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AFT - Afrimat Limited - Reviewed condensed provisional consolidated financial

Release Date: 10/05/2012 07:05
Code(s): AFT
Wrap Text

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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. 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