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AFT
AFT
AFT - Afrimat Limited - Reviewed Condensed Consolidated Financial Results
For the year ended 29 February 2008 and dividend declaration
AFRIMAT LIMITED
(Incorporated in the Republic of South Africa)
(Registration Number: 2006/022534/06)
Share Code: AFT ISIN Code: ZAE000086302
("Afrimat" or "the company")
Reviewed Condensed Consolidated Financial Results For the year ended 29
February 2008
Highlights
- HEPS up 20,4%
- NAV of 348 cents per share
- Operating margin of 22,4%
- Geared for growth
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
2008 2007 Change
R`000 R`000 %
Revenue 611 660 349 032 75,2
Cost of sales (415 841) (249 766)
Gross profit 195 819 99 266
Other income 8 504 3 919
Operating expenses (67 206) (33 412)
Operating profit 137 117 69 773 96,5
Investment revenue 6 031 10 906
Finance costs (9 176) (3 623)
Profit before taxation 133 972 77 056 73,9
Taxation (38 562) (23 668) 62,9
Profit attributable
to shareholders 95 410 53 388 78,7
Attributable to:
Ordinary shareholders 94 950 51 709
Minority interest 460 1 679
95 410 53 388
Reconciliation of
headline earnings
Profit attributable to
ordinary shareholders 94 950 51 709
Profit on disposal
of property, plant and
equipment net of tax (2 321) (141)
Profit on disposal of
subsidiaries net of tax (2 311) -
Impairment of goodwill 862 -
Impairment of mining rights 1 368 -
92 548 51 568 79,5
Shares in issue
Total shares in issue 133 762 738 124 299 497
Treasury shares (119 563) -
Net shares in issue 133 643 175 124 299 497
Net shares in issue
Three months to 31 May 124 299 497 70 075 959
Five months to 31 October 133 762 738 70 075 959
Two months to 31 December 133 762 738 124 299 497
One month to 31 January 133 699 113 124 299 497
One month to 29 February 133 643 175 124 299 497
Weighted average number
of net shares in issue 131 381 662 88 150 472 49,0
Earnings per
ordinary share (cents) 72,3 58,7 23,2
Headline earnings
per share (cents) 70,4 58,5 20,4
CONDENSED CONSOLIDATED BALANCE SHEET
Reviewed Audited
2008 2007
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 309 675 190 531
Intangible assets 15 771 7 040
Goodwill 96 395 39 181
Other financial assets 3 978 3 502
Retirement benefit asset 11 059 11 594
436 878 251 848
Current assets
Inventories 59 691 35 909
Current tax receivable 4 551 4 349
Trade and other receivables 120 474 66 479
Other financial assets - 44 334
Cash and cash equivalents 38 820 41 362
223 536 192 433
Total assets 660 414 444 281
Equity and Liabilities
Equity
Share capital 1 340 1 245
Share premium 326 116 245 425
Business combination adjustment (105 788) (105 788)
Treasury shares (887) -
Net issued share capital 220 781 140 882
Other reserves 935 336
Retained income 242 485 156 863
Attributable to equity holders of parent 464 201 298 081
Minority interest 701 25
Total equity 464 902 298 106
Liabilities
Non-current liabilities
Borrowings 27 420 17 551
Deferred tax 49 096 38 244
Provisions 8 522 5 950
85 038 61 745
Current liabilities
Borrowings 37 045 20 806
Current tax payable 13 565 12 847
Trade and other payables 58 610 49 820
Bank overdraft 1 254 957
110 474 84 430
Total liabilities 195 512 146 175
Total equity and liabilities 660 414 444 281
Net asset value per share (cents) 348 240
CONDENSED CONSOLIDATED CHANGES IN EQUITY
Reviewed Audited
2008 2007
R`000 R`000
Attributable to equity holders of parent
Balance at the beginning of year 298 081 110 420
Issue of shares 95 1 243
Premium on shares issued 80 690 245 426
IFRS3 business combination adjustment - (105 788)
Movement in treasury shares purchased (887) -
Other items 635 (4 929)
Profit for the year 94 950 51 709
Dividends paid (9 363) -
Total changes 166 120 187 661
Balance at the end of year 464 201 298 081
Minorities
Balance at the beginning of year 25 4255
Acquisition equity adjustments 216 (5 909)
Profit for the year 460 1679
Total changes 676 (4 230)
Balance at the end of year 701 25
Total equity 464 902 298 106
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
2008 2007
R`000 R`000
Cash flows from operating activities
Cash generated from operations 114 506 75 858
Interest income 6 011 10 889
Dividends received 19 17
Finance costs (9 176) (3 623)
Tax paid (39 937) (17 396)
Net cash from operating activities 71 423 65 745
Acquisition of property, plant and (60 484) (32 681)
equipment
Proceeds on sale of property, plant
and equipment 11 046 1 899
Proceeds/(purchase) of financial asset 44 353 (43 720)
Acquisition of businesses (113 571) 3 739
Proceeds on sale of businesses 6 344 -
Cash flows from investing activities (112 312) (70 763)
Proceeds and premium on share issue 58 284 69 562
Purchase of treasury shares (887) -
Net movement in borrowings (9 984) (33 223)
Dividends paid (9 363) (5 265)
Net cash from financing activities 38 050 31 074
Total cash movement for the year (2 839) 26 056
Cash at beginning of year 40 405 14 349
Total cash at end of year 37 566 40 405
CONDENSED CONSOLIDATED SEGMENT REPORT
Reviewed Audited
2008 2007
R`000 R`000
Revenue
External sales
Aggregates 364 726 198 700
Ready mixed concrete 157 500 118 796
Concrete manufactured products 89 434 31 536
Total 611 660 349 032
Intersegment sales
Aggregates 37 359 25 099
Ready mixed concrete 4 573 257
Concrete manufactured products 439 12
Total 42 371 25 368
Total revenue
Aggregates 402 085 223 799
Ready mixed concrete 162 073 119 053
Concrete manufactured products 89 873 31 548
Total 654 031 374 400
Operating profit before tax
Aggregates 102 082 49 529
Ready mixed concrete 15 330 13 211
Concrete manufactured products 13 560 3 612
Other 6 145 3 421
Total 137 117 69 773
Other Information
Assets
Aggregates 411 980 226 686
Ready mixed concrete 53 196 40 706
Concrete manufactured products 39 303 31 857
Other 155 935 145 032
Consolidated total assets 660 414 444 281
Liabilities
Aggregates 85 738 51 566
Ready mixed concrete 26 332 21 916
Concrete manufactured products 5 445 11 701
Other 77 997 60 992
Consolidated total liabilities 195 512 146 175
NOTES
Reviewed Audited
2008 2007
R`000 R`000
1. Dividends
- Dividends before listing - 5 265
- Interim dividend paid 9 363 -
- Final dividend declared 21 402 -
30 765 5 265
2. Capital commitments
- Approved capital expenditure to be
funded from surplus cash and
bank financing 72 486 32 519
3. Depreciation 33 306 15 085
4. Net movement in borrowings
- Opening balance 38 357
- New borrowings 32 027
- Acquired through acquisitions 36 093
- Repayments (42 012)
- Closing balance 64 465
5. Business combinations included during the period
are the Malans/Denver group, from 1 June 2007, and
Scottburgh/Maritzburg group, from 1 July 2007. Amounts
included are as follows:
Malans Denver Scottburgh/
Group Quarries Maritzburg
Carrying amount of net
assets
- Property 6 857 - 5 037
- Plant and equipment 41 379 31 206 1 900
- Mining rights - 1 368 -
- Other 1 226 (17 606) (457)
- Total previously 49 462 14 968 6 480
reported
- Provisions and
accruals
adjusted (2 023) (577) (530)
47 439 14 391 5 950
Fair value of assets
- Property 20 676 - 5 037
- Plant and equipment 41 379 31 206 1 900
- Mining rights - 1 368 8 513
- Other (777) (17 606) (457)
- Total previously 61 278 14 968 14 993
reported
- Mining rights adjusted - - 1 554
- Provisions and
accruals
adjusted (2 023) (577) (531)
59 255 14 391 16 016
Goodwill
- Total previously 14 825 37 944 1 900
reported
- Adjustments 2 213 1 193 -
17 038 39 137 1 900
Purchase consideration
- Total previously 76 103 52 912 16 893
reported
- Adjustments 190 616 1 023
76 293 53 528 17 916
Profit after tax
included
in results 15 153 781 (158)
Unaudited proforma
profit
after tax assuming
business
combinations for full 18 581 2 638 44
year
Purchase consideration for
Malans/Denver group was partly paid
in shares (30%). Share price was
determined at the agreement date and
based on the volume weighted average
price on the JSE Limited on 23
November 2006 less 10% discount.
6. Business disposals during the
period are Prima Quarries 1987, from
30 November 2007, and 12,5% of Capmat
(Pty) Limited, from 6 January 2008.
Amounts disposed are as follows:
PQ 1987 12,5% Capmat
Carrying amount of net assets
- Plant and equipment 2 806 233
- Other 4 143 660
6 949 893
Fair value of assets
- Plant and equipment 2 806 233
- Other 4 143 660
6 949 893
Proceeds on disposal 11 117 102
Profit after tax included in results
- Profit/(loss) on disposal of 3 674 (676)
businesses
- Profit after tax for period to 673 36
disposal date
4 347 (640)
COMMENTARY
INTRODUCTION
The directors are pleased to present
the reviewed condensed consolidated
financial results for the year ended
29 February 2008 ("the year"). The
group`s operations performed well
across the board reflecting strong
organic growth. In addition
acquisitions made during the year
have been well integrated into
existing operations.
FINANCIAL RESULTS
Headline earnings increased by 79% to
R92,5 million, translating into
headline earnings per share of 70,4
cents up by 20%. Operating margins of
22,4% reflect the particularly strong
performance of the "Aggregates" and
"Concrete manufactured products"
divisions.
The Malans Quarries and Scottburgh
acquisitions ("the acquisitions")
have been included for nine and eight
months respectively, from the dates
of conclusion of the respective
acquisitions following delays in
obtaining Competition Commission
approval.
Lancaster group has been included in
these results for the full twelve
months. (The comparative results for
the year ending 28 February 2007
("the previous year") reflect the
results of Prima group for 12 months
and Lancaster group for four months
in terms of International Financial
Reporting Standards 3: "Business
Combinations".)
The weighted number of shares in
issue increased to 131,4 million
during the year following shares
issued as part settlement of the
purchase consideration for the Malans
Quarries acquisition, and to fund
future expansion. The Afrimat Share
Incentive Trust purchased 119 563
shares during the year.
OPERATIONAL REVIEW
Afrimat`s three divisions performed
well:
- "Aggregates" delivered operating
profit in line with expectations,
driven by strong demand for its
products and higher value products in
its sales mix. The division
accordingly experienced increased
sales volumes at improved pricing.
- "Ready mix concrete" was
impacted in the first half of the
year by intensifying price
competition in the Western Cape as
well as unusually severe winter
conditions which impeded growth in
the supply of products in the region.
Performance in the second half of the
year improved substantially in line
with higher demand and favourable
weather conditions.
- "Concrete manufactured products"
benefited significantly from
increased public and private sector
expenditure on low cost housing
developments nationwide. Capacity
expansion at Afrimat`s Ladysmith
plant is now fully operational and
robust demand for the division`s
products continues unabated.
During the year Afrimat commissioned
new quarries in Kommetjie and
Saldanha Bay in the Western Cape and
replaced an existing quarry in Paarl,
in respect of which the lease had
expired, with another quarry in the
same area. In addition a non-
profitable quarry in Oudtshoorn was
closed.
Constrained cement supply in KwaZulu-
Natal and the Free State during the
first three months of the year has
now been alleviated by the
commissioning of new capacity at
Natal Portland Cement. Full and
adequate supply was achieved in the
second quarter of the year and is
expected to be sustainable.
ACQUISITIONS
Malans Quarries
As previously announced on 7 February
2007 Afrimat acquired the Malans
group and Denver Quarries (Pty)
Limited, together comprising a number
of quarry operations and sand mines
in the Western Cape peninsula,
Jeffrey`s Bay area and in Port
Elizabeth, as well as mobile crushing
operations, for a total consideration
of R130 million. Competition
Commission approval was obtained on
31 May 2007. The operations have been
bedded down, adding strategically
located quarries and sand mines as
well as sophisticated mobile crushers
to Afrimat`s portfolio, which has
enhanced the group`s ability to
supply infrastructure projects
throughout South Africa. Additional
production capacity at Denver
Quarries is now fully operational.
Scottburgh
Afrimat acquired certain quarrying
operations and concrete block
manufacturing and land holding
businesses as previously announced on
16 July 2007. The two quarries,
strategically located in Scottburgh
and Pietermaritzburg, and concrete
block and brick factory in Park Rynie
boosted Afrimat`s total quarry
portfolio to 22 and block and brick
factories to eight.
Integration of the acquisitions and
upgrading of production capability is
progressing well in line with
strategy. As a result of the
strategic positioning of the
respective operations close to major
high-growth regions, strong growth is
expected.
DISPOSALS
During the year Prima Quarries 1987
(Pty) Limited, consisting of a small
quarry located in Port Elizabeth, was
sold with effect from 30 November
2007 to satisfy a Competition
Commission ruling in respect of the
Denver Quarries acquisition.
DIVIDEND
A final dividend of 16,0 cents per
share has been declared for the year
in line with the group`s dividend
policy (2007: Nil). See `Dividend
declaration` below.
BASIS OF PREPARATION
The reviewed condensed consolidated
financial statements for the year
ended 29 February 2008 have been
prepared in compliance with
International Financial Reporting
Standards (IFRS), IAS 34 and the
South African Companies Act, 1973.
The accounting policies and methods
of measurement and recognition
applied in preparation of these
reviewed condensed consolidated
financial statements are consistent
with those applied in the group`s
most recent audited annual financial
statements for the previous year
ended 28 February 2007.
AUDITOR`S REVIEW
The condensed consolidated financial
statements for the year have been
reviewed by the company`s auditors,
Mazars Moores Rowland. Their
unqualified review opinion is
available for inspection at the
company`s registered office.
PROSPECTS
Government`s and private sector`s
commitment to infrastructure
investment continues to drive
significant industry growth,
stimulating ongoing strong demand for
Afrimat`s products. Solid operational
infrastructure, further strengthened
by recent capacity expansions at
strategic sites, and flexibility
offered by the group`s mobile
crushing fleet, position Afrimat to
entrench its status as a leading
supplier of construction materials
across the country and to sustain
growth.
Earnings for the current year ending
28 February 2009 are expected to
reflect the positive impact of
increasing demand, the inclusion for
the full 12 months of the
acquisitions and expansion into the
Gauteng and northern regions.
On behalf of the board
MW von Wielligh AJ van Heerden
Chairman Chief Executive
Officer
13 May 2008
Dividend declaration
Notice is hereby given that a final
dividend, No. 2 of 16,0 cents per
share, in respect of the year ended
29 February 2008, was declared on
Friday, 9 May 2008. Relevant dates
are as follows:
Last day to trade cum dividend Friday, 30 May 2008
Commence trading ex dividend Monday, 2 June 2008
Record date Friday, 6 June 2008
Dividend payable Monday, 9 June 2008
Share certificates may not be
dematerialised or rematerialised
between Monday, 2 June 2008 and
Friday, 6 June 2008, both dates
inclusive.
By order of the board
Routledge, Modise Attorneys
Company secretary
13 May 2008
Directors: MW von Wielligh*^
(Chairman), AJ van Heerden (CEO), HP
Verreynne (Financial Director), PG
Corbin, L Dotwana*, F du Toit*, M
Kaplan*^, GN Jiyane*, HJE van Wyk*
*Non-executive director
^Independent
Registered office: Tyger Valley
Office Park No. 2, Corner Willie van
Schoor Avenue and Old Oak Road Tyger
Valley, 7530
Sponsor: Bridge Capital Advisors
(Pty) Limited
Transfer secretaries: Computershare
Investor Services 2004 (Pty) Limited,
70 Marshall Street, Johannesburg,
2001 (PO Box 61763, Marshalltown,
2107)
Company secretary: Routledge Modise
Attorneys 2nd Floor Wanderers
Building, The Campus, 57 Sloane
Street, Bryanston, 2021 (PO Box
78333, Sandton City, 2146)
Investor Relations: Envisage Investor
& Corporate Relations
Date: 13/05/2008 07:00:10 Produced by the JSE SENS Department.
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