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AFT
AFT
AFT - Afrimat Limited Reviewed Condensed Consolidated Interim Financial
Results for the six months ended 31 August 2009
Afrimat Limited
("Afrimat" or "the company" or "the group")
(Incorporated in the Republic of South Africa)
(Registration Number: 2006/022534/06)
Share Code: AFT
ISIN Code: ZAE000086302
Reviewed Condensed Consolidated Interim Financial Results for the six months
ended 31 August 2009
HEPS up 20,8%
NAV of 382 cents per share
Net debt: equity ratio 19,4%
Strong performance from Aggregates Division
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Reviewed Change Audited
six months six months % year ended
ended 31 ended 31 28 February
August 2009 August 2008 2009 R`000
R`000 R`000
Revenue 392 517 323 830 21,2 687 091
Cost of sales (292 512) (237 232) (525 377)
Gross profit 100 005 86 598 161 714
Other income 3 170 2 359 5 054
Operating expenses (36 587) (34 439) (71 720)
Operating profit 66 588 54 518 22,1 95 048
Investment revenue 1 968 2 245 4 521
Finance costs (7 638) (4 909) (13 223)
Profit before taxation 60 918 51 854 17,5 86 346
Taxation (18 804) (17 100) 10,0 (28 249)
Profit for the period 42 114 34 754 21,2 58 097
Attributable to:
Owners of the parent 41 866 34 376 57 703
Non-controlling interests 248 378 394
42 114 34 754 58 097
Reconciliation of headline
earnings:
Profit attributable to 41 866 34 376 57 703
owners of the parent
Profit on disposal of (2 534) (988) (3 682)
property, plant and
equipment
Profit on disposal of - (1 372) (1 372)
subsidiaries
Profit on disposal of (637) - -
financial instruments
Impairment of goodwill - 110 110
Total tax effects of 908 562 1 316
adjustments
39 603 32 688 21,2 54 075
Reconciliation of core
headline earnings (as
defined):
Headline earnings 39 603 32 688 54 075
Transaction costs of BEE - 508 3 329
shareholders change
Losses of start-up - 10 007 17 999
operations
Total tax effects of - (2 802) (5 695)
adjustments
39 603 40 401 (2,0) 69 708
Shares in issue:
Total shares in issue 143 262 412 133 762 412 133 762 412
Treasury shares (1 960 867) (190 503) (855 829)
Net shares in issue 141 301 545 133 571 909 132 906 583
Weighted average number of 133 585 941 133 612 625 133 480 115
net shares in issue
Diluted weighted average 134 453 353 133 612 625 133 480 115
number of shares
Earnings per ordinary share 31,3 25,7 21,8 43,2
(cents)
Diluted earnings per 31,1 25,7 21,0 43,2
ordinary share (cents)
Headline earnings per 29,6 24,5 20,8 40,5
ordinary share "HEPS"
(cents)
Diluted HEPS (cents) 29,5 24,5 20,4 40,5
Core HEPS (cents) 29,6 30,2 (2,0) 52,2
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed six Change Audited year
six months months ended % ended 28
ended 31 31 August February
August 2008 R`000 2009 R`000
2009 R`000
Profit for the period 42 114 34 754 21,2 58 097
Other comprehensive income
Net change in fair value of 138 185 (280)
available-for-sale financial
assets
Net change in fair value of (637) - -
available-for-sale financial
assets transferred to profit
and loss
Income tax on other 182 (26) 33
comprehensive income
(317) 159 (247)
Total comprehensive income 41 797 34 913 19,7 57 850
for the period
Attributable to:
Owners of the parent 41 549 34 535 57 456
Non-controlling interests 248 378 394
41 797 34 913 57 850
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Reviewed 31 Audited
31 August August 2008 28
2009 R`000 R`000 February
2009
R`000
ASSETS
Non-current assets
Property, plant and equipment 380 747 367 248 382 539
Intangible assets 14 867 15 411 15 139
Goodwill 101 332 101 332 101 332
Other financial assets 66 307 4 169 3 728
Deferred taxation 3 227 - -
Retirement benefit asset 12 310 11 096 11 792
578 790 499 256 514 530
Current assets
Inventories 82 369 83 233 75 402
Current tax receivable 6 664 4 252 10 593
Trade and other receivables 170 709 140 516 132 367
Cash and cash equivalents 27 661 22 105 21 689
287 403 250 106 240 051
Total assets 866 193 749 362 754 581
EQUITY AND LIABILITIES
Equity
Share capital 1 435 1 340 1 340
Share premium 352 150 325 170 325 170
Business combination adjustment (105 788) (105 788) (105 788)
Treasury shares (6 439) (1 311) (4 120)
Net issued share capital 241 358 219 411 216 602
Other reserves 2 205 1 787 2 260
Retained income 303 387 255 481 272 077
Attributable to equity holders of 546 950 476 679 490 939
parent
Non-controlling interests 510 2 814 2 830
Total equity 547 460 479 493 493 769
Liabilities
Non-current liabilities
Borrowings long-term 63 841 54 472 58 202
Deferred tax 57 674 51 485 53 713
Provisions 12 535 10 242 12 009
134 050 116 199 123 924
Current liabilities
Borrowings short-term 43 629 47 876 42 919
Current tax payable 14 671 15 563 7 307
Trade and other payables 99 785 86 161 73 265
Bank overdraft 26 598 4 070 13 397
184 683 153 670 136 888
Total liabilities 318 733 269 869 260 812
Total equity and liabilities 866 193 749 362 754 581
Net asset value per share (cents) 382 358 369
Net tangible asset value per share 301 271 282
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed six Reviewed Audited
months ended six months year
31 August ended 31 ended 28
2009 R`000 August 2008 February
R`000 2009
R`000
Cash flows from operating
activities
Cash generated from operations 60 865 56 731 119 479
Interest income 1 968 2 240 4 495
Dividends received 5 5 26
Finance costs (7 638) (4 909) (13 223)
Tax paid (3 895) (14 730) (38 190)
Net cash from operating activities 51 305 39 337 72 587
Acquisition of property, plant and (12 104) (80 585) (122 269)
equipment
Proceeds on sale of property, 7 010 12 259 21 742
plant and equipment
Proceeds/(purchase) of financial (35 367) (6) (29)
asset
Acquisition of businesses (14) (7 803) (7 803)
Proceeds on sale of businesses - 4 002 4 002
Cash flows from investing (40 475) (72 133) (104 357)
activities
Proceeds and premium/(adjustment) - (946) (946)
on share issue
Purchase of treasury shares (2 319) (424) (3 233)
Net movement in borrowings (5 184) 36 015 34 788
Dividends paid (10 556) (21 380) (28 113)
Net cash from financing activities (18 059) 13 265 2 496
Total cash movement for the period (7 229) (19 531) (29 274)
Cash at beginning of the period 8 292 37 566 37 566
Total cash at end of the period 1 063 18 035 8 292
CONDENSED CONSOLIDATED SEGMENT REPORT
Split Reviewed Split Reviewed Split Audited
six six six six year year
months months months months ended 28 ended 28
ended ended 31 ended ended 31 February February
31 August 31 August 2009 % 2009
August 2009 August 2008 R`000
2009 % R`000 2008 % R`000
Revenue
External
sales
63 245 062 53 172 605 57 392 946
Aggregates
Readymix 24 94 590 31 100 486 28 194 370
Concrete
Concrete 13 52 865 16 50 739 15 99 775
Manufactured
Products
100 392 517 100 323 830 100 687 091
Intersegment
sales
84 20 637 85 23 663 85 46 725
Aggregates
Readymix 1 255 1 196 1 688
Concrete
Concrete 15 3 718 14 3 967 14 7 623
Manufactured
Products
100 24 610 100 27 826 100 55 036
Total
revenue
63 265 699 55 196 268 60 439 671
Aggregates
Readymix 23 94 845 29 100 682 26 195 058
Concrete
Concrete 14 56 583 16 54 706 14 107 398
Manufactured
Products
100 417 127 100 351 656 100 742 127
Operating
profit
before tax
75 49 866 60 32 552 60 57 062
Aggregates
Readymix 10 6 467 19 10 158 18 17 098
Concrete
Concrete 13 8 793 22 12 083 21 20 402
Manufactured
Products
Other 2 1 462 (1) (275) 1 486
100 66 588 100 54 518 100 95 048
Operating
profit
margins on
external
revenue (%)
20,3 18,9 14,5
Aggregates
Readymix 6,8 10,1 8,8
Concrete
Concrete 16,6 23,8 20,4
Manufactured
Products
17,0 16,8 13,8
Other
Information
Assets
58 508 307 63 471 065 61 464 478
Aggregates
Readymix 8 67 277 9 71 011 9 64 759
Concrete
Concrete 8 66 814 8 59 288 8 58 300
Manufactured
Products
Other 26 223 795 20 147 998 22 167 044
Consolidated 100 866 193 100 749 362 100 754 581
total assets
CONDENSED CONSOLIDATED statement of CHANGES IN EQUITY
Share Share Treasu Business Other Retai Non- Total
capi pre ry combi- reser ned control equity
tal mium shares nation ves incom ling
adjust- e interes
ment ts
Balance at 1 340 326 116 (887) (105 935 242 701 464 902
1 March 788) 485
2008
Changes:
Acquisitio - - - - - - 1 735 1 735
n equity
adjustment
s
Cancellati - (946) - - - - - (946)
on/adjustm
ent on
shares
issued
Employee - - - - 693 - - 693
share
option
scheme:
Value of
services
provided
Movement - - (424) - - - - (424)
in
treasury
shares
Total - - - - 159 34 378 34 913
comprehens 376
ive income
for the
period
Dividends - - - - - (21 - (21
paid 380) 380)
Balance at 1 340 325 170 (1 311) (105 1 787 255 2 814 479 493
31 August 788) 481
2008
Balance at 1 340 326 116 (887) (105 935 242 701 464 902
1 March 788) 485
2008
Changes:
Acquisitio - - - - (2) 2 1 735 1 735
n equity
adjustment
s
Cancellati - (946) - - - - - (946)
on/adjustm
ent on
shares
issued
Employee - - - - 1 574 - - 1 574
share
option
scheme:
Value of
services
provided
Movement - - (3 233) - - - - (3 233)
in
treasury
shares
Total - - - - (247) 57 394 57 850
comprehens 703
ive income
for the
year
Dividends - - - - - (28 - (28
paid 113) 113)
Balance at 1 340 325 170 (4 120) (105 2 260 272 2 830 493 769
28 788) 077
February
2009
Changes:
Acquisitio - - - - - - (2 568) (2 568)
n equity
adjustment
s
Issue of 95 26 980 - - - - - 27 075
share
capital
Employee - - - - 262 - - 262
share
option
scheme:
Value of
services
provided
Movement - - (2 319) - - - - (2 319)
in
treasury
shares
Total - - - - (317) 41 248 41 797
comprehens 866
ive income
for the
period
Dividends - - - - - (10 - (10
paid 556) 556)
Balance at 1 435 352 150 (6 439) (105 2 205 303 510 547 460
31 August 788) 387
2009
NOTES
Reviewed six Reviewed six Audited year
months ended months ended ended 28
31 August 31 August February 2009
2009 R`000 2008 R`000 R`000
1. Dividends
- Interim dividend 8 596 6 688 6 688
declared/paid
- Final dividend declared/paid 10 701 21 402 10 701
19 297 28 090 17 389
2. Capital commitments
- Approved capital expenditure 24 723 41 157 43 327
to be funded from surplus cash
and bank financing
3. Depreciation 20 817 18 008 37 613
4. Net movement in borrowings
- Opening balance 101 121 64 465 64 465
- New borrowings 25 162 60 516 89 898
- Acquired through 11 532 1 868 1 868
acquisitions
- Repayments (30 345) (24 501) (55 110)
Closing balance 107 470 102 348 101 121
5. Other financial assets
Funding provided to Afrimat 64 205 - -
employees (BEE transaction)
Other 2 102 4 169 3 728
66 307 4 169 3 728
6. Business acquisition
Business combination included during the period is 66% of Blue
Platinum Ventures 56 (Pty) Limited, from 1 July 2009.
Amounts included are as follows:
R`000
Carrying amount of net assets
Plant and equipment 11 397
Other (11 317)
80
Fair value of assets
Plant and equipment 11 397
Other (11 317)
80
Goodwill -
Purchase consideration for 66% 80
Loss after tax of subsidiary included in (493)
results
Pro forma loss after tax of subsidiary (2 615)
assuming business combinations for full
six month period
Revenue of subsidiary included in the 840
results
Pro forma revenue of subsidiary assuming 2 838
business combinations for full six month
period
The initial accounting for the business combination is provisional and
based on an interpretation of a claw-back clause in the agreement.
COMMENTARY
INTRODUCTION
The directors are pleased to present the reviewed condensed consolidated
interim results for the six months ended 31 August 2009 ("the period"),
reflecting an improvement on the comparative period as anticipated. The group
benefitted from a strong performance in its Aggregates operations despite
tough trading conditions due to the economic downturn.
During the period, Afrimat successfully concluded the acquisition of a 66%
equity stake of a quarry, strategically located close to Lanseria airport
("Blue Platinum acquisition" - see "Business Expansion and Acquisitions"
below).
The group also successfully initiated a BEE transaction that saw Afrimat
become fully compliant with the Mining Charter requirement of 26% black
ownership in advance of the 2014 deadline (see "BEE Transaction" below).
FINANCIAL RESULTS
Revenue for the period increased by 21,2% to R392,5 million from R323,8
million in the 2008 comparative period. Headline earnings grew by 21,2% to
R39,6 million and headline earnings per share by 20,8% to 29,6 cents (2008:
24,5 cents).
Core headline earnings
Core headline earnings are defined as headline earnings excluding once-off
start-up costs at new operations and BEE costs. Core headline earnings for the
period reflect a marginal decrease of 2,0% compared to last year. Start-up
operations all became fully operational and began to contribute to
profitability during the period.
Statement of financial position
Other financial assets increased substantially during the period due to
funding provided by Afrimat to the Afrimat BEE Trust for purposes of the BEE
transaction.
Trade and other receivables includes debtors outstanding relating to new large-
scale government contracts amounting to R34 million. Since August 2009 these
outstanding debtors have shown a significant reduction and R13 million remains
outstanding.
OPERATIONAL REVIEW
"Aggregates Division" successfully countered a dramatic slowdown in private
residential and commercial spend, as well as intensified competition in the
economically hard-hit Western Cape, to significantly outperform the
comparative period.
Processing plants are all fully-commissioned and well-placed to supply
government infrastructure projects and boost the division`s revenue going
forward.
"Readymix Concrete Division" underperformed during the period, affected by a
sharp fall in volumes in the Western Cape due to the generally poor economy in
the region, and lower sales in KwaZulu-Natal as a result of the SAFCEC strike
and other industrial action at the Ulundi operations. Affected operations
returned to full production from mid-August 2009.
"Concrete Manufactured Products Division" in KwaZulu-Natal was similarly
impacted and consequently suffered decreased volumes.
BUSINESS EXPANSION AND ACQUISITIONS
New business development remains a key focus of the group`s growth strategy. A
dedicated team continues to explore opportunities in existing markets as well
as in new markets where high growth is anticipated.
Blue Platinum acquisition
The group acquired 66% of Blue Platinum Ventures 56 (Pty) Limited - comprising
a quarry located in the growth area of Lanseria - with effect from 1 July
2009. The acquisition added another strategically located operation to
Afrimat`s portfolio and bolstered the group`s presence in the Gauteng region.
DIVIDEND
An interim dividend of 6,0 cents per share (2008: 5,0 cents per share) has
been declared for the period. This is in line with the group`s dividend policy
of 3 times cover.
BEE TRANSACTION
As previously reported, Afrimat`s black employees have acquired 15,8%
(22 700 000 shares) of the issued share capital of the company utilising
funding provided by Afrimat to the Afrimat BEE Trust. The transaction consists
of 13 200 000 shares purchased from previous BEE shareholders and a new issue
of 9 500 000 shares. Existing BEE shareholders and Afrimat`s black employees
now hold 26,12% of Afrimat`s issued share capital.
PROSPECTS
The prevailing challenging conditions are expected to continue for the
remainder of the financial year. Afrimat is well-positioned to weather the
ongoing economic downturn as Government`s commitment to infrastructure
investment and housing development continues to stimulate demand for Afrimat`s
products. This, together with other strategic initiatives, should result in
increased volumes.
BASIS OF PREPARATION
The reviewed condensed consolidated interim financial statements for the
period have been prepared in accordance with the recognition and measurement
requirements of International Financial Reporting Standards (IFRS) and the
disclosure and presentation requirements of IAS 34: Interim Financial
Reporting, the Listings Requirements of the JSE Limited and the manner
required by the South African Companies Act. The accounting policies and
method of measurement and recognition applied in preparation of these reviewed
condensed consolidated interim financial statements are consistent with those
applied in the group`s most recent audited annual financial statements for the
year ended 28 February 2009, except for the changes required by IAS 1:
Presentation of Financial Statements which have been adjusted accordingly. In
respect of IFRS 8: Operating Segments and Circular 3/2009: Headline Earnings
no adjustments were necessary.
Adjustments have been made to reported revenue for the comparative period, and
to the split of cost of sales and operating expenses, to be consistent with
current disclosure.
AUDITOR`S REVIEW
The condensed consolidated interim financial statements for the period 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.
On behalf of the board
MW von Wielligh AJ van Heerden
Chairman Chief Executive Officer
4 November 2009
DIVIDEND DECLARATION
Notice is hereby given that interim dividend, No. 5 of 6,0 cents per share, in
respect of the six months ended 31 August 2009, was declared on 4 November
2009. Relevant dates are as follows:
Last day to trade cum dividend Friday, 27 November 2009
Commence trading ex dividend Monday, 30 November 2009
Record date Friday, 4 December 2009
Dividend payable Monday, 7 December 2009
Share certificates may not be dematerialised or rematerialised between Monday,
30 November 2009 and Friday, 4 December 2009, both dates inclusive.
By order of the board
Routledge Modise Incorporated practising as Eversheds
Company secretary
4 November 2009
Directors: MW von Wielligh* (Chairman), AJ van Heerden (CEO), HP Verreynne
(Financial Director), PG Corbin, L Dotwana*, F du Toit*, LP Korsten*, PRE
Tsukudu*, 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, 27 Fricker Road, Illovo, 2196
(PO Box 651010, Benmore, 2010)
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70
Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Company secretary: Routledge Modise Incorporated practising as Eversheds, 22
Fredman Drive, Sandton, Johannesburg (PO Box 78333, Sandton City, 2146)
Date: 05/11/2009 07:05:04 Produced by the JSE SENS Department.
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