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AFT
AFT
AFT - Afrimat Limited - Reviewed condensed provisional consolidated financial
results for the year ended 29 February 2012
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
PAT up 18,4%
Net cash from operating activities up 12,1%
HEPS up 17,0% to 62,6 cents per share
Net debt: equity ratio <0%
Total dividend up 11,8% to 19,0 cents per share
NAV of 469 cents per share
Solid performance from all segments
Condensed consolidated income statement
Restated
Reviewed audited
2012 2011 Change
R`000 R`000 %
Revenue 996 137 854 496 16,6
Cost of sales (749 841) (648 532)
Gross profit 246 296 205 964 19,6
Other income 7 893 3 405
Operating expenses (124 059) (99 772)
Operating profit 130 130 109 597 18,7
Investment revenue 10 267 9 969
Finance costs (10 546) (10 952)
Share of profit of associate 42 18
Profit before taxation 129 893 108 632 19,6
Taxation (38 976) (31 870) 22,3
Profit attributable to shareholders 90 917 76 762 18,4
Attributable to:
Owners of the parent 90 250 76 294
Non-controlling interests 667 468
90 917 76 762
Shares in issue
Total shares in issue 143 262 412 143 262 412
Treasury shares (6 145 174) (5 149 510)
Net shares in issue 137 117 238 138 112 902
Weighted average number of net shares 137 371 771 138 596 357
in issue
Diluted weighted average number of 140 583 947 139 925 029
shares
Earnings per ordinary share (cents) 65,7 55,0 19,5
Diluted earnings per ordinary share 64,2 54,5 17,8
(cents)
Reconciliation of headline earnings
Restated
Reviewed audited
2012 2011 Change
R`000 R`000 %
Profit attributable to owners of the 90 250 76 294
parent
Profit on disposal of property, plant (5 280) (3 405)
and equipment
Reclassification of profit on (245) -
disposal of financial instruments
Impairment of goodwill 337 600
Total tax effects of adjustments 999 592
86 061 74 081 16,2
Headline earnings per ordinary share 62,6 53,5 17,0
"HEPS" (cents)
Diluted HEPS (cents) 61,2 52,9 15,7
Condensed consolidated statement of comprehensive income
Restated
Reviewed audited
2012 2011 Change
R`000 R`000 %
Profit for the year 90 917 76 762 18,4
Other comprehensive income/(loss)
Net change in fair value of available- 104 123
for-sale financial assets
Net change in fair value of available- (245) -
for-sale financial assets transferred
to profit and loss
Remeasurements of the net defined - (5 912)
benefit liability/(asset)
Income tax on other comprehensive (30) 1 639
income
(171) (4 150)
Total comprehensive income for the year 90 746 72 612 25,0
Attributable to:
Owners of the parent 90 079 72 144
Non-controlling interests 667 468
90 746 72 612
Condensed consolidated statement of financial position
Restated
Reviewed audited
2012 2011
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 425 906 403 980
Intangible assets 13 160 13 819
Goodwill 101 195 100 843
Investment in associate 44 24
Other financial assets 83 601 83 578
Deferred tax 5 406 4 939
629 312 607 183
Current assets
Inventories 71 827 75 548
Current tax receivable 3 133 5 192
Trade and other receivables 163 548 157 121
Cash and cash equivalents 132 557 87 316
371 065 325 177
Non-current asset held-for-sale - 7 630
371 065 332 807
Total assets 1 000 377 939 990
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 (20 559) (16 799)
Net issued share capital 227 238 230 998
Other reserves 5 495 2 692
Retained income 435 564 368 668
Attributable to equity holders of parent 668 297 602 358
Non-controlling interests 3 609 3 207
Total equity 671 906 605 565
Liabilities
Non-current liabilities
Borrowings long-term 44 838 52 168
Deferred tax 70 354 64 365
Provisions 31 260 28 777
Retirement benefit liability - 2 055
146 452 147 365
Current liabilities
Borrowings short-term 36 752 38 719
Current tax payable 10 068 3 431
Trade and other payables 117 052 116 729
Bank overdraft 18 147 28 181
182 019 187 060
Total liabilities 328 471 334 425
Total equity and liabilities 1 000 377 939 990
Net asset value per share (cents) 469 423
Net tangible asset value per share (cents) 389 343
Condensed consolidated statement of cash flows
Restated
Reviewed audited
2012 2011
R`000 R`000
Cash flows from operating activities
Cash generated from operations 171 049 159 987
Interest income 9 988 9 969
Dividends received 22 -
Finance costs (9 238) (10 952)
Tax paid (25 478) (28 424)
Net cash from operating activities 146 343 130 580
Acquisition of property, plant and equipment (71 932) (45 977)
Proceeds on sale of property, plant and 17 181 6 909
equipment
Purchase of financial asset (253) (4 763)
Proceeds on sale of financial asset 612 -
Acquisition of businesses - (33 189)
Acquisition of non-controlling interests - (3 275)
Net cash from investing activities (54 392) (80 295)
Purchase of treasury shares (3 760) (5 797)
Net movement in borrowings (note 5) (9 297) 4 962
Dividends paid (note 2) (23 619) (22 445)
Net cash from financing activities (36 676) (23 280)
Total cash movement for the year 55 275 27 005
Cash/(overdraft) at the beginning of the year 59 135 32 130
Total cash/(overdraft) at the end of the year 114 410 59 135
Condensed consolidated statement of changes in equity
Business
Share Share Treasury combination
capital premium shares adjustment
Previously stated balance 1 435 352 150 (11 002) (105 788)
at 1 March 2010
Change from early adopting - - - -
IAS19
Restated balance at 1 March 1 435 352 150 (11 002) (105 788)
2010
Changes:
Movements in non- - - - -
controlling interests
Share-based payments - - - -
Movement in treasury shares - - (5 797) -
Profit for the year - - - -
Other comprehensive - - - -
income/(loss) for the year
Dividends paid - - - -
Balance at 28 February 2011 1 435 352 150 (16 799) (105 788)
Changes:
Share-based payments - - - -
Movement in treasury shares - - (3 760) -
Profit for the year - - - -
Other comprehensive - - - -
income/(loss) for the year
Dividends paid - - - -
Balance at 29 February 2012 1 435 352 150 (20 559) (105 788)
Condensed consolidated statement of changes in equity
Non-
Other Retained controlling Total
reserves income interests equity
Previously stated balance 1 835 325 668 201 564 499
at 1 March 2010
Change from early adopting - (6 726) - (6 726)
IAS19
Restated balance at 1 835 318 942 201 557 773
1 March 2010
Changes:
Movements in non- - (127) 2 799 2 672
controlling interests
Share-based payments 750 - - 750
Movement in treasury shares - - - (5 797)
Profit for the year - 76 294 468 76 762
Other comprehensive 107 (4 257) - (4 150)
income/(loss) for the year
Dividends paid - (22 184) (261) (22 445)
Balance at 28 February 2011 2 692 368 668 3 207 605 565
Changes:
Share-based payments 2 974 - - 2 974
Movement in treasury shares - - - (3 760)
Profit for the year - 90 250 667 90 917
Other comprehensive (171) - - (171)
income/(loss) for the year
Dividends paid - (23 354) (265) (23 619)
Balance at 29 February 2012 5 495 435 564 3 609 671 906
Condensed consolidated segment report
Restated Restated
Split Reviewed split audited
2012 2012 2011 2011
% R`000 % R`000
Revenue
External sales
Mining & Aggregates 70 704 509 68 581 878
Concrete Products 12 116 112 12 105 630
Readymix 18 175 516 20 166 988
100 996 137 100 854 496
Intersegment sales
Mining & Aggregates 86 41 886 85 40 212
Concrete Products 12 5 990 12 5 906
Readymix 2 1 057 3 1 452
100 48 933 100 47 570
Total revenue
Mining & Aggregates 71 736 609 69 622 090
Concrete Products 12 122 780 12 111 536
Readymix 17 175 895 19 168 440
100 1 035 284 100 902 066
Operating profit before tax
Mining & Aggregates 85 110 809 90 98 779
Concrete Products 11 13 852 10 10 963
Readymix 6 8 653 2 2 428
Other (2) (3 184) (2) (2 573)
100 130 130 100 109 597
Operating profit margins on
external revenue (%)
Mining & Aggregates 16,0 17,0
Concrete Products 11,9 10,4
Readymix 4,9 1,5
13,2 12,8
Other information
Assets
Mining & Aggregates 543 750 532 830
Concrete Products 69 026 60 665
Readymix 54 119 56 558
Other 333 482 289 937
1 000 377 939 990
Liabilities
Mining & Aggregates 163 690 172 502
Concrete Products 13 406 11 856
Readymix 15 275 15 178
Other 136 100 134 889
328 471 334 425
Notes
Restated
Reviewed Audited
2012 2011
R`000 R`000
1. Other income
Profit on disposal of property, plant and 5 280 3 405
equipment
Reclassification of profit on disposal of 245 -
financial instruments
Settlement of defined benefit plan liability 2 368 -
7 893 3 405
2. Dividends
2.1 Afrimat Limited dividends paid/declared in
respect of the current year profits
Interim dividend paid 8 596 8 596
Final dividend declared/paid 18 624 15 759
27 220 24 355
2.2 Dividends cash flow
Current year interim dividend paid 8 596 8 596
Previous year final dividend paid 15 759 14 326
Dividends received on treasury shares (1 001) (738)
Dividends paid by subsidiaries to non- 265 261
controlling shareholders
23 619 22 445
3. Capital commitments
Approved capital expenditure to be funded 78 755 74 752
from surplus cash and additional bank
financing
4. Depreciation 45 735 44 880
5. Net movement in borrowings
Opening balance 90 887 91 870
New borrowings 39 960 60 160
Acquired through acquisitions - (5 947)
Repayments (49 257) (55 196)
Closing balance 81 590 90 887
New borrowings relate to the acquisition of
property, plant and equipment.
6. Other financial assets
Funding provided to Afrimat employees (BEE 70 310 70 032
transaction)
Rehabilitation fund trusts and other 13 291 13 546
83 601 83 578
7. Effect of early adopting IAS19 (issued in
June 2011)
The company decided to early adopt the
amended IAS19, issued in June 2011,
retrospectively. According to the revised IAS
19, actuarial gains and losses are renamed
"remeasurements" and will be recognised
immediately in other comprehensive income.
The use of the corridor method, as previously
applied, is no longer permitted. The revised
standard has introduced the new concept of
net interest on the net defined benefit
liability (assets) and the ways in which the
net interest is determined, represents a
major change to the existing IAS 19. Under
the revised standard, the return on plan
assets is estimated on the basis of the
discount rate of the liability, rather than
the expected rate of return of plan assets,
as in the past.
7.1 Effect on income statement
Profit after tax previously stated 76 540
Profit after tax restated 76 762
Difference 222
7.2 Effect on statement of comprehensive income
Total comprehensive income previously stated 76 647
Total comprehensive income restated 72 612
Difference (4 035)
7.3 Effect on statement of financial position
Retirement benefit asset/(liability) 12 891
previously stated
Retirement benefit asset/(liability) restated (2 055)
Difference (14 946)
Retained income previously stated 379 429
Retained income restated 368 668
Difference (10 761)
Deferred tax liability previously stated 68 550
Deferred tax liability restated 64 365
Difference (4 185)
7.4 Effect on segment report
Operating profit previously stated 109 826
Operating profit restated 109 597
Difference (229)
Assets previously stated 952 881
Assets restated 939 990
Difference (12 891)
7.5 Effect on earnings per ordinary share and
HEPS
Earnings per ordinary share previously stated 54,9
(cents)
Earnings per ordinary share restated (cents) 55,0
Difference 0,1
HEPS previously stated (cents) 53,3
HEPS restated (cents) 53,5
Difference 0,2
8. Business combination
The company acquired 100% of the share
capital of SA Block (Pty) Limited and its
100% owned subsidiary Clinker Supplies (Pty)
Limited ("Clinker group acquisition") with
effect from 1 March 2012 for R120,8 million,
settled in shares of R25,8 million and cash
of R95,0 million. The effect of acquisition
will only be reflected in the results for the
financial year ending 28 February 2013.
The initial accounting for this business
combination was incomplete at the time of
this announcement. Further disclosure
requirements in terms of IFRS 3, such as the
fair value of assets acquired and liabilities
assumed, have not been disclosed as the
effective date financials and valuations have
not been finalised.
Clinker
Group
R`000
Unaudited pro forma profit after tax assuming 35 096
the business combination for full year
Unaudited pro forma revenue assuming the 212 978
business combination for full year
Acquisition costs included in Afrimat`s 231
operating expenses for the year ending 29
February 2012
9. Events after reporting date
9.1 Adjustments relating to events after the
reporting date
The retirement benefit liability was settled
during the year under review based on the
approval obtained from the Financial Services
Board (FSB), on 4 April 2012, to convert the
fund from a defined benefit plan to a defined
contribution plan with retrospective effect
from 1 August 2011.
9.2 Non-adjusting events after the reporting date
Save for the business combination, as
disclosed in note 8, there were no other
material events 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 29 February 2012 ("the year") have been prepared in accordance
with the framework concepts and 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 computation
applied in preparation of these reviewed condensed provisional consolidated
financial statements are consistent with those applied in the audited annual
financial statements for the year ended 28 February 2011, save for the early
adoption of the amended IAS19: Employee benefits, issued in June 2011. The
retrospective effect of the early adoption of the amended IAS19 is disclosed
in note 7.
The reviewed condensed provisional consolidated financial statements have
been prepared under the supervision of the Financial Director, HP Verreynne
BCompt (Hons) CA (SA).
INTRODUCTION
The reviewed condensed provisional consolidated financial results for the
year reflect ongoing improvement despite the slow paced recovery in the
general business environment. However, the group`s performance was boosted by
the benefits of strategic initiatives in previous years aimed at "growth from
diversification" (see Financial Results below).
FINANCIAL RESULTS
Revenue for the year increased by 16,6% to R996,1 million from R854,5
million. Headline earnings increased by 16,2%, translating into headline
earnings per share of 62,6 cents (2011: 53,3 cents).
Glen Douglas Dolomite was included for the full 12 months of the year,
compared to inclusion for only two months since acquisition in the previous
year`s financial results.
OPERATIONAL REVIEW
Afrimat`s key division, "Mining & Aggregates", benefited from increased
volumes mainly due to its entry into industrial minerals through the Glen
Douglas Dolomite mine. Volumes from the traditional aggregates market were
sustained at similar levels to the previous year.
Glen Douglas Dolomite contributed well in line with expectations and good
progress has been made in terms of the turnaround strategy of the mine. The
group`s strategy to differentiate itself through geographic distribution and
product offering proved to be a good hedge against the volatility associated
with its traditional markets.
"Concrete Products" performed well, enjoying higher volumes and steady
pricing also generated by government housing projects.
"Readymix" benefited from higher demand from government housing projects.
However, intensifying price competition in the Western Cape, where the market
is still feeling the strain of the economic slowdown, had a negative impact
on the division`s overall performance.
BUSINESS EXPANSION AND ACQUISITIONS
New business development remains a key component of the group`s growth
strategy. The dedicated business development team continues to successfully
identify and pursue opportunities in existing markets as well as in areas
where high growth is projected.
Acquisition: Clinker Group
As previously announced, the acquisition of the Clinker Group became
unconditional with effect from 1 March 2012. Afrimat acquired 100% of the
issued ordinary share capital of S.A. Block (Pty) Limited and its 100% owned
subsidiary Clinker Supplies (Pty) Limited (jointly referred to as the
"Clinker Group").
Afrimat is excited about the scale of the potential opportunity of this
acquisition. The Clinker Group has complementary and supplementary strengths
to those of the Afrimat group. Leveraging these combined strengths will
result in new revenue opportunities in line with the group`s long-term
diversification strategy.
BEE
Existing BEE shareholders and Afrimat`s black employees together 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 on an ongoing basis.
DIVIDEND
A higher final dividend of 13,0 cents per share (2011: 11,0 cents) was
declared for the year on 14 March 2012 and paid on 10 April 2012. This is in
line with the group`s current dividend policy of three times cover. The final
dividend was based on estimates utilising unaudited management accounts for
the year.
The total dividend (interim and final) for the year is 19 cents per share
(2011: 17 cents per share).
PROSPECTS
While ongoing recovery of the business environment is expected to remain
slow, benefits should devolve from government`s planned infrastructure spend.
In addition, Afrimat should benefit further from its investment in industrial
minerals through the Glen Douglas Dolomite operation and its acquisition of
the Clinker Group. In light of these activities "Mining & Aggregates" are
expected to remain the dominant driver of growth in the future.
Initiatives aimed at expanding volumes, reducing and managing costs and
improving efficiencies will be a key focus in all operations during the new
financial year. These initiatives, supported by ongoing product
diversification in attractive growth sectors such as industrial minerals and
open cast mining, should see volumes increase.
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
Chairman
AJ van Heerden
Chief Executive Officer
10 May 2012
Directors: MW von Wielligh* (Chairman), AJ van Heerden (CEO),
HP Verreynne (Financial Director), GJ Coffee, 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 134, Century City, 7446)
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: 10/05/2012 07:05:14 Produced by the JSE SENS Department.
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