enable the banking sector to play a role in partnership with state-owned institutions and other entities to develop financial services and to participate in things like the financing of the infrastructure programmes Government has unveiled.” Coovadia says that although there weren’t fundamental changes, the dialogue was useful. “At a policy and regulation level we need to separate what’s really happening form the rhetoric. Fundamentally there hasn’t been a significant policy shift from the ANC. “With our interaction with the ANC we feel that there’s an indication that the government is thinking about making interventions in the economy where the market has not

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Banking Association focus finance

succeeded in addressing some of the critical social problems that we have. We don’t have a problem with that, provided the intervention is in areas where there is market dysfunction.” The future, then, is bright. “It is, but we need to ensure that we maintain the right balance to ensure we maintain, if not improve, our position; we don’t want to fall behind others in the global marketplace,” Coovadia says. “One very interesting area for the banks today is infrastructure development. In fact, we had our annual banking summit on August 21 and the theme was infrastructure finance.” South Africa’s R3.3 trillion infrastructure plan, announced by President Jacob Zuma in his February State of the Nation address, created significant opportunities for banks. “Many infrastructure projects in South Africa have a social and commercial component, and therefore a hybrid financing approach 84

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is required,” Coovadia says. “Government has identified 17 strategic integrated projects in sectors such as energy, transport and logistics to schools, hospitals and nursing colleges to be constructed between now and 2020. I think the financial sector has to be considered as a strategic partner in enabling the sustainability of infrastructure projects and we need sustainable funding models for these projects. I think also that engagement must take place earlier, before the costing and funding models are determined. “We are saying that we would like to sit down with the presidential infrastructure coordinating committee to identify three or four out of those 17 projects that are critical. Let’s put technical teams together from both the public and private sector around those three or four projects and get them to actually develop sustainable financial models. Let’s get away from the rhetoric and get concretely on the ground with these projects. So that’s the process we’ve start. We want to be involved and we believe we can make a contribution.“ So what’s next for our banks? “Everyone’s looking at Africa. Africa has been seen as something more than a curio in global investment terms since 2007, when the Industrial and

Commercial Bank of China bought up a 20 percent share in Standard Bank, South Africa’s biggest lender, for $5.5 billion. Africa is flavour of the day. If you look at Standard Bank, they have cut down on other global activity and are saying that they want to focus on Africa. “The continent is becoming more and more competitive and there are broadly two sorts of banks operating in Africa. First, the biggish locals and then you have the Western world giants like Barclays, Citigroup and Société Générale. “African economies are expanding rapidly, while steadily increasing consumer affluence is creating fresh demand for banking services. There are challenges, but also undoubted opportunity. The opportunities in Africa are certainly very good.” The banking sector is critical to any economy. South Africa has a developed and wellregulated banking system, comparable to that of any industrialised country. Our system is world class, with adequate capital resources, technology and infrastructure, as well as a strong regulatory and supervisory environment. END To learn more visit www.banking.org.za

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nuRsinG AfRicAâ&#x20AC;&#x2122;s

smes

Altx plays an important role in encouraging entrepreneurs.

www.southafricamag.com

focuS AlTx

ub-Saharan Africa continues to record strong economic growth despite the weaker global economic environment, according to the International Monetary Fund’s regional economic outlook report. Against this backdrop and the growing recognition of the importance of entrepreneurship as a crucial factor in economic development, the Johannesburg Stock Exchange’s (JSE’s) AltX offers a compelling proposition to family-owned and growing businesses. AltX was launched in October 2003 and was intended for small, medium and growing companies which were not yet large enough to list on the JSE Main Board. There was much cynicism at its launch, in fact AltX made its debut without even one listing. The first listing took place a few months later and since then 99 companies have listed. AltX spokesperson and client relationship manager, Nicole Cheyne, says that nine years on, AltX is an attractive market for quality companies throughout Africa. “The introduction of AltX represented a lot of

unknowns at the time. AltX has earned a reputation as a market that maintains a delicate balance between listing requirements with which investors are comfortable and providing a supportive mechanism for smaller companies to move into the listed sector,” she explains. The JSE has different listing requirements for AltX and Main Board. “We do not prescribe size but a company would need to adhere to listings requirements. There are costs associated with being a listed company, including listing fees, auditors fees and Designated Advisor fees, so each company would need to weigh up the costs against their objectives.” Basic listing criteria are the appointment of a Designator Advisor, share capital of R2 million, a shareholders’ spread of 10 percent and a minimum of 100 shareholders. No profit or financial history is required. AltX fulfils an important macroeconomic role.”By giving companies an opportunity to grow, AltX supports companies to employ more people and

to achieve their growth ambitions. Entrepreneurial, growing listed companies support an emerging economy,” says Cheyne. “A number of other African countries are working towards the introduction of similar trading platforms but few can match the experience and credibility of the JSE”, she adds. “The clarion call for greater collaboration between Africans is made even easier by the existence of a world-class market and sufficient appetite to meet the capital-raising needs of AltX-listed companies amongst investors.” The JSE recently announced its evolving Africa strategy as appetite for African investments continues to rise. African companies will now be able to list directly on the Main Board and on AltX. The JSE also offers depository receipts and a broader range of exchange traded funds and debt instruments. The JSE’s existing African offering includes 12 African companies. In future, there will be no differentiation (for listing purposes) between African and non-African companies. For equities, this

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will mean that the JSE will list the companies on the Main Board or AltX. The JSE will also actively market and profile the African companies that are already listed. “There are a many companies in the rest of Africa that would be appropriate for an AltX listing. Their own home exchanges may not be sufficiently liquid or suitable for them as there are very few exchanges that offer a dedicated listing platform for AltX-sized companies. We are working with partners to identify these types of companies and are optimistic that over the longer term we will be able to attract them to AltX,” says Cheyne. A recent survey of AltX-listed companies indicated that they have achieved their listing objectives. Although each company has specific listing objectives, they range from raising capital to boosting the company’s profile or realising value. Fourteen companies have delisted and 21 of the companies that listed on AltX have grown sufficiently to move to the Main Board. The JSE views moves to the Main Board as success stories. “Listings are certainly not at their peak. These have contracted over the last few years on international markets as has the South African economy. These macro factors affect all companies - not only those listed on AltX,” Cheyne says. “We are experiencing ongoing interest in AltX listings but listings are cyclical and mirror bull and bear markets.” The most common questions asked about the AltX market relate to its liquidity and whether it attracts sufficient institutional interest. Cheyne says that listing is a long-term strategy, not a short-term exercise and that liquidity often improves as companies grow, provided that companies work at it. “Liquidity is a function of a number of factors. To list on AltX, the directors of a company need only list a minimum of 10 percent of its shares with 100 shareholders. After a listing, the company directors are encouraged to work the listing and issue additional share capital.” 88

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Brian Rainier, an executive at Merchantec Capital, a specialist corporate finance and research company, agrees: “One of the factors affecting the liquidity of AltX companies is that management typically has retained a large stake in the company. This usually means that there is very little free float, which further limits the liquidity of the share. One of the first steps to improving liquidity therefore, is making sure that there are sufficient shares in the market to trade.” The JSE offers forums where senior executives of listed companies can showcase their business to investors to increase liquidity. “We also offer investor forums where companies can showcase their business to potential investors and find out how to meet the needs of institutional investors. We stress to company directors that in order to grow, you have to let go. It is not always easy for entrepreneurs to give away a large portion of their business, but an AltX listing gives them an opportunity to grow and mature into a larger company,” adds Cheyne. “In terms of institutional interest – each institution has a mandate about the types of companies that can be invested in. This of course doesn’t only affect those companies listed on AltX, but small caps too. It could be argued that AltX is perhaps an appealing space for retail investors who are willing to take risk for returns. AltX companies are aware that as they grow they will attract further institutional investment, which is part of the natural business cycle.” Obviously, on any market there will always be those companies that perform well and those that struggle for various reasons. From an investment perspective, small caps may be considered to be more risky but there is a place for high risk, high return companies in any portfolio. “AltX is an exciting cocktail to meet entrepreneurs and add in a bit of experience

focuS AlTx

nothing worthwhile is too easy

in matters such as corporate governance and acquisitions. You could be creating the formula for a successful big brother of the future,” says Ivan Clark, an investor in AltX companies who is considered a South African business legend. He is the executive chairman of Grindrod Limited and Grindrod Bank, chairman and a shareholder of Anchor Capital, chairman of Chemspec, a non executive director of BSI Steel and runs Clark Investments. “Nothing worthwhile is too easy,” continues Cheyne philosophically, referring to the perception that there is significantly more effort and capacity required of AltXlisted companies, many of which display the entrepreneurial flair that has precipitated their growth. Ian Lourens, CEO of AltX-listed Onelogix, puts the additional regulatory emphasis in perspective. “We are an entrepreneurial company and we encourage all who work here to be entrepreneurial too. We balance our entrepreneurial culture with the JSE’s listing and governance requirements. Our listing on AltX has served us.” Cheyne encourages companies that are considering an AltX listing that preparation is key. “It is both necessary and beneficial for a company to work with a Designated Advisor for a while if they are considering an AltX listing, so that they get a taste for the new environment in which they will need to operate.” She likens an AltX listing to the beginning of a race, one that takes work and commitment, but which can be incredibly rewarding. “Companies can expect access to capital for growth, an enhanced profile, the creation of value and liquidity for shareholders, the attraction of new investors and a better ability to achieve acquisitive growth.” For more about the Altx market go to www.jse.co.za END www.southafricamag.com 89

f uLL

sTea m aHead Railway engineering specialist Racec steams ahead following successful refocusing. By ian Armitage

www.southafricamag.com

Racec focus altx

ACEC is a company transformed, it has returned to profitability and, with a healthy order book, the future looks bright. In June, the JSE-listed firm announced interim revenues were up 58 percent to R128 million in the six months ending March 2012. That compares to a loss at 2011 year-end. What’s the remarkable turnaround down to? A decision to re-focus on ‘core’ rail business. Indeed, RACEC sold off its loss making electrification operations and disposed of its noncore and loss-making subsidiaries in an effort to refocus its business exclusively on the rail sector. CEO Gary Harrod believes although impressive, this is just the start. “We are hugely optimistic and excited about the future. Our determined commitment to being a railfocused entity is already paying dividends. We’ve really turned the company around”. The company’s 2012 and 2013 order book is extremely healthy. “We have a promising order book in South Africa and into Africa – most notably upgrading 71km of railway in Sierra Leone. “We’re very optimistic for the remainder of 2012 and beyond.” Harrod says the company has been in direct contact with potential projects that hold a long-term value – value which tallies into the billions. “If we secure only five percent of the potential new business which is out there, that is worth an additional R500 million to us in the next four to five years.” While most of this work will come from mining companies and cross-border business, Racec also stands to benefit from Transnet’s R205 billion investments in bolstering rail networks over the next five years. “There’s a lot of opportunity. As you may know SA itself is going through a large infrastructure revival and rebuilding scheme, as announced by Jacob Zuma.

We have a promising order book in South Africa and into Africa, most notably upgrading 71km of railway in Sierra Leone. We’re very optimistic for the remainder of 2012 and beyond

www.southafricamag.com 91

Racec focus AltX

We want to have a 50/50 split between work in South Africa and work in the rest of Africa

Billions are going into rail infrastructure and we’re just hoping to see a small piece of that pie. “They’re already putting out tenders for the upgrading of the signalling and upgrading of the railways. It’s taken a while to come to fruition but it is starting to happen now.” Although there will be lots of work locally, Africa could be Racec’s ticket to ride, Harrod says. “We want to have a 50/50 split between work in South Africa and work in the rest of 92

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Africa. The margins on African business are slightly higher than earned on local work.” In recent years cross-border business has grown quickly to account for around a third of revenue. “We’re currently working in Mozambique, Kenya and Sierra Leone where we are working with London-listed African Minerals Limited. Things are looking up and we’re definitely in a sweet spot. “We’re looking at quite a few countries in Africa, but we’ve been cautious going in

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and are making sure that we’ve got our facts right so that there aren’t any Commercial risks or political risks that we can’t handle. “With the mineral boom in Africa, there is no better place to be than in the rail business.” There is a catch: RACEC does not have the capacity on its balance sheet to chase down all the wonderful opportunities so it is having to be very selective on the work it takes on - an enviable position to be in. “We are being invited to tender on a host of different and exciting opportunities but we have to bear in mind that we’re not a massive company so the challenge is to take into consideration that we cannot grow too fast too quickly. We can’t take on the world. We have a fairly aggressive growth target but it isn’t unachievable. We are mindful of over spreading ourselves and we know we can only go as far as our cash flow will allow us. That is our biggest restraint.” Its interim report showed Racec was unable to fully convert its pre-tax profits of around R15 million into positive cash flow. “Our cash flow is improving daily and will rectify in the second half. We were right at the peak of our losses and were dealing with lots of various challenges, but now we have swung the cash flow. Between now and this time last year we’ve achieved an approximate R40 million positive swing in our cash flow. “For now we will remain selective around contracts, opting for fewer contracts at higher margins.” Is Harrod worried about any potential pitfalls with working in 94

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Africa? No. “Working in certain African countries can be quite difficult but I think we’re mastering it. For example, Sierra Leone is perceived to be quite a hostile environment and we’re sometimes operating in places where there is no water or electricity, but we have risen up to the challenge and are succeeding. In other areas we have had to put up basic camps with everything from water purification plants to power generation etc. You’ve also got challenges with the Internet, email and basic communication, which are tricky to overcome. Then you’ve got the distances that you have to travel between work areas. It can be significant distances when you’re

Racec focus altx

Working in certain African countries can be difficult but I think we’re mastering it. For example, Sierra Leone is perceived to be quite a hostile environment and we’re sometimes operating in places where there is no water or electricity, but we have risen up to the challenge and are succeeding

putting down a railway line from point A to B. On top of that you have the administration challenges – different tax regimes, different labour laws, different rules, different everything! That combined with the extreme weather in certain cases and sometimes even staff contracting malaria, well… it’s not for the faint hearted!” What’s the secret to the firm’s success? “We’ve got a young and dynamic team. We like the new ideas that are coming in to the business - It’s young, energetic and dynamic. We like to call ourselves lean and mean. Our overhead structure compared to other rail businesses is fairly small and literally a handful of key players direct the business. It means we can move quickly, react to and grasp opportunities expeditiously and I think that’s key. We’re also a sustainable business and an aligned team, now that we’re focused on our core business. “Moving forward we’ll look to act quickly on tangible, low risk opportunities as they present themselves. They’re not there for long and you have to make sure you capitalise while the going is good.” RACEC starts a new project in Ghana in January. END To learn more visit www.racec.co.za. www.southafricamag.com 95

BLue profiTs

sOAR af Ter Turnaround south Africa magazine examines the remarkable turnaround of Blue financial Services.

By ian Armitage

www.southafricamag.com

Blue Financial Services focus altx

lue Financial Services is a diversified financial services group. In the year ended February 29, 2012, Blue recorded a profit after tax of R42 million, significantly up from a loss of R1 billion the previous financial year. We caught up with Johan Meiring, CEO of Blue Financial Services, who is also Group CEO of Mayibuye Group, the largest shareholder, and who led the turnaround of Blue. Johan, nice to meet you. The turnaround has been absolutely phenomenalâ&#x20AC;Ś It has. Blue Financial Services has steadily met and successfully achieved the objectives that were set as part of the turnaround strategy. The business has become more profitable, more cost efficient and, more importantly, a sustainable enterprise. Blue Financial Services is now poised for growth. We are currently opening up many new distribution points, particularly in East Africa, and we are actively raising lines of capital to fund our growing lending activities and our expanding operational footprint across the continent. Blue currently operates in 12 African countries, has a presence in 14, and is well positioned to fund future expansion in Africa. To be profitable and in a good position for growth is pleasing, particularly considering the loss-making position we took over at the end of 2010. I believe that the full potential of Blue as a leading pan-African financial services provider is only starting to be realised. So, from that perspective, we are pleased with what weâ&#x20AC;&#x2122;ve achieved to date, but still far from content. When did it all start? And what was actually done? Mayibuye Group took control of Blue in December 2010 and immediately launched the turnaround strategy. Since the takeover, a total of R844.5 million has been injected into the business. This comprises an initial

amount of R163 million made by Mayibuye in December 2010 when it acquired its stake in Blue. This was followed by the Debt Restructuring Agreement which was concluded with funders. This agreement saw the capital repayments on existing debt ringfenced and delayed by a period of three years. As a result of confidence in the delivery of the planned turnaround process, funders agreed to two separate debt-to-equity conversions - R274.7 million in February 2011, and a further R406.8 million in June 2012 - making themselves shareholders of the business and further strengthening the balance sheet. Regarding what has been done in the intervening period to date, the answer is that so much has been done that Blue today is a very different organisation compared to preDecember 2010. Starting at the top, the board has been restructured and is now fit-forpurpose to take Blue forward strongly and positively. On the next tier, management has been strengthened, reoriented and up skilled to deliver on and achieve Blueâ&#x20AC;&#x2122;s new business strategy. Members of staff at all levels have received extensive training and upskilling. New systems and methodologies have been developed and implemented. These include new, leading edge IT facilities that position Blue way ahead of the pack and power our new operational processes to provide unparalleled service and convenience to our customers across Africa. Added to this are new internal controls and cost-optimisation initiatives that we have developed and implemented. These have elevated our credit-granting activities to much more effective levels and have dramatically reduced overall costs, ensuring that Blue is now a far more efficient organisation, delivering superior service to our customers. And the cherry on the top is that we have entirely overhauled and refreshed our existing products while, at the same time, added significant new products that have taken our offerings to new levels. www.southafricamag.com 97

Innovate, create and unlock value One Waterloo Technologies has partners (we prefer not to refer to ‘clients’) in various countries, mainly in the financial sector. Our current partners are located in South Africa, Botswana, Mauritius, Zambia, Nigeria, Kenya and Switzerland, and include Blue Financial Services. We are in the process of expanding into Angola, Tanzania and Uganda. Our products and services are in the following key focus areas: · Custom Business Solutions · Licensed Software Components in the financial sector · Issuing and Account Hosting Platforms

Tel: 0861 1WATERLOO / 086 119 2837 / Fax: 086 613 1290 6 Cotillion Place, 22 Techno Drive TechnoPark, Stellenbosch, 7601 Email: enquiries@onewaterloo.com www.onewaterloo.com www.onewaterloo.mu

Blue Financial Services focus altx

Needless to say, we’re excited about all these developments and all the work that has already been done to position us for our planned expansion. Has the turnaround process finished? Significant progress has been made in terms of the turnaround strategy. However there is a lot more that needs to be done to transform Blue into the group we now envision for the future. The biggest factor in the business’s growth is our ability to strengthen the balance sheet. We’ve already made considerable progress in this regard, and we continue to work towards further initiatives to gain more ground. As a key business strategy, we need to leverage off a strong balance sheet to raise capital in order to extend our operational footprint and accelerate our lending activities into a very exciting and fast-growing market in Africa. We are currently spending much of

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our time and attention on ensuring that we have the necessary lines of credit needed to fund the company’s growth into the future. The focus of our capital-raising programme is to access funding for the growth of the loan book and for expanding the distribution capabilities of existing operations. To date, we have already enjoyed much success in this regard. Now that you are on a more stable footing, how would you like to see Blue grow? In terms of our pan-African strategy, we have turned our primary focus onto East Africa, where we are currently establishing and expanding our distribution footprint for more aggressive growth. At the same time, we are also focusing on the West African market. These two regions offer the greatest growth opportunities at this point in time. Across the group, the key indicators are starting to look positive. Costs, as a percentage of delivery, have been significantly reduced. The cost of funding too has been reduced, leaving the yield of loans advanced at an attractive and sustainable level. Our traditional customer base comprises largely of government employees, where Blue can collect repayments on its loans via the payroll. This has provided Blue with many benefits and significantly reduced risk. However, to meet our customer growth targets Blue will increasingly need to attract more customers from the retail market. Blue has publicly set itself an ambitious target of increasing its customer base to five million in the next five years. Our distribution, marketing and branding efforts are aligned, and we are preparing the business for this push into an exciting and growing market. At present, Blue’s product mix is currently skewed towards the shorter-term and unsecured loans. Over time, we will look to diversify the product mix towards larger and longer-term secured loans in the home loan space specifically, while also ramping up our business loan offerings.

www.onewaterloo.mu

So your focus has shifted away from South Africa? Blue Financial Services has in the past year been very clear on its strategy regarding focal areas. As such, we have shifted our focus away from the South African market, which is a less attractive proposition for the group than some of the other African markets in which we operate. As mentioned, we are focusing on growing the business in the East African and West African markets. In order to give effect to this strategy, Blue has, however, needed to concentrate intensely on a number of its key business areas to ensure that costs remain in check, systems are stable and reliable, technology provides convenience, and internal controls allow for constant safety checks with regards to the individual country operations. Blue is keenly aware of the need to address each country’s operations individually, in order to understand each unique set of parameters, including the various social, cultural, economic and regulatory environments, and to generate strategies that relate to the realities encountered and leverage effectively off the opportunities on offer. In addition to the decentralisation process we have strategically adopted, and the appointment of new local boards and executive management teams in each of the 12 African jurisdictions, Blue has responded to the current economic environment in the following ways: Channelling capital and operational capacity towards the fastest-growing and most promising jurisdictions in Africa to boost lending activity Focusing heavily on technology and systems, with a view to automating and streamlining the credit application, disbursal and collections process Improving access to Blue’s products by opening new distribution points through innovative third-party partnerships 102 www.southafricamag.com

Standardising pricing across the 12 African jurisdictions by introducing the B1 Index – this allows for country-specific inputs into a standard pricing model, which acts as a self-imposed pricing cap to ensure ethical and sustainable lending practices throughout Blue’s pan-African footprint Working hard to reinvest our time and money back into the communities we serve and to our employees. Blue’s distribution strategy has been to open up new points of access, but without incurring the hefty capital requirements normally associated with expanding a branch infrastructure. As such, Blue has been able to partner with established third-party distribution networks, and we are delighted with the symbiotic relationships that provide both parties in any one agreement with an enhanced suite of offerings to their combined customer bases. As this strategy is currently working well for us, Blue will continue to operate in this vein for the foreseeable future, and will not deviate from it any time soon. What are the opportunities for the company? Financial services are a critical enabler of growth in any economy. Providing credit, savings and transaction facilities helps individuals and companies grow and turn their ideas into realities. The opportunity in Africa for financial service providers to play an enabling role in this regard is enormous and Blue is very excited to be an established player in the mix. Africa’s employed population of 500 million is growing faster than any other continent on the planet. Long-term expectations are for this to overtake China and India by 2040. While this is a long way off, the continent is developing fast right now. Those companies that are already on the ground and earning their stripes will be better positioned to reap the benefits of understanding the

Blue Financial Services focus finance

Financial services are a critical enabler of growth in any economy. Providing credit, savings and transaction facilities helps individuals and companies grow and turn their ideas into realities

subtle differences and the vast diversity between the African countries, and converting this positioning into sustainable business growth into the future. This will also stand us in good stead to benefit from the exciting growth opportunities presenting themselves in the short, medium and long term. Blueâ&#x20AC;&#x2122;s products are now well aligned to benefit customers as entrepreneurship (business loans), education (study loans) and urbanisation (home loans) all proliferate across the continent. END To learn more visit www.blue.co.za

Blueâ&#x20AC;&#x2122;s turnaround in a nutshell Balance sheet significantly strengthened Blue has a new Group Board of Directors Oversight from Group Risk Audit and Remco chaired by independent directors Deloitte has been retained as external auditors PwC has been appointed as independent internal auditors New HR policies and procedures have been formulated and implemented as part of the change management process A new fit-for-purpose structure has been designed and implemented Local in-country boards have been constituted Appointment of experienced in-country CEOs and CFOs is well advanced. www.southafricamag.com 103

shop

drop â&#x20AC;&#x2DC;Til yOu

104 www.southafricamag.com

Westgate focuS ReTAil

Westgate super Regional shopping centre is the Johannesburg metropolitan area’s third-largest shopping centre.

By ian Armitage

espite running the risk of being labelled sexist I’m going to make a statement: It is often said women love to shop (I can already hear the gasps). But why? Why do they like shopping so much? Scientists say it is hard-wired in our DNA and that dating back to our lovely hunter-gatherer days we are genetically programmed to “gather”. Me, I’m not a women, and I love shopping. Its great fun. And I have a recommendation for you: check out Westgate Super Regional Shopping Centre. It is absolutely massive, a shoppers’ Mecca. The people of Joburg love it, which isn’t much of a surprise considering the city’s unofficial motto is “Go big or go home”. “Westgate is the metropolitan area’s thirdlargest centre after Sandton City and Eastgate. Our vast size and spread of stores means that it plays host to shoppers from all over the region,” says Westgate’s Rob van Dongen. The super regional shopping centre opened its doors in 1985 and started life as a small 45,000m² regional centre with just five anchor stores: Checkers, Dion, Edgars, Woolworths and Ster Kinekor. Westage has more than doubled in size since. It hasn’t looked back. And now it is entering an exciting new phase, with a huge infrastructure improvement project underway. “As part of that we are currently investing R6 million to build a new taxi rank designed to enhance commuter’s experience at the centre,” says van Dongen. “It’s part of our strategic vision of meeting the needs of our core target market.” The Westgate Shopping Centre taxi rank, which is due to be completed by the end of October, will become the first fully formalised operational taxi rank at a shopping centre on the West Rand. “We’re relocating the taxi rank and the project forms part of continued www.southafricamag.com 105

Westgate focus RETAIL

Kamo Architects Kamo Architect’s wealth of intellectual ability, years of experience and strong background (including innovative and ‘green’ architectural design) is steering our vision to become one of the leading firms in South Africa. We are also gaining a lot of experience and success from our associations with large and much more experienced architectural and project management firms on various projects. We hope to pool this collective experience and expertise so as to create a platform to advance previously disadvantaged professionals and create a culture in the construction industry that corrects the imbalances of the past. Kamo architects has been evaluated in terms of section 9 (1) of the Broad-Based Empowerment Act 53 of 2003 and has a Level Three Contributor Status.

As part of that we are currently investing R6 million to build a new taxi rank designed to enhance commuter’s experience at the centre

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infrastructure improvement efforts and follows closely on the heels of a waterproofing project,” van Dongen explains. He says the local taxi association Dorljota was extensively involved in the planning and design phases of the taxi rank relocation project. “Our research show that a significant proportion of shoppers travel by taxi to the centre. We feel that by providing a structured taxi rank we would be enhancing the overall shopping experience of shoppers.” Facilities at the new taxi rank include taxi rank offices; ablution facilities; seating areas; canteen and pause areas, featuring formal and informal trading stalls. Along with formalised lanes, provision has also been made to accommodate metered taxis in the new structure.

Kamo Architects (Pty) Ltd

Proposed Fairlands Office Park

New Westgate Taxi Rank

New Langaville Library

Proposed Fairlands Office Park

Westgate Mall toilets refurb

New Langaville Library

Unit 121A, First Floor Building 4, Midrand Business Park 563 Main Road, Halfway House Midrand,1682

Tel: +27 11 805 1611 Fax: +27 11 315 4606 E-mail: kamoarchitects@telkomsa.net Website: www.kamoarchitects.co.za Kamo Architects (Pty) Ltd is co-owned by Mr Alex Katete Pr.Arch and Mr Rantopo Boikanyo Pr.Arch.Tech

“It’s something we are excited by and look forward to the completion,” says van Dongen. “Anything that can help Westgate standout in this difficult trading environment is a good thing “A lot of our visitors are commuters and this is definitely the way forward. We want people to experience the convenience of the upgrade and we feel it’s important to offer this new experience.” The latest stats show that growth in South Africa’s retail sales slowed in July, increasing 4.2 percent year-on-year at constant prices, compared with 8.6 percent rise in June According to Statistics South Africa sales were up by a marginal 0.1 percent on a seasonally adjusted basis in July from June, and increased by 6.2 percent in the three months ended July compared with the same period a year ago. There are fears retail sales could fall further in coming months with consumer spending expected to lose momentum in the

months ahead as a poor economic outlook, both locally and globally, hurts consumer confidence and higher prices of essential goods such as food and fuel weigh on disposable income. Unemployment is also weighing on consumer spending. Van Dongen says some retailers are suffering and have left the shopping centre as a result. “We have an action group and we’re looking at all the elements. Is it branding? Staff communication? We’re taking the lead to see what we can do positively to get there sales up. Generally the stores are doing quite well but there has been a slump over the past few months.” He thinks the future is bright. “We’re excited. There’s going to be a big overhaul here and we’re getting two new super stores, Dischem and Food lovers market. The future is positive.” END To learn more visit www.westgate.co.za. www.southafricamag.com 107

The mountain Kingdomâ&#x20AC;&#x2122;s

(not so) little Gem

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Letšeng Diamonds focuS mininG

Diamond mining company letšeng Diamonds is nestled high in the breathtaking maluti mountains of the Kingdom of lesotho.

By marie Toms

iamond mining company Letšeng Diamonds is nestled high in the Kingdom of Lesotho’s Maluti Mountains. It is in fact the highest diamond mine in the world at over 3,000 metres above sea level. Letšeng’s story is an interesting one and began in 1995, when the previous General Manager, Mr Keith Whitelock commenced a process to re-open the Letšeng mine after De Beers had closed it in the early 1980s. In 1999, the mining lease for the Letšeng mine was acquired, during which time the South African company, JCI Gold, was the majority shareholder. It took a further five years for the mine to come into commercial production. In 2004 the mine had a single processing plant with the operation producing around 35,000 carats a year. Then, in 2006, Gem Diamonds Limited acquired JCI’s holding and became the 70 percent shareholder, in partnership with the Government of Lesotho, which holds the remaining 30 percent. In 2007, Mazvi Maharasoa joined Letšeng as the Company’s Resident Director and was appointed as CEO of Letšeng Diamonds in November 2009. The Letšeng mine is believed to be the seventh largest processing kimberlite mine in the world, with an estimated 35year mine life. “Processing kimberlite ore and liberating the diamonds is Letšeng’s core business, and upon taking control of Letšeng, the first order of business for Gem Diamonds was to approve an expansion plan, which saw the construction of a second processing plant, bringing the processing capacity of the mine to circa seven million tonnes of ore,

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Letšeng Diamonds focuS mininG

producing circa 100,000 carats per annum,” explains Maharasoa. Speaking to South Africa Magazine in January she said that Letšeng is increasing the annual treatment capacity of the mine to around 10 million tonnes per annum, with a carat output rising to around 200,000 carats per annum. Outlining the expansion project, known as Project Kholo, Maharasoa added, “Our business strategy is growth. The mine fundamentally needs to continue to drive costs down, improve efficiencies and maximise revenue. Both the Letšeng and the Gem Diamonds Boards approved the expansion project in November 2011. Project Kholo will commence in January 2012 and when this expansion is complete, the Letšeng mine will rank amongst the top four largest kimberlite diamond mines in the world.” The total project capital expenditure for Project Kholo is estimated at $280 million. “The expansion project at the Letšeng mine is a major step forward,” added Stephen Gould, the Chief Operations Officer of Letšeng Diamonds. “The number of carats of diamonds that we produce will effectively be doubled. Through Project Kholo we will be improving the recovered grade through the increased liberation of diamonds from the kimberlite ore, while we introduce new technology to reduce diamond damage and unit costs.” Gould said the requirements of project Kholo go far beyond just increasing the capacity of the treatment plants and that the current open pit mine will increase in depth from 150 to 500 metres. In 110 www.southafricamag.com

order to expose sufficient ore for the plants, the waste mining activity has to increase from moving 15 million tonnes of waste per annum to in excess of 60 million tonnes per annum. This will further increase job opportunities at the mine. In order to improve the efficiency of this large earthmoving operation, the size of the equipment employed will be increased by a factor of three, he said. “The challenge of providing the increased power required is being carefully managed, and currently the plan is to increase the capacity of the current power line. However, this will stretch power supply to its limit, and in order to cater for a possible underground mine in the future, other options such as a second line and the possibility of using wind generated power are being looked into.” “I am extremely excited for the future,” Maharasoa added, explaining, “There are a great many factors for contemplation and great potential for growth and development at Letšeng. Strategically, Letšeng is looking at ways to increase the business potential in terms of developing in-country diamond cutting and polishing facilities, known as beneficiation.”

Alliance Insurance Company Lesotho provides Short-Term Commercial Insurance and Personal Insurance, as well as Life Assurance Products and services. Alliance has built a sustainable relationship with Letseng Diamond Mine since the beginning of the mining operations and continues to be a proud service provider of choice for the mineâ&#x20AC;&#x2122;s Short Term Insurance needs. Alliance is heavily involved in Lesotho as a Short Term Underwriter in Mining, Engineering, Construction, Contractors Guarantees and Professional Indemnity covers. Our Life business unit offers market leading Funeral products, Group Life and Employees Benefits Schemes. As a proudly Basotho owned Insurance company, Alliance Insurance recognises the need to play an active role in community life and reach out to different groups and organisations through various Corporate Social Responsibility initiatives; this is made possible by our products which are geared towards reinvestment in the community ensuring that everybody benefits from their alliance with us. We continually strive to deliver unsurpassed customer experience through our innovative product offering and relevant value added insurance solutions specifically tailored for our market.

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Alliance House, 4 Bowker Rd, Maseru Lesotho Email: info@alliance.co.ls Web: www.alliance.co.ls

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Letšeng Diamonds focus MINING

The diamonds produced at Letšeng sell for the highest price per carat of any kimberlite mine, with a grade of less than two carats per hundred tonnes, and although the Letšeng mine is characterised by a low-grade ore body, producing less than two carats per 100 tonnes of ore mined, it is also renowned for producing some of the world’s largest, most exceptional diamonds. The Mountain Kingdom’s gems are amongst the very best in the world and approximately 35 percent of the world’s supply of diamonds larger than 10.8 carats in size are produced at Letšeng with around 90 percent of the diamonds recovered at the Letšeng Mine being gem quality. Over the years, the Letšeng Mine has recovered some of the world’s largest rough diamonds such as the 603 carat Lesotho Promise, the 493 carat Letšeng Legacy, the 478 carat Light of Letšeng and the 550 carat Letšeng Star. “The expansion project will enable us to increase the volume of this high value production even further, thereby allowing us to invest in appropriate cutting and polishing technologies in order to participate 112 www.southafricamag.com

downstream and maximise revenue potentials,” Gould told us in January. “Letšeng’s diamonds are extremely valuable and so we are looking at all downstream options in order to capture additional margin beyond the mine gate. We are becoming increasingly successful in selling rough and polished diamonds, with good margins being realised. A cutting and polishing facility will be built in Maseru, Lesotho. Naturally this will create jobs locally and would be positive for Lesotho. Mining is an extractive industry, however, it is a finite resource, so you need to have as many economic linkages with the community, and national economy as possible – it is just good corporate practice. “From cutting and polishing you can have spin-off industries such as the jewellery manufacturing industry, which can create SME enterprises and additional employment,” he added. “That really is our objective. We want to put the seeds down for economic development from the mining industry.” END To learn more visit www.letsengdiamonds.co.ls.

want bigger profits? mAyBe iT’s Time fOR A suPPly cHAin ReTHinK

The real competitive edge in business lies in having a better supply chain, says logistics consultant martin Bailey.

By ian Armitage

114 www.southafricamag.com

artin Bailey is a supply chain whizz. It is his belief that if you can get it right you can leapfrog your opposition. “This is where the money is,” he says. I’m sure most execs out there would agree. Certainly, we are living in the era of the supply chain. Mr Bailey is the Chairman of Industrial Logistics Systems, a firm he and Gary Benatar founded 25 years ago. Today the Johannesburg and Cape Town-based firm is a major sector player and pre-eminent name in ‘Start-to-Finish’ logistic consultancies. “There are many benefits to operating a slick supply chain,” Bailey says. “A lot of products cost more to supply and deliver than to make so by optimising your supply chain you can make huge savings. There is

Industrial Logistics Systems focus SUPPLY CHAIN

no argument that companies realise this and have the right strategies in place, but the execution is sometimes lacking – that’s where we come in.” Supply chain innovation and excellence is more important today than ever , but Bailey feels South Africa still lacks the logistics and transportation infrastructure to compete on a global level, with poor infrastructure and high costs a stumbling block. “The big problem is that the centre of our economy – over 60 to 70 percent - is based around Johannesburg

and Pretoria, 600km away from the nearest port. This puts us at a huge disadvantage. “Another problem is our poor freight railway infrastructure. It pushes more traffic onto the roads, and with it costs and prices have been driven up. Huge investment is needed to fix this.” Skills are another challenge, he says. “Nationally we have a real problem. As a company we like to employ industrial engineers – they fit our culture. The problem again

There are many benefits to operating a slick supply chain

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Industrial Logistics Systems focus supply chain

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is that technical education in South Africa has totally collapsed. Five years ago I would employ three or four technical graduates and one university graduate. That’s not the case today. In fact, we have to train graduate engineers, and my opposition and much of South African industry has to do the same. The result is we are sucking the number of engineers dry and the costs are increasing. It’s not because we don’t have enough graduates or highly skilled people – we’ve got them in South Africa – what we haven’t got is the middle level skills.” Bailey says another challenge facing industry is labour costs. “Labour costs are going up, while labour productivity is going down. 116 www.southafricamag.com

For the most effective cold room storage, Universal Storage Systems recommends the following racking systems: • Adjustable pallet racking: Extremely versatile and cost effective • High density pallet racking: Increases the amount of useable storage positions in a warehouse • Pushback pallet racking: Accumulative storage system that is especially useful in smaller cold stores. The density of storage offered by these racking systems also aids in temperature control: The more compactly the goods are stored, the better the temperature can be maintained inside the warehouse. The most efficient racking system for your warehouse Our team of cold storage racking experts will help you to select the ideal type of pallet racking for your warehouse, and we’ll install the system with as little disruption as possible to daily operations. Contact our Sales Director, Jan Breytenbach, on 011 793 4920 for an efficient, reliable and cost-effective solution to your racking requirements.

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w w w . u n i v e r s a l - s t o r a g e . c o . z a

The real challenge is looking at energy price, putting our CO2 levels under control, and getting costs into line - whole new strategies

118 www.southafricamag.com

While this is happening, the cost of automation is coming down and so industry is taking a serious look at it. It’s certainly a dilemma, but the computer stuff is getting cheaper and cheaper. I certainly believe, and I’m not sure this is good for the country, that industry can benefit from automation and we’ll see much more of it.” Bailey says there are benefits to automating many processes and replacing some (but not all) workers with machines. He has a point. According to the 11th UASA Employment Report released by economist Mike Schüssler in May, South Africa can’t afford to employ its own people. He found the employed unskilled workers here, in comparison with other countries surveyed, are being paid too much.

Industrial Logistics Systems focus SUPPLY CHAIN

On a broader front Bailey adds the biggest challenge to business and with it the supply chain and logistics sector worldwide is the future movement of fuel prices. “Everything is inflated at fuel price and energy prices are inflating far far faster than the rest. And as prices start shooting through the roof all strategies need to be looked at. “The real challenge is looking at energy price, putting our CO2 levels under control, and getting costs into line - whole new strategies. We really need to re- look at our supply chain from a wholly different point of view. “If we predict $200-a-barrel, which will come eventually, then we’ll need to radically change the way we look at and how we structure supply chains. Companies are starting to strategise and think about the impact and what their businesses will look like. That keeps us nice and busy and represents a great opportunity for us. We’re every excited.” How focused is South African business and industry on cutting-edge strategies? ”In retail hugely aware. Worldwide the retail industry has understood that the supply chain is core to their business. Elsewhere the picture is very mixed.” Bailey’s professional www.southafricamag.com 119

Industrial Logistics Systems focuS suPPly cHAin

CONGRATULATIONS INDUSTRIAL LOGISTICS SYSTEMS Toyota Forklift congratulates Industrial logistics Systems (IlS) on their 25th birthday and is proud of the long and professional association between the two companies. Toyota Forklift is proud to have worked on projects that IlS has chosen us to collaborate with over the years. The relationship goes back over 15 years, and it has evolved to become mutually beneficial based on a joint sense of professionalism, work ethic, commitment and trust. We wish IlS everything of the best for the next 25 years and look forward to continuing our relationship with them.

credentials are impressive. Along with Professor Roy Marcus he established the Materials Handling Research Unit at Wits University in 1979. Three years later he was joined as research assistant by Gary Benatar and the two went on to establish Industrial Logistic Systems in 1987. “This is a small country so we engage in everything from mining to motor car parts to retail. The sector is highly, highly competitive. “The biggest difference with us is that we do the complete range – the strategic planning and the execution. “We’ve also got experience. In 25 years we’ve built over 500 warehouses. We can show the battle scars, and people like that.” END To learn more visit www.ils.co.za. 120 www.southafricamag.com

Toyota Forklift has supplied handling equipment on a number of projects designed and managed by IlS, most notably Shoprite, where we have been the suppliers at all of their distribution centres. Further information is available from: karen van Diggelen, GM: Marketing & communications, Eqstra Industrial Equipment Tel: 011 571 0294. cell: 082 880 0204 Email: karenv@sie.co.za

RAisiNg the stANDARDs

as market leaders since 1984 EQSTRA INDUSTRIAL AND AGRI is the Partner of Choice (employer, supplier, investor) in distribution, rental & value-added services in the Industrial, Material Handling and Agricultural Equipment market; offering a total solution, providing best-inclass brands and delivering optimal life-time value for our customers. Toyota Forklift is the global market leader in materials handling equipment with a reputation for safety & efficiency, innovative research & development and quality productsâ&#x20AC;Ś AND helping you reach new heights.

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Haul the way As trade continues to increase both in south Africa and across the rest of the continent of Africa, concargo, which is celebrating its 25th anniversary, is looking to expand its footprint says the firmâ&#x20AC;&#x2122;s founder and renowned cape Town businessman David Kruyer.

By ian Armitage

122 www.southafricamag.com

Concargo focus supply chain

hrough its impressive suite of services and a philosophy of integrated end-to-end supply chain solutions Concargo Global Logistics offers the kind of new generation logistics that are unrivalled in the SADC region. Its motto is ‘Synergy at Your Service’ and says the company’s founder, Chairman and Managing Director David Kruyer “synergy is key” to its successful formula. “Each of our divisions is dedicated in its respective fields but collectively offer holistic supply chain solutions which ultimately add value to the core business of our clients. Synergy is the key.” Concargo’s philosophy of innovation and specialisation offers not only increased sophistication, greater efficiencies and cost control but is backed by a reliable, quality service, he says. “We have industry focused and customised logistics solutions; our footprint by Road Transport in Africa covers the BLNS countries and SADC region.” Concargo is a company on the up. Kruyer is eager to capitalise on its success and expand. “The objective is to increase our African footprint, across all 54

countries. Essentially as our customers grow and expand into new areas, we want to support them and grow with them. We understand crossboarder trade. “Right now we have our Head Office in Cape Town and offices in Johannesburg, Durban and in Zambia and associated offices throughout the rest of Africa.” Investors see South Africa as a gateway to Africa and as trade continues to increase both on and with the rest of the continent, the logistics involved in the transport of an extensive range of products becomes increasingly important, Kruyer says. “We are intent on being the service provider of choice into Africa. “Our ability to provide reliable supply chain services from start to finish means there is no reason why we

We have industry focused and customised logistics solutions; our footprint by Road Transport in Africa covers the BLNS countries and SADC region

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Our ability to provide reliable supply chain services from start to finish means there is no reason why we cannot achieve that goal

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cannot achieve that goal.” Mr Kruyer founded Concargo in 1987, his vision to create strategic business partnerships and alliances in the supply chain and logistics industry in order to provide “cutting-edge solutions for many industry verticals”. That vision continues to define the company. It is a formula that works: This is Concargo’s 25th year in business and it is an established and recognised brand and a vital link in the supply chain in Southern Africa. “The services we offer range from Abnormal, Out-of-Gauge Heavy Haulage and

Concargo focus supply chain

super load project logistics, which is handled by our projects division. Specialised rigging, Mobile Crane Services, national and over-border Africa road haulage, warehousing and distribution solutions and Deployment and mission-critical logistics,” says Kruyer. “Our client base is broad and we identify, develop and coordinate the implementation of industry-focused and customised logistical solutions. “The integration of supply chain functions not only offers unprecedented levels of control and ease of management but is based on strategic solutions to meet overall project objectives no matter the shape or size of the consignment.” Concargo operates a total quality control system to ensure all loads are properly routed, escorted and supervised throughout, complete with documentation management. It has been frequently recognised for its successes and business excellence, winning a gold international quality award for excellence and business prestige in 2005 and an international transport award in Madrid in 2004. “Quality is absolutely vital,” Kruyer says. “Every consignment is approached on an individual basis and according to its size, application and volume.” Concargo is a growing business there are obvious opportunities across the continent and at home in South Africa too. The future looks bright. “I’d say it is, specifically for road haulage,” Kruyer says. “There is to be big upgrades of major ports and the automotive industry is growing so there are a lot of potential contracts to fight for. www.southafricamag.com 125

Concargo focus supply chain

“Also there is a real shortage of power which is a fantastic opportunity, you have booming interest in Renewable Energy both Wind Turbines and Solar, and we have the big SKA telescope project and the MeerKAT project. There will be dishes in Mozambique, Uganda and Namibia as well as South Africa and a lot of the equipment will be manufactured here. Specialised equipment will be imported from various parts of the world and both the MeerKAT and SKA projects are certainly things we want to be involved with. “At this time growth is absolutely the main goal.” Kruyer isn’t a greedy man, however. He likes to give back. Enterprise development partnerships are something close to his heart. “Mentoring others and encouraging social upliftment is something we are duty bound to do,” he says. “Where we can help other businesses who are looking to achieve the same goals as us, increase their knowledge base and as both parties we will benefit accordingly. “We’ll share in the profitability of any business they procure.” This is of course Concargo’s 25th year 126 www.southafricamag.com

in business. Understandably Kruyer is a delighted by that. “Along the road we’ve learnt a lot. We’ve learnt by getting out there and getting our hands dirty. We’ve learnt from our mistakes. We believe that over the years we have perfected our services, which are seamless. A warning to anyone thinking of going into this business is beware. There are a lot of challenges. “Let’s hope we can celebrate our 50th anniversary at the top of the transport and logistics industry.” Concargo’s experience allows it to offer clients throughout Africa a responsible and effective service by integrating the logistics value chain. Its staff will react swiftly, efficiently, intelligently and flexibly to every request – and are geared to meeting the demands and inspirations of a rapidly changing world. “Concargo will continue to build on its reputation as a market leader in South Africa,” Kruyer says, adding that crossborder transport into-Africa is not for sissies. To learn more visit URL. www.concargo.com or www.logisticsafrica.com