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AFT
AFT
AFT - Afrimat Limited - Reviewed condensed provisional consolidated financial
results for the year ended 28 February 2011
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 provisional consolidated financial results for the year
ended 28 February 2011
PAT up 5,0%
HEPS up 3,9%
NAV of 430 cents per share
Total dividend up 6% to 17,0 cents per share
Net debt:equity ratio 5,2%
Strong performance from Mining & Aggregates division
Condensed consolidated income statement
Reviewed Audited Change
2011 2010 %
R`000 R`000
Revenue 854 496 778 016 9,8
Cost of sales (648 532) (595 852)
Gross profit 205 964 182 164 13,1
Other income 3 405 3 253
Operating expenses (99 543) (76 493)
Operating profit 109 826 108 924 0,8
Investment revenue 9 432 6 807
Finance costs (10 952) (12 959)
Share of profit of associate 18 5
Profit before taxation 108 324 102 777 5,4
Taxation (31 784) (29 864) 6,4
Profit attributable to 76 540 72 913 5,0
shareholders
Attributable to:
Owners of the parent 76 072 72 911
Non-controlling interests 468 2
76 540 72 913
Reconciliation of headline
earnings:
Profit attributable to 76 072 72 911
owners of the parent
Profit on disposal of (3 405) (2 052)
property, plant and
equipment
Profit on disposal of - (669)
financial instruments
Negative goodwill included - (532)
in other income
Impairment of goodwill 600 -
Total tax effects of 592 779
adjustments
73 859 70 437 4,9
Shares in issue:
Total shares in issue 143 262 412 143 262 412
Treasury shares (5 149 510) (3 398 280)
Net shares in issue 138 112 902 139 864 132
Weighted average number of 138 596 357 137 236 345
net shares in issue
Diluted weighted average 139 925 029 138 290 134
number of shares
Earnings per ordinary share 54,9 53,1 3,4
(cents)
Diluted earnings per 54,4 52,7 3,2
ordinary share (cents)
Headline earnings per 53,3 51,3 3,9
ordinary share "HEPS"
(cents)
Diluted HEPS (cents) 52,8 50,9 3,7
Condensed consolidated statement of financial position
Reviewed Audited
2011 2010
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 403 980 385 261
Intangible assets 13 819 14 479
Goodwill 100 843 101 332
Investment in associate 24 5
Other financial assets 83 578 67 012
Deferred tax 4 939 4 570
Retirement benefit asset 12 891 12 672
620 074 585 331
Current assets
Inventories 75 548 68 862
Current tax receivable 5 192 5 223
Trade and other receivables 157 121 130 956
Cash and cash equivalents 87 316 52 914
325 177 257 955
Non-current asset held-for-sale 7 630 -
332 807 257 955
Total assets 952 881 843 286
Equity and liabilities
Equity
Share capital 1 435 1 435
Share premium 352 150 352 150
Business combination adjustment (105 788) (105 788)
Treasury shares (16 799) (11 002)
Net issued share capital 230 998 236 795
Other reserves 2 692 1 835
Retained income 379 429 325 668
Attributable to equity holders of parent 613 119 564 298
Non-controlling interests 3 207 201
Total equity 616 326 564 499
Liabilities
Non-current liabilities
Borrowings long-term 52 168 48 506
Deferred tax 68 550 61 467
Provisions 28 777 13 160
149 495 123 133
Current liabilities
Borrowings short-term 38 719 43 364
Current tax payable 3 431 159
Trade and other payables 116 729 91 347
Bank overdraft 28 181 20 784
187 060 155 654
Total liabilities 336 555 278 787
Total equity and liabilities 952 881 843 286
Net asset value per share (cents) 430 394
Net tangible asset value per share (cents) 350 313
Condensed consolidated statement of cash flows
Reviewed Audited
2011 2010
R`000 R`000
Cash flows from operating activities
Cash generated from operations 160 524 166 491
Interest income 9 432 6 802
Dividends received - 5
Finance costs (10 952) (12 959)
Tax paid (28 424) (25 582)
Net cash from operating activities 130 580 134 757
Acquisition of property, plant and (45 977) (38 086)
equipment
Proceeds on sale of property, plant and 6 909 10 171
equipment
Purchase of financial asset (4 763) (35 989)
Acquisition of businesses (33 189) (14)
Acquisition of non-controlling interests (3 275) -
Net cash from investing activities (80 295) (63 918)
Purchase of treasury shares (5 797) (6 882)
Net movement in borrowings 4 964 (20 784)
Dividends paid (22 445) (19 335)
Net cash from financing activities (23 280) (47 001)
Total cash movement for the year 27 005 23 838
Cash at the beginning of the year 32 130 8 292
Total cash at the end of the year 59 135 32 130
Condensed consolidated statement of changes in equity
Share Share Treasury Business
capital premium shares combination
adjustment
Balance at 1 March 2009 1 340 325 170 (4 120) (105 788)
Changes:
Acquisition equity - - - -
adjustments
Issue of share capital 95 26 980 - -
Employee share option - - - -
scheme: Value of services
provided
Movement in treasury shares - - (6 882) -
Total comprehensive income - - - -
for the year
Dividends paid - - - -
Balance at 28 February 2010 1 435 352 150 (11 002) (105 788)
Changes:
Changes in non-controlling - - - -
interests that do not result
in loss of control
Employee share option - - - -
scheme: Value of services
provided
Movement in treasury shares - - (5 797) -
Total comprehensive income - - - -
for the year
Dividends paid - - - -
Balance at 28 February 2011 1 435 352 150 (16 799) (105 788)
Condensed consolidated statement of changes in equity
Other Retained Non- Total
reserves income controlling equity
interests
Balance at 1 March 2009 2 260 272 077 2 830 493 769
Changes:
Acquisition equity - 15 (2 631) (2 616)
adjustments
Issue of share capital - - - 27 075
Employee share option (153) - - (153)
scheme: Value of services
provided
Movement in treasury shares - - - (6 882)
Total comprehensive income (272) 72 911 2 72 641
for the year
Dividends paid - (19 335) - (19 335)
Balance at 28 February 2010 1 835 325 668 201 564 499
Changes:
Changes in non-controlling - (127) 2 799 2 672
interests that do not result
in loss of control
Employee share option 750 - - 750
scheme: Value of services
provided
Movement in treasury shares - - - (5 797)
Total comprehensive income 107 76 072 468 76 647
for the year
Dividends paid - (22 184) (261) (22 445)
Balance at 28 February 2011 2 692 379 429 3 207 616 326
Condensed consolidated statement of comprehensive income
Reviewed Audited Change
2011 2010 %
R`000 R`000
Profit for the year 76 540 72 913 5,0
Other comprehensive income
Net change in fair value of available- 123 220
for-sale financial assets
Net change in fair value of available- - (669)
for-sale financial assets transferred
to profit and loss
Income tax on other comprehensive (16) 177
income
107 (272)
Total comprehensive income for the 76 647 72 641 5,5
year
Attributable to:
Owners of the parent 76 179 72 639
Non-controlling interests 468 2
76 647 72 641
Condensed consolidated segment report
Split Reviewed Split Audited
2011 2011 2010 2010
% R`000 % R`000
Revenue
External sales
Mining & Aggregates 68 581 878 63 487 387
Readymix 20 166 988 24 188 295
Concrete Products 12 105 630 13 102 334
100 854 496 100 778 016
Intersegment sales
Mining & Aggregates 85 40 212 83 35 889
Readymix 3 1 452 1 554
Concrete Products 12 5 906 16 6 713
100 47 570 100 43 156
Total revenue
Mining & Aggregates 69 622 090 64 523 276
Readymix 19 168 440 23 188 849
Concrete Products 12 111 536 13 109 047
100 902 066 100 821 172
Operating profit before tax
Mining & Aggregates 90 98 968 77 83 633
Readymix 2 2 428 11 11 736
Concrete Products 10 11 003 11 12 347
Other (2) (2 573) 1 1 208
100 109 826 100 108 924
Operating profit margins on
external revenue (%)
Mining & Aggregates 17,0 17,2
Readymix 1,5 6,2
Concrete Products 10,4 12,1
12,9 14,0
Other information
Assets
Mining & Aggregates 532 830 473 695
Readymix 56 558 58 889
Concrete Products 60 665 60 528
Other 302 828 250 174
952 881 843 286
Liabilities
Mining & Aggregates 172 502 145 809
Readymix 15 178 18 638
Concrete Products 11 856 16 125
Other 137 019 98 215
336 555 278 787
Notes
Reviewed Audited
2011 2010
R`000 R`000
1. Dividends
1.1 Afrimat Limited dividends paid/declared in
respect of the current year profits
- Interim dividend paid 8 596 8 596
- Final dividend declared/paid 15 759 14 326
24 355 22 922
1.2 Dividends cash flow
- Current year interim dividend paid 8 596 8 596
- Previous year final dividend paid 14 326 10 701
- Dividends received on treasury shares (738) (262)
- Dividends paid by subsidiaries to non- 261 300
controlling shareholders
22 445 19 335
2. Capital commitments
- Approved capital expenditure to be funded 74 752 51 951
from surplus cash and bank financing
3. Depreciation 44 880 38 642
4. Net movement in borrowings
- Opening balance 91 870 101 121
- New borrowings 60 160 30 509
- Acquired through acquisitions (5 947) 11 533
- Repayments (55 196) (51 293)
- Closing balance 90 887 91 870
5. Other financial assets
Funding provided to Afrimat employees (BEE 70 032 65 284
transaction)
Rehabilitation fund trusts and other 13 546 1 728
83 578 67 012
6. Business acquisitions
Business combination included during the year
is 100% of Glen Douglas Dolomite (Pty) Ltd
from 1 January 2011.
Amounts included are as follows: Glen
Douglas
R`000
Carrying amount of net assets
Plant and equipment 28 756
Trade and other receivables 22 243
Other assets 17 739
Assets 68 738
Deferred tax 5 592
Provisions 14 475
Trade and other payables 14 511
Other liabilities 1 066
Liabilities 35 644
Net assets 33 094
Fair value of net assets
Plant and equipment 28 756
Trade and other receivables 22 243
Other assets 17 739
Assets 68 738
Deferred tax 5 592
Provisions 14 475
Trade and other payables 14 511
Other liabilities 1 066
Liabilities 35 644
Net assets 33 094
Gross trade and other receivables before 22 902
provision for impairment
Goodwill 111
Purchase consideration settled in cash 33 205
Profit after tax of subsidiary included in 3 240
results
Pro forma profit after tax of subsidiary 3 864
assuming business combinations for full year
Revenue of subsidiary included in results 17 140
Pro forma revenue of subsidiary assuming 123 901
business combinations for full year
Acquisition costs included in operating 368
expenses
7. Business disposal
Business disposal included during the year is
50% of Intshinga Mining (Pty) Ltd, a dormant
company, for no consideration.
8. Acquisition of non-controlling interests
Acquisition of non-controlling interests
included during the year are 15% of AFT
Aggregates (Pty) Ltd from 13 December 2010 and
34% of Blue Platinum Ventures 56 (Pty) Ltd
from 1 January 2011.
9. Events after reporting date
No material events have occurred between the
reporting date and the date of this
announcement.
Commentary
BASIS OF PREPARATION
The reviewed condensed provisional consolidated financial statements for the
year ended 28 February 2011 ("the year") have been prepared in accordance with
the recognition and measurement criteria of the International Financial
Reporting Standards (IFRS), the disclosure and presentation requirements of
IAS 34: Interim Financial Reporting, the AC 500 standards as issued by the
Accounting Practice Board, the Listings Requirements of the JSE Limited and in
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 financial statements are
consistent with those applied in the audited annual financial statements for
the previous year ended 28 February 2010.
INTRODUCTION
The directors are pleased to present the condensed provisional consolidated
financial results for the year reflecting ongoing improvement and
diversification. The healthier financial results were driven in part by
strategic initiatives of previous years starting to yield benefits for the
group during the year while laying a solid foundation for the diversification
strategy.
ACQUISITION - Glen Douglas Dolomite (Pty) Limited
As previously reported the acquisition of Glen Douglas Dolomite (Pty) Limited
became unconditional with effect from 1 January 2011, following fulfilment of
all conditions precedent including approvals from the Department of Mineral
Resources.
FINANCIAL RESULTS
Revenue for the year increased by 9,8% to R854,5 million from R778,0 million.
Headline earnings grew by 4,9% translating into 3,9% higher headline earnings
per share ("HEPS") of 53,3 cents (2010: 51,3 cents). As a result of the BEE
transaction announced on 31 August 2009 and the impact on the group of the new
Mineral and Petroleum Resources Royalty Act effective 1 March 2010, HEPS was
reduced by 2,5% and 3,1%, respectively.
OPERATIONAL REVIEW
`Mining & Aggregates` benefited from both increased volumes and solid
contracting activities throughout the year. Afrimat`s flexible service
delivery model utilising mobile equipment positioned the group to become a key
player in contracting. Certain projects were concluded during the year and
this division has successfully secured a number of new major roads contracts
in various regions, boding well for future growth. The slowdown in private
residential and commercial spend, especially in the Western Cape, severely
impacted the division`s margins for the year. However, since year-end some
improvement is noticeable.
`Readymix` continued to underperform due to a fall in volumes, severe
competition and intensifying margin squeeze in the Western Cape resulting from
the generally poor economy in the region. Sales volumes in KwaZulu-Natal were
adversely impacted by delays in government housing projects.
`Concrete Products` positively enjoyed increased volumes. Severe competition
was evident and selling prices and margins remained under pressure.
BUSINESS EXPANSION AND ACQUISITIONS
Diversification and new business development remain key components of the
group`s growth strategy. The dedicated business development team continues to
explore opportunities in existing markets as well as in areas where high
growth is projected.
DIVIDEND
A final dividend of 11,0 cents per share (2010: 10,0 cents) has been declared
for the year. This is in line with the group`s dividend policy of three times
cover. The total dividend (interim and final) for the year is 17 cents per
share (2010: 16 cents per share). (See "Dividend Declaration" below.)
B-BBEE STATUS
Existing BEE shareholders and Afrimat`s Black employees hold in aggregate
26,12% of Afrimat`s issued shares. Notwithstanding a fully empowered ownership
platform, the group remains dedicated to enhancing all aspects of B-BBEE
across the group on an ongoing basis.
PROSPECTS
The slow paced recovery of the business environment is expected to continue.
The group is set to benefit from its diversification strategy and investment
in industrial minerals through the acquisition of Glen Douglas as well as from
other new initiatives. This should lead to Mining & Aggregates` activities
continuing to dominate group results. Price competition and margin squeeze
will remain adverse factors in Readymix and Concrete Products.
Business improvement initiatives aimed at expanding volumes, reducing costs
and improving efficiencies will remain a key focus in all operations. These,
supported by ongoing diversification into attractive growth sectors such as
industrial minerals and open cast mining, should see volumes increase further.
CHANGES TO THE BOARD OF DIRECTORS
Mr Gert Johannes Coffee was appointed as an executive director with effect
from 4 November 2010.
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. Their
review was conducted in accordance with ISRE 2410 "Review of interim financial
information performed by the independent auditor of the entity".
On behalf of the board
MW von Wielligh AJ van Heerden
Chairman Chief Executive Officer
12 May 2011
DIVIDEND DECLARATION
Notice is hereby given that final dividend, No. 8 of 11,0 cents per share, in
respect of the year ended 28 February 2011, was declared on Wednesday, 11 May
2011. Relevant dates are as follows:
Last day to trade cum dividend Friday, 27 May 2011
Commence trading ex dividend Monday, 30 May 2011
Record date Friday, 3 June 2011
Dividend payable Monday, 6 June 2011
Share certificates may not be dematerialised or rematerialised between Monday,
30 May 2011 and Friday, 3 June 2011, both dates inclusive.
By order of the board
Company secretary: PGS de Wit
12 May 2011
Directors: MW von Wielligh* (Chairman), AJ van Heerden (CEO), HP Verreynne
(Financial Director), GJ Coffee, 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 (PO Box 5278, Tyger Valley, 7536)
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: PGS de Wit, Tyger Valley Office Park No. 2, Corner Willie
van Schoor Avenue and Old Oak Road, Tyger Valley, 7530 (PO Box 5278, Tyger
Valley, 7536)
Date: 12/05/2011 07:05:01 Produced by the JSE SENS Department.
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