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AFT
AFT
AFT - Afrimat - Reviewed Interim Results For The Six Months Ended
31 August 2008 and Dividend Declaration
AFRIMAT LIMITED
("Afrimat" or "the company")
(Incorporated in the Republic of South Africa)
(Registration number: 2006/022534/06)
Share Code: AFT & ISIN Code: ZAE000086302
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2008 AND DIVIDEND
DECLARATION
Highlights
* NAV of 358 cents per share
* Continued expansion to meet infrastructure demand
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Reviewed Change Audited
six months six months % year ended
ended ended 29 February
31 August 31 August 2008
2008 2007 R`000
R`000 R`000
Revenue 328 046 281 458 16,6% 611 660
Cost of sales (229 109) (196 783) (415 841)
Gross profit 98 937 84 675 195 819
Other income 2 359 3 215 8 504
Operating expenses (46 778) (20 509) (67 206)
Operating profit 54 518 67 381 (19,1%) 137 117
Investment revenue 2 245 3 458 6 031
Finance costs (4 909) (4 163) (9 176)
Profit before 51 854 66 676 (22,2%) 133 972
taxation
Taxation (17 100) (20 231) (15,5%) (38 562)
Profit
attributable
to shareholders 34 754 46 445 (25,2%) 95 410
Attributable to:
Ordinary 34 376 46 298 94 950
shareholders
Minority interest 378 147 460
34 754 46 445 95 410
Reconciliation of
headline earnings:
Profit 34 376 46 298 94 950
attributable to
ordinary
shareholders
Profit on disposal (711) (111) (2 321)
of property, plant
and equipment net
of tax
Profit on disposal (1 087) - (2 311)
of subsidiaries
net of tax
Impairment of 110 - 862
goodwill
Impairment of - 1 368 1 368
mining rights
32 688 47 555 (31,3%) 92 548
Reconciliation of
core headline
earnings
(as defined):
Headline earnings 32 688 47 555 92 548
Transaction costs 508 - -
of BEE
shareholders
change
Losses of start-up 7 205 1 232 2 429
operations net of
tax
40 401 48 787 (17,2%) 94 977
Shares in issue:
March 133 643 175 124 299 497 124 299 497
April 133 643 175 124 299 497 124 299 497
May 133 625 365 124 299 497 124 299 497
June 133 615 257 133 762 738 133 762 738
July 133 576 909 133 762 738 133 762 738
August 133 571 909 133 762 738 133 762 738
September 133 762 738
October 133 762 738
November 133 762 738
December 133 762 738
January 133 699 113
February 133 643 175
Weighted average
number of shares
in issue 133 612 632 129 031 118 3,6% 131 381 662
Earnings per 25,7 35,9 (28,4%) 72,3
ordinary share
(cents)
Headline earnings
per ordinary share 24,5 36,9 (33,6%) 70,4
"HEPS" (cents)
Core headline 30,2 37,8 (20,1%) 72,3
earnings per
ordinary share
(cents)
CONDENSED CONSOLIDATED BALANCE SHEET
Reviewed Reviewed Audited
31 August 31 August 29 February
2008 2007 2008
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 367 248 309 364 309 675
equipment
Intangible assets 15 411 15 553 15 771
Goodwill 101 332 93 850 96 395
Other financial assets 4 169 3 590 3 978
Deferred taxation - 787 -
Retirement benefit asset 11 096 11 594 11 059
499 256 434 738 436 878
Current assets
Inventories 83 233 52 489 59 691
Current tax receivable 4 252 3 333 4 551
Trade and other 140 516 111 394 120 474
receivables
Other financial assets - 2 466 -
Cash and cash equivalents 22 105 71 447 38 820
250 106 241 129 223 536
Total assets 749 362 675 867 660 414
EQUITY AND LIABILITIES
Equity
Share capital 1 340 1 340 1 340
Share premium 325 169 326 116 326 116
Business combination (105 788) (105 788) (105 788)
adjustment
Treasury shares (1 310) - (887)
Net issued share capital 219 411 221 668 220 781
Other reserves 1 787 336 935
Retained income 255 481 203 161 242 485
Attributable to equity 476 679 425 165 464 201
holders of parent
Minority interest 2 814 320 701
Total equity 479 493 425 485 464 902
Liabilities
Non-current liabilities
Borrowings long term 54 472 35 661 27 420
Deferred tax 51 485 50 636 49 096
Provisions 10 242 7 639 8 522
116 199 93 936 85 038
Current liabilities
Borrowings short term 47 876 43 600 37 045
Current tax payable 15 563 23 121 13 565
Trade and other payables 86 161 89 522 58 610
Bank overdraft 4 070 203 1 254
153 670 156 446 110 474
Total liabilities 269 869 250 382 195 512
Total equity and 749 362 675 867 660 414
liabilities
Net asset value per share 358 318 348
(cents)
CONDENSED CONSOLIDATED CHANGES IN EQUITY
Reviewed Reviewed Audited
six months six months year ended
ended ended 29 February
31 August 31 August 2008
2008 2007 R`000
R`000 R`000
Attributable to equity
holders of parent
Balance at the beginning
of period 464 201 298 081 298 081
Issue of shares - 95 95
Premium/(adjustment)
on shares issued (946) 80 690 80 690
Movement in treasury shares (424) - (887)
purchased
Other items 852 149 635
Profit for the year 34 376 46 298 94 950
Dividends paid (21 380) - (9 363)
Total changes 12 478 127 232 166 120
Balance at the end of 476 679 425 313 464 201
period
Minorities
Balance at the beginning
of period 701 25 25
Disposal equity adjustments 1 735 - 216
Profit for the year 378 147 460
Total changes 2 113 147 676
Balance at the end of 2 814 172 701
period
Total equity 479 493 425 485 464 902
CONDENSED CONSOLIDATED SEGMENT REPORT
Split Reviewed Split % Reviewed Split % Audited
% six months six six months year year
six ended months ended ended ended
months 31 August ended 31 August 29 29
ended 2008 31 2007 February February
31 R`000 August R`000 2008 2008
August 2007 R`000
2008
Revenue
External
sales
Aggregates 53% 172 605 57% 160 777 60% 364 726
Readymix
Concrete 32% 104 702 28% 77 402 26% 157 500
Concrete
Manufactured
Products 15% 50 739 15% 43 279 14% 89 434
Total 100% 328 046 100% 281 458 100% 611 660
Intersegment
sales
Aggregates 85% 23 663 97% 9 939 88% 37 359
Readymix
Concrete 15% 4 098 2% 223 11% 4 573
Concrete 0% 65 1% 48 1% 439
Manufactured
Products
Total 100% 27 826 100% 10 210 100% 42 371
Total
revenue
Aggregates 55% 196 268 59% 170 716 61% 402 085
Readymix
Concrete 31% 108 800 27% 77 625 25% 162 073
Concrete 14% 50 804 14% 43 327 14% 89 873
Manufactured
Products
Total 100% 355 872 100% 291 668 100% 654 031
Operating
profit
before tax
Aggregates 60% 32 552 81% 54 454 74% 102 082
Readymix
Concrete 19% 10 158 11% 7 282 11% 15 330
Concrete 22% 12 083 9% 6 571 10% 13 560
Manufactured
Products
Other (1%) (275) (1%) (926) 5% 6 145
Total 100% 54 518 100% 67 381 100% 137 117
Operating
profit
margins on
external
revenue
Aggregates 18,9% 33,9% 28,0%
Readymix
Concrete 9,7% 9,4% 9,7%
Concrete
Manufactured
Products 23,8% 15,2% 15,2%
Total 16,6% 23,9% 22,4%
Other
Information
Assets
Aggregates 471 065 396 628 411 980
Readymix
Concrete 71 011 50 533 53 196
Concrete
Manufactured
Products 59 288 42 876 39 303
Other 147 998 185 830 155 935
Consolidated
total assets 749 362 675 867 660 414
Liabilities
Aggregates 130 375 111 721 85 738
Readymix
Concrete 33 349 26 121 26 332
Concrete
Manufactured
Products 16 128 17 287 5 445
Other 90 017 95 253 77 997
Consolidated
total
liabilities 269 869 250 382 195 512
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Reviewed Audited
six six
months months year
ended ended ended
31 August 31 August 29
February
2008 2007 2008
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from operations 56 731 89 220 114 506
Interest income 2 240 3 446 6 011
Dividends received 5 12 19
Finance costs (4 909) (4 163) (9 176)
Tax paid (14 730) (11 137) (39 937)
Net cash from operating 39 337 77 378 71 423
activities
Acquisition of property, plant (80 585) (35 188) (60 484)
and equipment
Proceeds on sale of property, 12 259 1 387 11 046
plant and equipment
Proceeds/(purchase)
of financial asset (6) 42 333 44 353
Acquisition of businesses (7 803) (102 540) (113 571)
Proceeds on sale of businesses 4 002 - 6 344
Cash flows from investing (72 133) (94 008) (112 312)
activities
Proceeds and (946) 58 286 58 284
premium/(adjustment) on share
issue
Purchase of treasury shares (424) - (887)
Net movement in borrowings 36 015 (10 817) (9 984)
Dividends paid (21 380) - (9 363)
Net cash from financing 13 265 47 469 38 050
activities
Total cash movement
for the period (19 531) 30 839 (2 839)
Cash at beginning of the period 37 566 40 405 40 405
Total cash at end
of the period 18 035 71 244 37 566
NOTES
Reviewed Reviewed Audited
six six year
months months ended
ended ended 29
February
31 August 31 August 2008
2008 2007 R`000
R`000 R`000
1. Dividends
- Interim dividend 6 688 9 363 9 363
declared/paid
- Final dividend paid/declared 21 402 - 21 402
28 090 9 363 30 765
2. Capital commitments
- Approved capital expenditure 41 157 10 054 72 486
to be funded from surplus cash
and bank financing
3. Depreciation 18 008 13 841 33 306
4. Net movement in borrowings
- Opening balance 64 465 38 357 38 357
- New borrowings 60 516 21 577 32 027
- Acquired through acquisitions 1 868 36 093 36 093
- Repayments (24 501) (16 766) (42 012)
- Closing balance 102 348 79 261 64 465
5. Business acquisition
Business combination included during the period is 100% of Sunshine
Crushers (Pty) Limited, from 1 August 2008.
Amounts included are as follows:
Sunshine
Crushers
R`000
Carrying amount of net assets
- Plant and equipment 6 268
- Other (3 910)
2 358
Fair value of assets
- Plant and equipment 6 268
- Other (3 910)
2 358
Goodwill 5 723
Purchase consideration 8 081
Profit after tax included in results 258
Unaudited pro forma profit after tax assuming 1 784
business combinations for full six month period
6. Business disposals
Business disposals during the period are 7,3% of Brickrush (Pty) Ltd,
from 1 March 2008, and 15,0% of Bak-klei en Steen (Pty) Ltd, from 1 May 2008.
7,3% Brickrush 15% Bak-klei
R`000 R`000
Carrying amount of net assets
- Plant and equipment 324 -
- Other 1 243 168
1 567 168
Fair value of assets
- Plant and equipment 324 -
- Goodwill 806 -
- Other 1 243 168
2 373 168
Proceeds on disposal 3 834 168
Profit after tax included in
results
- Profit/(loss) on disposal 1 199 (24)
of businesses
- Profit after tax for period - 3
to disposal date
1 199 (21)
COMMENTARY
INTRODUCTION
The directors are pleased to present the reviewed consolidated interim results
for the six months ended 31 August 2008 ("the period"). The group`s operations
in KwaZulu-Natal and the Eastern Cape performed well during the period.
Operations in the Western Cape were impacted by adverse winter weather
conditions and lower economic activity.
During the period Afrimat successfully concluded a further strategic
acquisition of a quarry and readymix plant in Dundee which extended its
existing foothold in KwaZulu-Natal ("the Sunshine Crushers acquisition" - See
`Business Expansion and Acquisitions` below). In addition a number of organic
expansion initiatives were completed to the benefit of the group, including
further national expansion into Gauteng and Limpopo.
FINANCIAL RESULTS
Headline earnings were impacted by lower volumes in the Western Cape, once-off
start-up expenses at new operations, transaction costs relating to changes in
BEE shareholders ("BEE costs") and significantly increased diesel costs, which
also affected operating margins. Accordingly headline earnings decreased by
31,3% to R32,7 million and headline earnings per share by 33,6% to 24,5 cents.
However, core headline earnings reflect a lower decrease of 20,1% (core
headline earnings are defined as headline earnings excluding once-off start-up
and BEE costs as well as non-recurring expenses).
The Sunshine Crushers acquisition has been included for one month from the
effective date of 1 August 2008. The Malans/Denver and Scottburgh quarries
have been included for the full six months and comparative results for the six
months ended 31 August 2007 reflect the results of these quarries for
three months and two months, respectively.
OPERATIONAL REVIEW
"Aggregates" was impacted by lower volumes in the Western Cape as a result of
extreme and prolonged winter conditions, delays in municipal authorisation of
projects, unusually low expenditure on infrastructure budget by the provincial
government and a downturn in residential property development. Afrimat expects
an improved performance going forward as projects within the Western Cape
region regain momentum, signs of which are already evident. The KwaZulu-Natal
operations were impacted by once-off production cost pressures and changes in
product mix.
Following the commissioning of the new plant the Denver quarry, which supplies
the Port Elizabeth metropole, performed exceptionally well.
Afrimat further secured the rights to supply large-scale projects in the
Gauteng and Limpopo regions. The establishment of processing plants in these
regions is progressing well. These operations are well-placed to supply
government infrastructure projects and significantly boost the division`s
revenue.
"Readymix Concrete" benefited from higher volumes resulting from increased
government infrastructure development, particularly in KwaZulu-Natal, and
additional plants commissioned by Afrimat in the Western Cape region.
"Concrete Manufactured Products" similarly leveraged increased volumes
resulting from government housing projects in KwaZulu-Natal.
BUSINESS EXPANSION AND ACQUISITIONS
New business development is a key component of the group`s growth strategy. A
dedicated team continues to explore opportunities in existing markets as well
as in provinces where high infrastructure spending is projected.
Government`s commitment to infrastructure and housing development is set to
drive industry growth and Afrimat is ideally positioned to derive additional
sales volumes from this. To this end the upgrade of production capabilities is
progressing well in line with strategy.
The group concluded the Sunshine Crushers acquisition by purchasing Sunshine
Crushers (Pty) Limited - comprising a quarry and readymix plant located in
Dundee - with effect from 1 August 2008. The acquisition added another
strategically located operation to Afrimat`s portfolio, bolstering the group`s
45 year presence in the KwaZulu-Natal region and entrenching its strategic
periphery location of operations.
BASIS OF PREPARATION
The reviewed consolidated interim financial statements for the six months
ended 31 August 2008 have been prepared in compliance with International
Accounting Standard (IAS 34) "Interim Financial Reporting". The accounting
policies and method of measurement and recognition applied in preparation of
the consolidated interim financial statements are consistent with those
applied in the group`s annual financial statements for the year ended 29
February 2008, which comply with International Financial Reporting Standards
(IFRS).
Adjustments were made to goodwill amounting to R129 535 in respect of the
Denver acquisition, loss on disposal of part of Capmat (Pty) Limited amounting
to R88 888 and the August 2007 assets/liabilities in the segment report were
re-allocated to be consistent with current disclosure.
AUDITOR`S REVIEW
The consolidated interim financial statements for the six months ended 31
August 2008 have been reviewed by the company`s auditors, Mazars Moores
Rowland. Their unmodified review opinion is available for inspection at the
company`s registered office.
INTERIM DIVIDEND
An interim dividend of 5,0 cents per share has been declared for the period in
line with the group`s dividend policy (2008: 7,0 cents) (see `Dividend
Declaration` below).
PROSPECTS
Earnings in the second half of the year to February 2009 are expected to
reflect the benefits of improved weather conditions in the Western Cape, new
operations coming on stream and demand arising from government`s
infrastructure spending, notwithstanding that the second half of the year is
traditionally adversely impacted by the month-long "builders` holiday".
On behalf of the board
MW von Wielligh AJ van Heerden
Chairman Chief Executive Officer
30 October 2008
DIVIDEND DECLARATION
Notice is hereby given that an interim dividend, No. 3 of 5,0 cents per share,
in respect of the six months ended 31 August 2008, was declared on Wednesday,
29 October 2008. Relevant dates are as follows:
Last day to trade cum dividend Friday, 21 November 2008
Commence trading ex dividend Monday, 24 November 2008
Record date Friday, 28 November 2008
Dividend payable Monday, 1 December 2008
Share certificates may not be dematerialised or rematerialised between Monday,
24 November 2008 and Friday, 28 November 2008, both dates inclusive.
By order of the board
Routledge Modise Attorneys
Company secretary
30 October 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 (Pty) Limited, 70
Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Company secretary: Routledge Modise Attorneys, 2nd Floor Wanderers Building
The Campus, 57 Sloane Street, Bryanston, 2021 (PO Box 78333, Sandton City,
2146)
Date: 30/10/2008 07:05:01 Produced by the JSE SENS Department.
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