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Unaudited condensed consolidated interim financial results
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
Unaudited condensed consolidated interim financial results for the six months
ended 31 August 2012
Delivering consistent growth
- Revenue up 32,5%
- HEPS up 17,4% to 35,0 cents per share
- Net cash from operating activities up 64,8%
- Net debt:equity ratio 5,3%
- NAV of 504 cents per share
- Interim dividend 8 cents per share
- Clinker Group acquired
Condensed consolidated income statement
Unaudited Reviewed Change% Audited
six months six months year
ended ended ended
31 August 2012 31 August 2011 29 February 2012
R'000 R'000 R'000
Revenue 671 349 506 717 32,5 996 137
Cost of sales (510 230) (385 009) (749 841)
Gross profit 161 119 121 708 32,4 246 296
Other income 355 4 714 7 893
Operating (85 851) (60 901) (124 059)
expenses
Operating profit 75 623 65 521 15,4 130 130
Investment 5 014 4 462 10 267
revenue
Finance costs (7 541) (5 533) (10 546)
Share of profit 33 17 42
of associate
Profit before 73 129 64 467 13,4 129 893
taxation
Taxation (22 526) (19 584) 15,0 (38 976)
Profit 50 603 44 883 12,7 90 917
attributable to
shareholders
Attributable to:
Owners of the 50 182 44 579 90 250
parent
Non-controlling 421 304 667
interests
50 603 44 883 90 917
Shares in issue:
Total shares in 143 262 412 143 262 412 143 262 412
issue
Treasury shares (104 240) (5 806 638) (6 145 174)
Net shares in 143 158 172 137 455 774 137 117 238
issue
Weighted average 142 593 027 137 457 107 137 371 771
number of net
shares in issue
Diluted weighted 146 178 128 139 483 285 140 583 947
average number
of shares
Earnings per 35,2 32,4 8,6 65,7
ordinary share
(cents)
Diluted earnings 34,3 32,0 7,2 64,2
per ordinary
share (cents)
Reconciliation of headline earnings
Unaudited Reviewed Change % Audited
six months six months year
ended ended ended
31 August 2012 31 August 2011 29 February 2012
R'000 R'000 R'000
Profit 50 182 44 579 90 250
attributable to
owners of the
parent
Profit on (355) (4 714) (5 280)
disposal of
property, plant
and equipment
Reclassification - - (245)
of profit on
disposal of
financial
instruments
Impairment of - 337 337
goodwill
Total tax 100 808 999
effects of
adjustments
49 927 41 010 21,7 86 061
Headline 35,0 29,8 17,4 62,6
earnings per
ordinary share
"HEPS" (cents)
Diluted HEPS 34,2 29,4 16,3 61,2
(cents)
Condensed consolidated statement of comprehensive income
Unaudited Reviewed Change % Audited
six months six months year
ended ended ended
31 August 2012 31 August 2011 29 February 2012
R'000 R'000 R'000
Profit for the 50 603 44 883 12,7 90 917
period
Other
comprehensive
income
Net change in 394 (14) 104
fair value of
available-for-sale
financial
assets
Net change in - - (245)
fair value of
available-for-sale
financial
assets
transferred to
profit and loss
Income tax on (11) 1 (30)
other
comprehensive
income
383 (13) (171)
Total 50 986 44 870 13,6 90 746
comprehensive
income for the
period
Attributable to:
Owners of the 50 565 44 566 90 079
parent
Non-controlling 421 304 667
interests
50 986 44 870 90 746
Condensed consolidated statement of financial position
Unaudited Reviewed Audited
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and 498 750 419 449 425 906
equipment
Intangible assets 22 046 13 490 13 160
Goodwill 137 452 101 195 101 195
Investment in 43 20 44
associate
Other financial 82 972 83 051 83 601
assets
Deferred tax 2 166 6 672 5 406
743 429 623 877 629 312
Current assets
Inventories 89 444 84 282 71 827
Current tax 3 109 3 451 3 133
receivable
Trade and other 231 790 200 702 163 548
receivables
Cash and cash 123 877 92 374 132 557
equivalents
448 220 380 809 371 065
Total assets 1 191 649 1 004 686 1 000 377
EQUITY AND
LIABILITIES
Equity
Share capital 1 435 1 435 1 435
Share premium 347 787 352 150 352 150
Business combination (105 788) (105 788) (105 788)
adjustment
Treasury shares (635) (18 988) (20 559)
Net issued share 242 799 228 809 227 238
capital
Other reserves 7 578 3 765 5 495
Retained income 467 236 398 127 435 564
Attributable to 717 613 630 701 668 297
equity holders of
parent
Non-controlling 4 030 3 511 3 609
interests
Total equity 721 643 634 212 671 906
Liabilities
Non-current
liabilities
Borrowings long term 79 938 49 716 44 838
Deferred tax 82 549 67 050 70 354
Provisions 32 510 31 089 31 260
Retirement benefit - 2 367 -
liability
194 997 150 222 146 452
Current liabilities
Borrowings short 64 819 36 048 36 752
term
Current tax payable 18 455 12 205 10 068
Trade and other 174 300 143 378 117 052
payables
Bank overdraft 17 435 28 621 18 147
275 009 220 252 182 019
Total liabilities 470 006 370 474 328 471
Total equity and 1 191 649 1 004 686 1 000 377
liabilities
Net asset value per 504 443 469
share (cents)
Tangible net asset 392 363 389
value per share
(cents)
Condensed consolidated statement of cash flows
Unaudited Reviewed Audited
six months six months year
ended ended ended
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Cash flows from
operating activities
Cash generated from 94 261 62 056 171 049
operations
Interest income 6 085 4 974 9 988
Dividends received 35 22 22
Finance costs (6 887) (5 533) (9 238)
Tax paid (6 634) (8 807) (25 478)
Net cash from 86 860 52 712 146 343
operating activities
Acquisition of (45 165) (39 601) (71 932)
property, plant and
equipment
Proceeds on sale of 4 342 13 939 17 181
property, plant and
equipment
Purchase of (47) - (253)
financial asset
Proceeds on sale of - - 612
financial asset
Acquisition of (85 762) - -
businesses (note 8)
Net cash from (126 632) (25 662) (54 392)
investing activities
Purchase of treasury (5 714) (2 189) (3 760)
shares
Net movement in 56 028 (5 123) (9 297)
borrowings (note 5)
Dividends paid (note (18 510) (15 120) (23 619)
2)
Net cash from 31 804 (22 432) (36 676)
financing activities
Total cash movement (7 968) 4 618 55 275
for the period
Cash at the 114 410 59 135 59 135
beginning of the
period
Total cash at the 106 442 63 753 114 410
end of the period
Condensed consolidated statement of changes in equity
Business
combina Non-
-tion controll
Share Share Treasury adjust OtherRetained -ing Total
capital premium shares -ment reserves income interests equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance 1 435 352 150 (16 799)(105 788) 2 692 368 668 3 207 605 565
at 1
March
2011
Changes:
Share-based - - - - 1 086 - - 1 086
payments
Movement - - (2 189) - - - - (2 189)
in
treasury
shares
Profit - - - - - 44 579 304 44 883
for the
period
Other - - - - (13) - - (13)
comprehe
nsive
income
for the
period
Dividend - - - - - (15 120) - (15 120)
s paid
Balance 1 435 352 150 (18 988)(105 788) 3 765 398 127 3 511 634 212
at 31
August
2011
Balance 1 435 352 150 (16 799)(105 788) 2 692 368 668 3 207 605 565
at 1
March
2011
Changes:
Share-ba - - - - 2 974 - - 2 974
sed
payments
Movement - - (3 760) - - - - (3 760)
in
treasury
shares
Profit - - - - - 90 250 667 90 917
for the
year
Other - - - - (171) - - (171)
comprehe
nsive
income
for the
year
Dividend - - - - - (23 354) (265) (23 619)
s paid
Balance 1 435 352 150 (20 559)(105 788) 5 495 435 564 3 609 671 906
at 29
February
2012
Changes:
Share-ba - - - - 1 700 - - 1 700
sed
payments
Movement - (4 363) 19 924 - - - - 15 561
in
treasury
shares
Profit - - - - - 50 182 421 50 603
for the
period
Other - - - - 383 - - 383
comprehe
nsive
income
for the
period
Dividend - - - - - (18 510) - (18 510)
s paid
Balance 1 435 347 787 (635)(105 788) 7 578 467 236 4 030 721 643
at 31
August
2012
Condensed consolidated segment report
Split six Unaudited Split six Reviewed Split Audited
months six months months six months year year
ended ended ended ended ended ended
31 August 31 August 31 August 31 August 29 February 29 February
2012 2012 2011 2011 2012 2012
% R'000 % R'000 % R'000
External sales
Mining 66 439 942 71 358 418 70 704 509
&
Aggregates
Concrete 20 134 017 12 59 484 12 116 112
Products
Readymix 14 97 390 17 88 815 18 175 516
100 671 349 100 506 717 100 996 137
Intersegment sales
Mining 85 32 576 85 20 853 86 41 886
&
Aggregates
Concrete 14 5 403 14 3 300 12 5 990
Products
Readymix 1 145 1 284 2 1 057
100 38 124 100 24 437 100 48 933
Total revenue
Mining 67 472 518 71 379 271 71 746 395
&
Aggregates
Concrete 19 139 420 12 62 784 12 122 102
Products
Readymix 14 97 535 17 89 099 17 176 573
100 709 473 100 531 154 100 1 045 070
Operating profit before tax
Mining 79 59 398 89 57 993 85 110 809
&
Aggregates
Concrete 16 12 714 11 7 433 11 13 852
Products
Readymix 5 3 861 2 1 403 6 8 653
Other - (350) (2) (1 308) (2) (3 184)
100 75 623 100 65 521 100 130 130
Operating profit margins on external revenue (%)
Mining 13,5 16,2 15,7
&
Aggregates
Concrete 9,5 12,5 11,9
Products
Readymix 4,0 1,6 4,9
11,3 12,9 13,1
Other
Information
Assets
Mining 55 654 555 57 576 991 55 543 750
&
Aggregates
Concrete 10 121 761 7 65 491 7 69 026
Products
Readymix 5 57 796 7 68 750 5 54 119
Other 30 357 537 29 293 454 33 333 482
100 1 191 649 100 1 004 686 100 1 000 377
Notes
Unaudited six Reviewed six Audited
months ended months ended year ended
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
1. Other income
Profit on 355 4 714 5 280
disposal of
property, plant
and equipment
Reclassification - - 245
of profit on
disposal of
financial
instruments
Settlement of - - 2 368
defined
retirement
benefit
liability
355 4 714 7 893
2. Dividends
2.1 Afrimat Limited dividends declared in respect of the current year profits
Interim dividend 11 461 8 596 8 596
declared
Final dividend 18 624
declared
11 461 8 596 27 220
2.2 Dividends cash flow
Current year - - 8 596
interim dividend
paid
Previous year 18 624 15 759 15 759
final dividend
paid
Dividends (114) (639) (1 001)
received on
treasury shares
Dividends paid - - 265
by subsidiaries
to
non-controlling
shareholders
18 510 15 120 23 619
3. Capital commitments
Approved capital 36 645 35 151 78 755
expenditure to
be funded from
surplus cash and
bank financing
4. Depreciation 28 913 22 537 45 735
5. Net movement in borrowings
Opening balance 81 590 90 887 90 887
New borrowings 80 758 21 398 39 960
Acquired through 7 139 - -
acquisitions
Repayments (24 730) (26 521) (49 257)
Closing balance 144 757 85 764 81 590
6. Other financial assets
Funding provided 69 238 69 519 70 310
to Afrimat
employees (BEE
transaction)
Rehabilitation 13 734 13 532 13 291
fund trusts and
other
82 972 83 051 83 601
Number of shares
31 August 31 August 29 February
2012 2011 2012
7. Movement in number of treasury shares
Opening balance 6 145 174 5 149 510 5 149 510
Utilised for (5 932 306) - -
acquisition of
Clinker Group
Utilised for (1 116 963) - -
share
appreciation
rights scheme
Purchased during 1 008 335 657 128 995 664
the period
Closing balance 104 240 5 806 638 6 145 174
8. Business acquisitions
Business combination included during the period is 100% of SA Block (Pty)
Limited and its 100% owned subsidiary Clinker Supplies (Pty) Limited
("Clinker Group") from 1 March 2012. The initial accounting for the
business combination is provisional.
Amounts included are as follows:
Clinker Group
R'000
Carrying amount
(fair value) of
net assets
Plant and 60 579
equipment
Intangible 9 983
assets
Trade and other 24 888
receivables
Cash 9 238
Other assets 13 840
Assets 118 528
Deferred tax 9 370
Borrowings 7 139
Trade and other 17 070
payables
Other 401
liabilities
Liabilities 33 980
Net assets 84 548
Gross trade and other 24 888
receivables before
provision for impairment
Goodwill 36 257
Purchase consideration 95 000
settled in cash
Purchase consideration 25 805
settled in shares (5 932
306 shares at R4,35)
Profit after tax of 20 042
subsidiaries included in
results
Revenue of subsidiaries 111 693
included in results
Acquisition costs included 1 201
in Afrimat's operating
expenses for the period
Net cash outflow from 85 762
acquisition of business
9. Events after reporting date
No material events occurred between the reporting date and the date of this announcement.
10. Contingencies
Additional guarantees to the value of R12,3 million were supplied by Standard Bank to Eskom during the
period.
COMMENTARY
BASIS OF PREPARATION
The unaudited condensed consolidated interim financial statements for the six months ended 31 August 2012 ("the period") 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, 2008. The accounting policies and method of computation applied in preparation of these unaudited condensed consolidated interim financial statements are consistent with those applied in the audited annual financial statements for the year ended 29 February 2012. The above information has not been reviewed or reported on by Afrimat's auditors. The unaudited condensed consolidated interim financial statements have been prepared under the supervision of the Financial Director, HP Verreynne BCompt (Hons) CA(SA).
INTRODUCTION
The unaudited condensed consolidated interim financial results for the period were positively impacted by the achievement of Afrimat's strategic initiatives which commenced in prior years to provide 'growth from diversification' as well as the acquisition of the Clinker Group.
FINANCIAL RESULTS
Revenue for the period increased by 32,5% from R506,7 million to R671,3 million. Headline earnings increased by 21,7%, translating into headline earnings per share of 35,0 cents (August 2011: 29,8 cents). The Clinker Group was included in the results with effect from 1 March 2012.
OPERATIONAL REVIEW
The acquisition of Clinker Supplies contributed to the increase in volumes of Afrimat's key division 'Mining & Aggregates'. Contracting, Eastern Cape and Glen Douglas Dolomite contributed well, in line with expectations. Pleasing progress was made in upgrading the equipment at Glen Douglas. Tough market conditions continued to impact sales volumes in the other regions and high energy costs and a strike in KwaZulu-Natal also had a negative impact. All processing plants are fully commissioned and well placed to supply market demand and should sustain revenue going forward. Afrimat's flexible service delivery model, using mobile equipment, positions the group to take advantage of opportunities as they arise. 'Concrete Products' benefited from the acquisition of SA Block but was adversely impacted by lower volumes and strike action in KwaZulu-Natal during the period. 'Readymix' experienced higher volumes in the Western Cape, while volumes declined in KwaZulu-Natal due to strike action.
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 regions where high growth is projected.
Acquisition: Clinker Group
As previously announced on 15 March 2012, the acquisition of the Clinker Group became unconditional with effect from 1 March 2012. Afrimat acquired 100% of the issued ordinary share capital of SA Block (Pty) Limited and its 100% owned subsidiary, Clinker Supplies (Pty) Limited ("Clinker Group"). Leveraging the combined strengths of Afrimat and the Clinker Group is opening new revenue opportunities as well as increased profitability, in line with the group's long-term diversification strategy.
B-BBEE
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
An interim dividend of 8,0 cents per share (2011: 6,0 cents) was declared for the period on 31 October 2012. This is in line with the group's dividend policy of 2,75 times cover (which equates to three times cover if secondary tax on companies ("STC") were still applicable).
PROSPECTS
While ongoing short-term recovery of the business environment is expected to remain slow, the group is well positioned to capitalise on its strategic initiatives such as its investment in industrial minerals through the Glen Douglas Dolomite operation and its acquisition of the Clinker Group. In light of this, activities in 'Mining & Aggregates' are expected to remain the dominant growth driver. Initiatives aimed at expanding volumes, reducing costs and improving efficiencies will be a key focus in all operations. These initiatives, supported by ongoing product diversification in attractive growth sectors, such as industrial minerals and open cast mining, should see volumes increase.
On behalf of the board
MW von Wielligh
Chairman
AJ van Heerden
Chief Executive Officer
1 November 2012
DIVIDEND DECLARATION
Notice is hereby given that an interim gross dividend, No 11 of 8,0 cents per share, in respect of the six months ended 31 August 2012, was declared on Wednesday, 31 October 2012.
There are 143 262 412 shares in issue at announcement date, of which 104 240 are held in treasury and the total dividend amount payable is R11 452 654 (2011: R8 247 346).
This is a dividend as defined in the Income Tax Act, 1962, and is payable from income reserves. The South African dividend tax ("DT") rate is 15% and a STC credit of 2,28804 cents per share may be utilised by shareholders. The net dividend payable to shareholders who are subject to dividend tax is 7,14320 cents per share, while it is 8,0 cents per share to those shareholders who are exempt from dividend tax.
The income tax reference number of the company is 9568738158.
Relevant dates to the interim dividend are as follows
Last day to trade cum dividend: Friday, 30 November 2012
Commence trading ex dividend: Monday, 3 December 2012
Record date: Friday, 7 December 2012
Dividend payable: Monday, 10 December 2012
Share certificates may not be dematerialised or rematerialised between Monday, 3 December 2012 and Friday, 7 December 2012, both dates inclusive.
By order of the board
Company secretary: PGS de Wit
1 November 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: 01/11/2012 07:19:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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