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AFT
AFT
AFT - Afrimat - Reviewed Condensed Provisional Consolidated Financial Results
for the Year Ended 28 February 2010
Afrimat Limited
(Incorporated in the Republic of South Africa)
(Registration Number: 2006/022534/06)
Share Code: AFT ISIN Code: ZAE000086302
("Afrimat" or "the company" or "the group")
Reviewed Condensed Provisional Consolidated Financial Results for the Year
Ended 28 February 2010
- HEPS up 26,7%
- NAV of 394 cents per share
- Net debt: equity ratio 10,6%
- Strong performance from Aggregates division
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Audited Change
2010 2009 %
R`000 R`000
Revenue 778 016 687 091 13,2
Cost of sales (595 852) (525 377)
Gross profit 182 164 161 714
Other income 3 253 5 054
Operating expenses (76 493) (71 720)
Operating profit 108 924 95 048 14,6
Investment revenue 6 807 4 521
Finance costs (12 959) (13 223)
Share of profit of associate 5 -
Profit before taxation 102 777 86 346 19,0
Taxation (29 864) (28 249) 5,7
Profit attributable to shareholders 72 913 58 097 25,5
Attributable to:
Owners of the parent 72 911 57 703
Non-controlling interests 2 394
72 913 58 097
Reconciliation of headline earnings:
Profit attributable to owners of the parent 72 911 57 703
Profit on disposal of property, (2 052) (3 682)
plant and equipment
Profit on disposal of subsidiaries - (1 372)
Profit on disposal of financial instruments (669) -
Negative goodwill included in other income (532) -
Impairment of goodwill - 110
Total tax effects of adjustments 779 1 316
70 437 54 075 30,3
Shares in issue :
Total shares in issue 143 262 133 762
412 412
Treasury shares (3 398 (855 829)
280)
Net shares in issue 139 864 132 906
132 583
Weighted average number of net shares in issue 137 236 133 480
345 115
Diluted weighted average number of shares 138 290 133 480
134 115
Earnings per ordinary share (cents) 53,1 43,2 22,9
Diluted earnings per ordinary share (cents) 52,7 43,2 22,0
Headline earnings per share "HEPS" (cents) 51,3 40,5 26,7
Diluted HEPS (cents) 50,9 40,5 25,7
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited Change
2010 2009 %
R`000 R`000
Profit for the year 72 913 58 097 25,5
Other comprehensive income
Net change in fair value of available-for- 220 (280)
sale financial assets
Net change in fair value of available-for-
sale financial assets
transferred to profit and loss (669) -
Income tax on other comprehensive income 177 33
(272) (247)
Total comprehensive income for the year 72 641 57 850 25,6
Attributable to:
Owners of the parent 72 639 57 456
Non-controlling interests 2 394
72 641 57 850
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
2010 2009
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 385 261 382 539
Intangible assets 14 479 15 139
Goodwill 101 332 101 332
Investment in associate 5 -
Other financial assets 67 012 3 728
Deferred tax 4 570 -
Retirement benefit asset 12 672 11 792
585 331 514 530
Current assets
Inventories 68 862 75 402
Current tax receivable 5 223 10 593
Trade and other receivables 130 956 132 367
Cash and cash equivalents 52 914 21 689
257 955 240 051
Total assets 843 286 754 581
EQUITY AND LIABILITIES
Equity
Share capital 1 435 1 340
Share premium 352 150 325 170
Business combination adjustment (105 788) (105 788)
Treasury shares (11 002) (4 120)
Net issued share capital 236 795 216 602
Other reserves 1 835 2 260
Retained income 325 668 272 077
Attributable to equity holders of parent 564 298 490 939
Non-controlling interests 201 2 830
Total equity 564 499 493 769
Liabilities
Non-current liabilities
Borrowings long term 48 506 58 202
Deferred tax 61 467 53 713
Provisions 13 160 12 009
123 133 123 924
Current liabilities
Borrowings short term 43 364 42 919
Current tax payable 159 7 307
Trade and other payables 91 347 73 265
Bank overdraft 20 784 13 397
155 654 136 888
Total liabilities 278 787 260 812
Total equity and liabilities 843 286 754 581
Net asset value per share (cents) 394 369
Net tangible asset value per share 313 282
(cents)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Reviewed Audited
2010 2009
R`000 R`000
Cash flows from operating activities
Cash generated from operations 166 491 119 479
Interest income 6 802 4 495
Dividends received 5 26
Finance costs (12 959) (13 223)
Tax paid (25 582) (38 190)
Net cash from operating activities 134 757 72 587
Acquisition of property, plant (38 086) (122 269)
and equipment
Proceeds on sale of property, plant 10 171 21 742
and equipment
Purchase of financial asset (35 989) (29)
Acquisition of businesses (14) (7 803)
Proceeds on sale of businesses - 4 002
Cash flows from investing activities (63 918) (104 357)
Proceeds and premium/(adjustment) on - (946)
share issue
Purchase of treasury shares (6 882) (3 233)
Net movement in borrowings (20 784) 34 788
Dividends paid (19 335) (28 113)
Net cash from financing activities (47 001) 2 496
Total cash movement for the year 23 838 (29 274)
Cash at beginning of year 8 292 37 566
Total cash at the end of year 32 130 8 292
CONDENSED CONSOLIDATED CHANGES IN EQUITY
Share Share Treasury Business
capital premium shares Combination
adjustment
Balance at 1 March 2008 1 340 326 116 (887) (105 788)
Changes:
Acquisition equity - - - -
adjustments
Cancellation/adjustment on - (946) - -
shares issued
Employee share option - - - -
scheme: Value of services
provided
Movement in treasury - - (3 233) -
shares
Total comprehensive income - - - -
for the year
Dividends paid - - - -
Balance at 28 February 1 340 325 170 (4 120) (105 788)
2009
Changes:
Acquisition equity - - - -
adjustments
Issue of share capital 95 26 980 - -
Employee share option - - - -
scheme: Value of services
provided
Movement in treasury - - (6 882) -
shares
Total comprehensive income - - - -
for the year
Dividends paid - - - -
Balance at 28 February 1 435 352 150 (11 002) (105 788)
2010
Other Retained Non- Total
reserves income Controlling equity
interests
Balance at 1 March 2008 935 242 485 701 464 902
Changes:
Acquisition equity (2) 2 1 735 1 735
adjustments
Cancellation/adjustment on - - - (946)
shares issued
Employee share option 1 574 - - 1 574
scheme: Value of services
provided
Movement in treasury - - - (3 233)
shares
Total comprehensive income (247) 57 703 394 57 850
for the year
Dividends paid - (28 113) - (28 113)
Balance at 28 February 2 260 272 077 2 830 493 769
2009
Changes:
Acquisition equity - 14 (2 631) (2 617)
adjustments
Issue of share capital - - - 27 075
Employee share option (153) - - (153)
scheme: Value of services
provided
Movement in treasury - - - (6 882)
shares
Total comprehensive income (272) 72 911 2 72 641
for the year
Dividends paid - (19 334) - (19 334)
Balance at 28 February 1 835 325 668 201 564 499
2010
CONDENSED CONSOLIDATED SEGMENT REPORT
Split Reviewed Split Audited
2010 2010 2009 2009
% R`000 % R`000
REVENUE
External sales
Aggregates 63 487 387 57 392 946
Readymix Concrete 24 188 295 28 194 370
Concrete Manufactured 13 102 334 15 99 775
Products
100 778 016 100 687 091
Intersegment sales
Aggregates 83 35 889 85 46 725
Readymix Concrete 1 554 1 688
Concrete Manufactured 16 6 713 14 7 623
Products
100 43 156 100 55 036
Total revenue
Aggregates 64 523 276 60 439 671
Readymix Concrete 23 188 849 26 195 058
Concrete Manufactured 13 109 047 14 107 398
Products
100 821 172 100 742 127
Operating profit before
tax
Aggregates 77 83 633 60 57 062
Readymix Concrete 11 11 736 18 17 098
Concrete Manufactured 11 12 347 21 20 402
Products
Other 1 1 208 1 486
100 108 924 100 95 048
Operating profit margins
on external revenue (%)
Aggregates 17,2% 14,5%
Readymix Concrete 6,2% 8,8%
Concrete Manufactured 12,1% 20,4%
Products
14,0% 13,8%
OTHER INFORMATION
Assets
Aggregates 473 695 464 478
Readymix Concrete 58 889 64 759
Concrete Manufactured 60 528 58 300
Products
Other 250 174 167 044
843 286 754 581
Liabilities
Aggregates 145 809 129 013
Readymix Concrete 18 638 28 240
Concrete Manufactured 16 125 13 933
Products
Other 98 215 89 626
278 787 260 812
NOTES
Reviewed Audited
2010 2009
R`000 R`000
1.DIVIDENDS
1.1Afrimat Limited dividends
paid/declared in respect of the
current year profits
- Interim dividend paid 8 596 6 688
- Final dividend declared/paid 14 326 10 701
22 922 17 389
1.2 Dividends cash flow
- Current year interim dividend paid 8 596 6 688
- Previous year final dividend paid 10 701 21 402
- Dividends received on treasury (262) (31)
shares
- Dividends paid by subsidiaries to 300 54
non-controlling shareholders
19 335 28 113
2.CAPITAL COMMITMENTS
- Approved capital expenditure to be 51 951 43 327
funded from surplus cash and
bank financing
3.DEPRECIATION 38 642 37 613
4.NET MOVEMENT IN BORROWINGS
- Opening balance 101 121 64 465
- New borrowings 30 509 89 898
- Acquired through acquisitions 11 533 1 868
- Repayments (51 293) (55 110)
- Closing balance 91 870 101 121
5. OTHER FINANCIAL ASSETS
Funding provided to Afrimat 65 284 -
employees
(BEE transaction)
Other 1 728 3 728
67 012 3 728
6.BUSINESS ACQUISITION
Business combination included during the year is 66% of Blue Platinum
Ventures
56 (Pty) Ltd, from 1 July 2009.
Amounts included are as follows: Blue
Platinum
R`000
Carrying amount of net assets
Plant and equipment 11 397
Other (10 785)
612
Fair value of assets
Plant and equipment 11 397
Other (10 785)
612
Negative goodwill included in (532)
other income
Purchase consideration for 66% 80
Loss after tax of subsidiary (1 850)
included
in results
Pro forma loss after tax of
subsidiary
assuming business
combination for full year (3 973)
Revenue of subsidiary included 6 983
in results
Pro forma revenue of subsidiary
assuming business
combination for full year 8 981
The initial accounting for the business combination has now been
finalised.
COMMENTARY
BASIS OF PREPARATION
The reviewed condensed provisional consolidated annual financial statements
for the year have been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting Standards
(IFRS), 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 provisional consolidated annual financial statements are
consistent with those applied in the audited annual financial statements for
the year ended 28 February 2009,except for the changes required by IAS 1:
Presentation of Financials Statements and IFRS 8: Operating Segments, which
have been adjusted accordingly, and Circular 3/2009: Headline Earnings for
which no adjustment was necessary.
INTRODUCTION
The directors are pleased to present the reviewed condensed provisional
consolidated financial results for the year ended 28 February 2010 ("the
year"), reflecting a significant improvement on the previous year in a
successful turnaround, as anticipated. The group benefitted from a strong
performance in its Aggregates operations mainly as a result of the strategy
to intensify focus on infrastructure-related work, which yielded substantial
new contracts.
As previously reported, Afrimat successfully concluded the acquisition of a
66% equity stake in Blue Platinum - a quarry strategically located close to
Lanseria Airport - ("Blue Platinum acquisition" - see `Business Expansion and
Acquisitions` below).
Afrimat also successfully initiated a BEE transaction that enabled it to
become fully compliant with the Mining Charter requirement of 26% Black
ownership, ahead of the 2014 deadline (see `BEE Transaction` below).
POST BALANCE SHEET EVENT
Further as previously announced, post year-end the group has acquired the
entire issued share capital of Glen Douglas Dolomite (Pty) Limited ("Glen
Douglas") from Exxaro Resources Limited for R35 million subject to the
fulfilment of certain suspensive conditions (refer to SENS announcement dated
4 May 2010).
This acquisition is the first step in Afrimat`s expansion and diversification
strategy into the industrial minerals sector. It is anticipated that this
investment will realise positive growth for the group once Afrimat`s
operational model is implemented. This would unlock the vast potential of
Glen Douglas over a realistic time horizon of three years.
FINANCIAL RESULTS
Revenue increased year-on-year by 13,2% to R778,0 million from R687,1
million. Headline earnings grew by 30,3% to R70,4 million, translating into
26,7% higher headline earnings per share of 51,3 cents (2009: 40,5 cents).
The Blue Platinum acquisition has been included in these results for eight
months from the effective date of 1 July 2009.
Statement of financial position
Other financial assets increased during the year due to funding of the
Afrimat BEE Trust for purposes of the BEE transaction (see `BEE Transaction`
below).
OPERATIONAL REVIEW
"Aggregates" successfully countered the dramatic slowdown in private
residential and commercial spend as well as intensified competition in the
economically hard-hit Western Cape, to significantly outperform the previous
year. Particularly Denver Quarry which supplies the Nelson Mandela
metropole, the KwaZulu-Natal operations and Contracting Services performed
well. Afrimat further secured infrastructure projects in the Gauteng, Limpopo
and Mpumalanga regions.
Processing plants are all fully-commissioned and well-placed to supply
government infrastructure projects to boost the division`s revenue going
forward.
"Readymix Concrete" was severely affected by a sharp decline in volumes in
the Western Cape due to the generally poor economy in the region. The SAFCEC
strike and other industrial action at the Ulundi operations in the first half
of the year resulted in lower sales in KwaZulu-Natal. Operations returned to
full production from mid-August 2009.
"Concrete Manufactured Products" was also impacted by the industrial action
in KwaZulu-Natal and consequently suffered decreased volumes.
The anticipated recovery of residential and commercial property development
starting in the latter part of 2010 should increase volumes of all the
divisions.
BUSINESS EXPANSION AND ACQUISITIONS
New business development is a key component of the group`s growth strategy.
The dedicated business development team continues to explore opportunities in
existing markets as well as in provinces where high growth is projected.
Blue Platinum acquisition
As previously reported, the group acquired 66% of Blue Platinum Ventures 56
(Pty) Limited - comprising a quarry located in the high growth area of
Lanseria - with effect from 1 July 2009. The acquisition bolstered Afrimat`s
portfolio with another strategically located operation in close proximity to
increasing development activity and strengthened the group`s presence in the
Gauteng region.
DIVIDEND
In light of the group`s improved performance a final dividend of 10,0 cents
per share (2009 : 8,0 cents) has been declared for the year. This is in line
with the group`s dividend policy of 3 times cover. The total dividend
(interim and final) for the year is 16 cents per share (2009:13 cents per
share). (See `Dividend Declaration` below).
BEE SHAREHOLDING
As previously reported, Afrimat`s Black employees have been assisted by the
company to acquire 16,8% of the issued share capital of the company through
funding provided to the Afrimat BEE Trust. Existing BEE shareholders and
Afrimat`s Black employees in aggregate now hold 26,12% of Afrimat`s issued
shares.
AUDITOR`S REVIEW
The condensed provisional consolidated financial statements for the year have
been reviewed by the company`s auditors, Mazars. Their unmodified review
opinion is available for inspection at the company`s registered office.
PROSPECTS
The current challenging economic conditions are expected to start improving
during the latter part of 2010 as all indications are that private
residential and commercial property development activity is expected to
improve. In addition government`s commitment to infrastructure spend should
stimulate demand for Afrimat`s products. Internal business strategies and
initiatives are set to expand volumes and reduce cost, which are key focus
areas in existing and acquired operations. These factors, supported by
further product diversification into sectors such as industrial minerals,
should result in increased volumes.
On behalf of the board
MW von Wielligh AJ van Heerden
Chairman Chief Executive Officer
12 May 2010
DIVIDEND DECLARATION
Notice is hereby given that a final dividend, No. 6 of 10,0 cents per share,
in respect of the year ended 28 February 2010, was declared on Wednesday, 12
May 2010. Relevant dates are as follows:
Last day to trade cum dividend Friday, 28 May 2010
Commence trading ex dividend Monday, 31 May 2010
Record date Friday, 4 June 2010
Dividend payable Monday, 7 June 2010
Share certificates may not be dematerialised or rematerialised between
Monday,
31 May 2010 and Friday, 4 June 2010, both dates inclusive.
By order of the board
Company secretary:
Routledge Modise Incorporated practising as Eversheds
12 May 2010
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)
Auditors: Mazars, Mazars House, Rialto Road, Grand Moorings Precinct, Century
City, 7441 (PO Box 2785, Cape Town, 8000)
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, 2146 (PO Box 78333, Sandton City, 2146)
Date: 13/05/2010 07:05:10 Produced by the JSE SENS Department.
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