Wrap Text
Reviewed Condensed Provisional Consolidated Financial Results for Year Ended 28 February 2013
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 2013
www.afrimat.co.za
Delivering consistent growth
Revenue up 34,3%
HEPS up 22,8% to 76,9 cents
Net cash from operating activities up 16%
Net debt: equity ratio 4,7%
NAV of 532 cents per share
Total dividend 28 cents per share
Acquired 100% of Clinker Group (1 March 2012)
Acquired 50,7% of Infrasors (1 March 2013)
Very strong cash flow
Condensed consolidated statement of comprehensive income
Reviewed Audited
2013 2012 Change
R'000 R'000 %
Revenue 1 337 585 996 137 34,3
Cost of sales (1 023 138) (749 841)
Gross profit 314 447 246 296 27,7
Operating expenses (158 955) (123 722)
(Loss)/profit on disposal of plant and equipment (3 009) 1 666
Contribution from operations 152 483 124 240 22,7
Other income (note 1) - 2 368
Other net gains 97 245
Profit on disposal of property - 3 614
Impairment of intangible assets (note 2) (4 746) (337)
Operating profit 147 834 130 130 13,6
Investment revenue 10 811 10 267
Finance costs (14 296) (10 546)
Share of profit of associate 68 42
Profit before taxation 144 417 129 893 11,2
Taxation (40 639) (38 976) 4,3
Profit attributable to shareholders 103 778 90 917 14,1
Attributable to:
Owners of the parent 103 036 90 250
Non-controlling interests 742 667
103 778 90 917
Other comprehensive income
Net change in fair value of available-for-sale
financial assets 67 104
Net change in fair value of available-for-sale
financial assets transferred
to profit and loss - (245)
Income tax on other comprehensive income (12) (30)
55 (171)
Total comprehensive income for the year 103 833 90 746 14,4
Attributable to:
Owners of the parent 103 091 90 079
Non-controlling interests 742 667
103 833 90 746
Shares in issue:
Total shares in issue 143 262 412 143 262 412
Treasury shares (204 242) (6 145 174)
Net shares in issue 143 058 170 137 117 238
Weighted average number of net shares in issue 142 867 266 137 371 771
Diluted weighted average number of shares 146 747 905 140 583 947
Earnings per ordinary share (cents) 72,1 65,7 9,7
Diluted earnings per ordinary share (cents) 70,2 64,2 9,3
Reconciliation of headline earnings
Reviewed Audited
2013 2012 Change
R'000 R'000 %
Profit attributable to owners of the parent 103 036 90 250
Loss/(profit) on disposal of property,
plant and equipment 3 009 (5 280)
Profit on disposal of financial instruments (97) (245)
Impairment of goodwill 4 746 337
Total tax effects of adjustments (815) 999
109 879 86 061 27,7
Headline earnings per ordinary share ("HEPS") (cents) 76,9 62,6 22,8
Diluted HEPS (cents) 74,9 61,2 22,4
Condensed consolidated statement of financial position
Reviewed Audited
2013 2012
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 503 615 425 906
Intangible assets 21 698 13 160
Goodwill 132 707 101 195
Investment in associate 77 44
Other financial assets (note 7) 115 398 83 601
Deferred tax 3 009 5 406
776 504 629 312
Current assets
Inventories 89 490 71 827
Current tax receivable 5 220 3 133
Trade and other receivables 195 788 163 548
Cash and cash equivalents 134 261 132 557
424 759 371 065
Total assets 1 201 263 1 000 377
EQUITY AND LIABILITIES
Equity
Ordinary share and stated capital 347 661 1 435
Share premium - 352 150
Business combination adjustment (105 788) (105 788)
Treasury shares (1 491) (20 559)
Net issued share and stated capital 240 382 227 238
Other reserves 6 929 5 495
Retained income 510 611 435 564
Attributable to equity holders of parent 757 922 668 297
Non-controlling interests 3 931 3 609
Total equity 761 853 671 906
Liabilities
Non-current liabilities
Borrowings long term 58 678 44 838
Deferred tax 80 610 70 354
Provisions 33 725 31 260
173 013 146 452
Current liabilities
Borrowings short term 62 006 36 752
Current tax payable 3 289 10 068
Trade and other payables 151 983 117 052
Bank overdraft 49 119 18 147
266 397 182 019
Total liabilities 439 410 328 471
Total equity and liabilities 1 201 263 1 000 377
Net asset value per share (cents) 532 469
Net tangible asset value per share (cents) 424 389
Condensed consolidated statement of cash flows
Reviewed Audited
2013 2012
R'000 R'000
Cash flows from operating activities
Cash generated from operations 216 421 171 049
Interest income 10 940 9 988
Dividends received 35 22
Finance costs (12 853) (9 238)
Tax paid (44 779) (25 478)
Net cash from operating activities 169 764 146 343
Acquisition of property, plant and equipment (82 934) (71 932)
Proceeds on sale of property, plant and equipment 7 345 17 181
Purchase of financial asset (31 858) (253)
Proceeds on sale of financial asset 97 612
Acquisition of businesses (86 716) -
Net cash from investing activities (194 066) (54 392)
Purchase of treasury shares (6 569) (3 760)
Net movement in borrowings (note 6) 31 955 (9 297)
Dividends paid (note 3) (30 352) (23 619)
Net cash from financing activities (4 966) (36 676)
Total cash movement for the year (29 268) 55 275
Cash/(overdraft) at the beginning of the year 114 410 59 135
Total cash/(overdraft) at the end of the year 85 142 114 410
Condensed consolidated statement of changes in equity
Ordinary
share and Business
stated Share Treasury combination
capital premium shares adjustment
Balance at 1 March 2011 1 435 352 150 (16 799) (105 788)
Changes:
Share-based payments - - - -
Purchase of treasury shares - - (3 760) -
Profit for the year - - - -
Other comprehensive income for the year - - - -
Dividends paid - - - -
Balance at 29 February 2012 1 435 352 150 (20 559) (105 788)
Changes:
Movements in non-controlling interests - - - -
Conversion to no-par value shares 352 150 (352 150) - -
Share-based payments - - - -
Treasury shares used for acquisitions 4 244 - 20 587 -
Net effect of settlement of employee
share options (10 168) - 5 050 -
Purchase of treasury shares - - (6 569) -
Profit for the year - - - -
Other comprehensive income for the year - - - -
Dividends paid - - - -
Balance at 28 February 2013 347 661 - (1 491) (105 788)
Condensed consolidated statement of changes in equity
Non-
Other Retained controlling Total
reserves income interests equity
Balance at 1 March 2011 2 692 368 668 3 207 605 565
Changes:
Share-based payments 2 974 - - 2 974
Purchase of treasury shares - - - (3 760)
Profit for the year - 90 250 667 90 917
Other comprehensive income for the year (171) - - (171)
Dividends paid - (23 354) (265) (23 619)
Balance at 29 February 2012 5 495 435 564 3 609 671 906
Changes:
Movements in non-controlling interests - - (32) (32)
Conversion to no-par value shares - - - -
Share-based payments 3 354 - - 3 354
Treasury shares used for acquisitions - - - 24 831
Net effect of settlement of employee
share options (1 975) 1 975 - (5 118)
Purchase of treasury shares - - - (6 569)
Profit for the year - 103 036 742 103 778
Other comprehensive income for the year 55 - - 55
Dividends paid - (29 964) (388) (30 352)
Balance at 28 February 2013 6 929 510 611 3 931 761 853
Condensed consolidated segment report
Split Reviewed Split Audited
2013 2013 2012 2012
% R'000 % R'000
Revenue
External sales
Mining & Aggregates 63 846 388 70 704 509
Concrete Products 22 285 994 12 116 112
Readymix 15 205 203 18 175 516
100 1 337 585 100 996 137
Intersegment sales
Mining & Aggregates 86 67 821 86 41 886
Concrete Products 14 10 724 12 5 990
Readymix - 299 2 1 057
100 78 844 100 48 933
Total revenue
Mining & Aggregates 65 914 209 71 746 395
Concrete Products 21 296 718 12 122 102
Readymix 14 205 502 17 176 573
100 1 416 429 100 1 045 070
Contribution from operations
Mining & Aggregates 78 117 480 85 105 760
Concrete Products 17 27 295 11 13 145
Readymix 7 9 996 6 8 182
Other (2) (2 288) (2) (2 847)
100 152 483 100 124 240
Contribution from operations
margins on external revenue (%)
Mining & Aggregates 13,9 15,0
Concrete Products 9,5 11,3
Readymix 4,9 4,7
11,4 12,5
Other information
Assets
Mining & Aggregates 615 211 543 750
Concrete Products 126 329 69 026
Readymix 61 648 54 119
Other 398 075 333 482
1 201 263 1 000 377
Liabilities
Mining & Aggregates 168 720 163 690
Concrete Products 33 032 13 406
Readymix 21 787 15 275
Other 215 871 136 100
439 410 328 471
Notes
Reviewed Audited
2013 2012
R'000 R'000
1. Other income
Settlement of defined benefit plan liability - 2 368
2. Impairment of intangible assets
A portion of the goodwill of Afrimat Aggregates
Trading (Pty) Limited, amounting to R4,746 million
was impaired due to the declining reserves
and resources.
3. Dividends
3.1 Afrimat Limited dividends paid/declared in
respect of the current
year profits
Interim dividend paid 11 461 8 596
Final dividend declared/paid 28 652 18 624
40 113 27 220
3.2 Dividends cash flow
Current year interim dividend paid 11 461 8 596
Previous year final dividend paid 18 624 15 759
Dividends received on treasury shares (121) (1 001)
29 964 23 354
Dividends paid by subsidiaries to
non-controlling shareholders 388 265
30 352 23 619
4. Capital commitments
Approved capital expenditure to be funded from
surplus cash and bank financing 112 779 78 755
5. Depreciation 55 450 45 735
6. Net movement in borrowings
Opening balance 81 590 90 887
New borrowings 94 854 39 960
Acquired through acquisitions 7 139 -
Repayments (62 899) (49 257)
Closing balance 120 684 81 590
7. Other financial assets
Funding provided to Afrimat employees
(BEE share purchase scheme) 101 656 70 310
Rehabilitation fund trusts and other 13 742 13 291
115 398 83 601
Number of shares
2013 2012
8. Movement in number of treasury shares
Opening balance 6 145 174 5 149 510
Utilised for acquisition of Clinker Group (5 932 306) -
Utilised for share appreciation rights scheme (1 116 963) -
Purchased during the year 1 108 337 995 664
Closing balance 204 242 6 145 174
9. Acquisitions of businesses
Business combinations included during the year is 100% of SA Block (Pty) Limited and its 100% owned subsidiary Clinker Supplies(Pty) Limited ("Clinker Group") from 1 March 2012 and 54% of Meepo Ya Mmu (Pty) Limited ("Meepo") from 1 November 2012.
Amounts included are as follows:
Clinker
Meepo Group
R'000 R'000
Carrying amount (fair value) of net assets
Plant and equipment - 60 579
Intangible assets 993 9 983
Trade and other receivables - 24 888
Cash 1 9 238
Other assets 60 13 840
Assets 1 054 118 528
Deferred tax - 9 370
Borrowings - 7 139
Trade and other payables - 17 070
Other liabilities 100 401
Liabilities 100 33 980
Net assets 954 84 548
Gross trade and other receivables before
provision for impairment - 24 888
Goodwill - 36 257
Purchase consideration settled in cash 954 95 000
Purchase consideration settled in shares - 25 805
Profit/(loss) after tax of subsidiaries
included in results (124) 46 734
Revenue of subsidiaries included in results 698 285 422
Acquisition costs included in Afrimat's
operating expenses for the period - 1 593
Net cash outflow from acquisition of businesses 954 85 762
Goodwill recorded with the above Clinker Group acquisition is primarily attributable to the profit generating ability of this business resulting from its products having distinct characteristics that are difficult to replicate or substitute.
10. Events after reporting date
The company acquired 94 171 108 Infrasors shares, representing 50,7% of the issued share capital of Infrasors Holdings Limited ("Infrasors"), from Hanchurch Asset Managers and certain retiring management of Infrasors, with effect from 1 March 2013 for cash of R33 million (35 cents per share). The effect of the acquisition will only be reflected in the results for the financial year ending 28 February 2014.
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.
As a result of Afrimat's holding in Infrasors surpassing 35% of the issued ordinary share capital of Infrasors, Afrimat is required, in terms of section 123 of the Companies Act, No. 71 of 2008, to extend a mandatory offer to the remaining Infrasors ordinary shareholders. As announced on 4 March 2013 a mandatory offer was made to the minority shareholders of Infrasors for Afrimat to purchase Infrasors shares held by them at 35 cents per share and a circular to this effect was posted to Infrasors shareholders on 22 April 2013. Subsequent to year-end, Afrimat restricted R32 million in cash in favour of Standard Bank in order for Standard Bank to supply the necessary guarantee to the Transaction Regulation Panel to satisfy the full offer consideration.
There were no other material events between the reporting date and the date of this announcement.
11. Contingencies
Additional guarantees to the value of R12,3 million and R13,1 million were supplied by Standard Bank to Eskom and the Department of Mineral Resources, respectively during the year under review.
12. Conversion to no-par value shares
The share capital of the group has been converted to no-par value shares during the year under review.
Commentary
Basis of preparation
The reviewed condensed provisional consolidated financial statements ("the financial statements") for the year ended 28 February 2013 ("the year") have been prepared in accordance with the framework concepts, the recognition and measurement requirements of International Financial Reporting Standards ("IFRS"), the disclosure and presentation requirements of IAS 34: Interim Financial Reporting, the SAICA financial reporting guides as issued by the Accounting Practices Committee, 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 the financial statements are in accordance with IFRS and are consistent with those applied in the audited annual financial statements for the year ended 29 February 2012.
The 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 the group's success in achieving the strategic objective of "growth from diversification" and the benefits of prior year initiatives in this regard, as well as the successful acquisition of the Clinker Group.
As announced on 8 February 2013, Afrimat acquired 50,7% of the issued shares of Infrasors Holdings Limited ("Infrasors") with effect from 1 March 2013, strengthening its foothold in the industrial minerals sector and further expanding its geographical reach across South Africa.
Financial results
Revenue for the year increased by 34,3% to R1 337,6 million from R996,1 million. Headline earnings grew by 27,7%, translating into headline earnings per share of 76,9 cents (February 2012: 62,6 cents).
The results of the Clinker Group are included in the results with effect from 1 March 2012.
OPERATIONAL REVIEW
All business segments have shown satisfactory profits despite tough trading conditions in most regions of the country. This was compounded by high fuel and electricity cost increases and a strike in KwaZulu- Natal in the first half of the year.
In the 'Mining & Aggregates' division, industrial minerals operations performed well. Good progress continued to be made with the initiative to upgrade the equipment at Glen Douglas Dolomite and Clinker Supplies performed above expectations.
All processing plants are fully commissioned and well placed to supply market demand, which should assist in sustaining revenue going forward. Afrimat's flexible service delivery model, utilising mobile equipment, positions the group to take advantage of opportunities as they arise.
'Concrete Products' benefitted from the acquisition of SA Block (part of the Clinker Group), but was impacted by lower volumes and industrial action in KwaZulu-Natal.
'Readymix' underperformed in the previous year, but experienced higher volumes in the Western Cape during the current year, while the same strike action in KwaZulu-Natal depressed volumes in that region.
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 growth is projected, as evidenced by the success and benefit of previous acquisitions motivated by them.
Acquisition: Clinker Group
As previously announced on 15 March 2012, the acquisition of the Clinker Group became unconditional, in terms of which Afrimat acquired 100% of the issued ordinary share capital of SA Block (Pty) Limited and its 100% owned subsidiary Clinker Supplies (Pty) Limited (jointly referred to as the Clinker Group).
As anticipated, leveraging the combined strengths of Afrimat and the Clinker Group is opening new revenue opportunities as well as increased profitability, in accordance with the group's long term diversification strategy.
Post year-end acquisition: Infrasors
Infrasors will complement and augment Afrimat's existing industrial minerals and aggregates offerings, as well as introduce additional products such as silica. The group will also expand its footprint in the country's northern provinces without the need to create additional capacity.
Afrimat CEO Andries van Heerden and Financial Director Hendrik Verreynne have joined the board of directors. The group intends to implement its proven management practices and business processes throughout the Infrasors group.
With Afrimat's management expertise and marketing input, opportunities exist to leverage the strength of Infrasors' assets for more effective distribution of a wider product range to identified marketing channels.
As announced on 4 March 2013 a mandatory offer was made to the minority shareholders of Infrasors for Afrimat to purchase Infrasors shares held by them at 35 cents per share and a circular to this effect was posted to Infrasors shareholders on 22 April 2013.
BEE
Existing BEE shareholders and Afrimat's black employees, via the Afrimat BEE Trust, together hold in aggregate 26,12% of Afrimat's issued shares. During the year Afrimat provided funding to the Afrimat BEE Trust to acquire 6 392 575 Afrimat shares held by Mega Oils SPV (Pty) Limited at R6,18 per share. Notwithstanding a fully empowered ownership platform, the group remains dedicated to enhancing all aspects of B-BBEE on an ongoing basis.
DIVIDEND
A final dividend of 20,0 cents per share (net 17,0 cents a share) (2012: 13,0 cents) was declared for the year on 8 May 2013. 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") was still applicable).
The total dividend (interim and final) for the year amounts to 28,0 cents per share (2012: 19 cents per share).
PROSPECTS
While ongoing short-term recovery of the business environment is expected to remain slow, benefits should devolve from government's planned infrastructure spend. In addition the group is well positioned to capitalise on its strategic investments in industrial minerals through Glen Douglas Dolomite, Infrasors operations and Clinker Group.
Initiatives aimed at expanding volumes, reducing costs and improving efficiencies is a key focus in all operations. These moves, supported by ongoing product diversification in attractive growth sectors such as industrial minerals and open cast mining, should see volumes increase.
AUDITORS' REVIEW
The 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
9 May 2013
DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend, No. 12 of 20 cents per share, in respect of the year ended 28 February 2013, was declared on Wednesday, 8 May 2013.
There are 143 262 412 shares in issue at the announcement date, of which 204 242 are held in treasury and the total dividend payable is R28 652 482 (2012: R18 624 114).
The board has confirmed by resolution that the solvency and liquidity test as contemplated by the Companies Act, No. 71 of 2008, has been duly considered, applied and satisfied. This is a dividend as defined in the Income Tax Act, 1962 (as amended), and is payable from income reserves. The South African dividend tax rate is 15% and no STC credit is available to be utilised by shareholders. The dividend payable to shareholders who are subject to dividend tax and shareholders who are exempt from dividend tax is 17 cents and 20 cents per share, respectively. The income tax number of the company is 9568738158.
Relevant dates to the final dividend are as follows:
Last day to trade cum dividend Friday, 24 May 2013
Commence trading ex dividend Monday, 27 May 2013
Record date Friday, 31 May 2013
Dividend payable Monday, 3 June 2013
Share certificates may not be dematerialised or rematerialised between Monday, 27 May 2013 and Friday, 31 May 2013, both dates inclusive.
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: 09/05/2013 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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