Wrap Text
Unaudited condensed consolidated interim financial results for the six months ended 31 August 2016
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 2016
Highlights
- HEPS up 25,3% to 95,2 cents
- Contribution from operations' margin 17,5%
- NAV per share of 777 cents
- Interim dividend 20,0 cents per share
- Return on net operating assets 29,1%
Basis of preparation
The unaudited condensed consolidated interim financial results ("financial statements") for the six
months ended 31 August 2016 ("the period") have been prepared in accordance with and contain, as a
minimum, the information required by IAS 34: Interim Financial Reporting and have been prepared in
accordance with the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee,
the JSE Listings Requirements and in the manner required by the South African Companies Act No. 71
of 2008, as amended. The accounting policies and method of computation applied in preparation of the
financial statements are in accordance with the International Financial Reporting Standards ("IFRS")
and are consistent with those applied in the audited annual financial statements for the year ended
29 February 2016. The above information has not been audited or reported on by Afrimat's auditors.
The financial statements have been prepared under the supervision of the Financial Director,
PGS de Wit CA(SA).
Introduction
The group continues to deliver solid results supported by its diversification strategy as well as
its cost reduction and efficiency improvement initiatives.
Afrimat acquired 100% of the issued ordinary shares of lime and associated products producer, Cape
Lime Proprietary Limited ("Cape Lime"). The acquisition became unconditional following regulatory
approval, effective on 31 March 2016. The integration of Cape Lime is progressing well and new
marketing initiatives are underway to enhance, develop and explore additional markets for
these products.
Financial results
Headline earnings increased by 24,6%, translating into headline earnings per share of 95,2 cents
(August 2015: 76,0 cents). The improvement in earnings resulted from a strong performance in the
mineral producing operations across all regions. The group was successful in increasing the operating
margin to 17,9% from 15,9% and improving cash generated from operations from R98,9 million to
R113,7 million through the efficiency improvement drive.
Improved efficiencies, cost reduction and the disposal of marginal businesses, including those of
Randfontein and Blue Platinum, included in the aggregates segment, contributed further to the
improvement in earnings. Revenue (excluding acquisitions) increased by 8,0%, whilst volumes
remained flat.
Operational review
All processing plants are fully operational and strategically positioned to deliver a superior
service to the group's customers. In respect of aggregates, Afrimat offers flexible services, which
are complemented by mobile mining and crushing equipment.
Labour relations continued to be satisfactory during the period under review. The group is committed
to creating and sustaining harmonious relationships in the workplace and addressing issues proactively.
The Mining & Aggregates segment generated satisfactory profits which includes an improvement in the
contribution from the traditional aggregates businesses. In the prior year, Infrasors was impacted
by the closure of Highveld Steel. New initiatives were launched, including the restructuring of the
Lyttleton operations and targeting of new market segments. These adjustments restored profitability
in the Infrasors business.
The Clinker group acquired a 6 million tonne clinker ash dump, commonly known as the Witbank Ash Dump,
from Eskom Holdings SOC Limited ("Eskom"). Eskom retains ownership of the property on which this dump
is located but provides Clinker Supplies Proprietary Limited ("Clinker") with unfettered access to
clinker from this dump. To ensure the long-term sustainability of the Clinker operations, Clinker is
investigating further options in order to secure additional clinker resources for the group.
In line with Afrimat's strategy to diversify, greenfield projects were initiated in Mpumalanga,
KwaZulu-Natal and Mozambique. Furthermore, the Bethlehem quarry and ancillary businesses of WG Wearne
Limited ("Wearne") were acquired. Profits generated in the Mozambican operations were eroded with the
deterioration of the Mozambican currency, the Metical. The Mozambique businesses remain well situated
to benefit from the planned infrastructure and industrial projects as soon as it commences.
The Concrete Based Products segment was impacted by difficult market conditions early in the financial
year, but the market has improved in recent months.
Business development
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 anticipated new high growth areas in southern Africa.
Acquisition
Afrimat entered into an agreement with Wearne on 6 July 2016 to purchase the Bethlehem quarry,
Bethlehem property and ancillary businesses as a going concern for R30,0 million with an effective
date of 17 October 2016.
Furthermore, given Afrimat's proven track record of turning struggling businesses around and to
supplement diversification and support the growth strategy, Afrimat has entered the iron ore sector.
Afrimat concluded an agreement to purchase 60% of Diro Manganese Proprietary Limited and Diro Iron Ore
Proprietary Limited ("DIRO"), as well as a cession and delegation agreement with Investec Limited to
purchase all of its security. DIRO's operations were halted as a consequence of it being under
financial distress and was accordingly put into formal Business Rescue on 7 June 2016. The aggregate
purchase consideration payable for the acquisition of DIRO is R276,0 million. The acquisition will
complement and augment Afrimat's product offering and further expand its footprint across South Africa.
It will give Afrimat further opportunity to diversify into different foreign exchange currencies.
For further details, refer to a SENS announcement published by the company on 11 October 2016.
B-BBEE
Existing BEE shareholders and the Afrimat BEE Trust in aggregate hold 26,1% of Afrimat's issued shares.
On 23 September 2016, Afrimat announced on SENS that African Rainbow Capital Proprietary Limited
("ARC") offered to purchase 26,3 million shares in Afrimat from Afrimat Empowerment Investments
Proprietary Limited ("AEI"). The shares comprise approximately 18,36% of the share capital in Afrimat.
The transaction is subject to various conditions precedent, including the participants of the Afrimat
BEE Trust voting in favour of the offer. ARC has agreed to be locked in for a period of at least four
years on successful conclusion of the purchase of the Afrimat shares.
ARC is a fully black-owned and controlled investment company focusing on businesses that deliver
exceptional returns on equity. ARC is a strategic long-term investor with no predefined exit strategy.
They invest in businesses able to grow organically or acquisitively and ARC can enable and accelerate
this growth by providing funding where necessary. Notwithstanding the fully empowered ownership
platform in line with the Mining Charter requirements, Afrimat remains dedicated to enhancing all
aspects of B-BBEE on an ongoing basis.
Dividend
The group's dividend policy is to maintain a 2,75 times dividend cover. An interim gross dividend of
20,0 cents per share (August 2015: 16,0 cents) for the period was declared on 2 November 2016.
The dividend payable to shareholders who are subject to dividend tax is 17,0 cents per share
(August 2015: 13,6 cents per share).
Prospects
The group is well positioned to capitalise on its strategic initiatives such as continued growth from
an excellent and growing asset base, the further expansion of the range of unique products and
turnaround initiatives of selective acquisitions.
Operational efficiency improvement initiatives aimed at expanding volumes, reducing costs and
developing the required skill levels of all employees, remains a key focus across all operations.
Afrimat expects the current business climate to continue with the group's growth driven by the
successful execution of its proven strategy, recent acquisitions and a wider product offering to
the market.
On behalf of the board
MW von Wielligh
Chairman
AJ van Heerden
Chief Executive Officer
3 November 2016
Dividend declaration
Notice is hereby given that an interim gross dividend, No. 19 of 20,0 cents per share, in respect of
the six months ended 31 August 2016, was declared on Tuesday, 2 November 2016.
There are 143 262 412 shares in issue at the reporting date, of which 998 162 are held in treasury.
The total dividend payable is R28,7 million (August 2015: R22,9 million).
The board has confirmed by resolution that the solvency and liquidity test as contemplated by the
Companies Act, No. 71 of 2008, as amended, has been duly considered, applied and satisfied. This is a
dividend as defined in the Income Tax Act, 1962, and is payable from income reserves. The South African
dividend tax rate is 15,0%. The dividend payable to shareholders who are subject to dividend tax and
shareholders who are exempt from dividend tax is 17,0 cents and 20,0 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 Tuesday, 29 November 2016
Commence trading ex dividend Wednesday, 30 November 2016
Record date Friday, 2 December 2016
Dividend payable Monday, 5 December 2016
Share certificates may not be dematerialised or rematerialised between Wednesday, 30 November 2016 and
Friday, 2 December 2016, both dates inclusive.
Condensed consolidated statement of profit or loss and other comprehensive income
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 Change 2016
R'000 R'000 % R'000
Revenue 1 153 258 1 003 237 15,0 1 969 786
Cost of sales (786 957) (701 206) (1 349 584)
Gross profit 366 301 302 031 21,3 620 202
Operating expenses (166 444) (141 604) (299 445)
Profit on disposal of plant and equipment 2 252 496 931
Contribution from operations 202 109 160 923 25,6 321 688
Impairment of goodwill (note 2) - (1 300) (1 300)
Profit on disposal of subsidiary (note 3) 4 043 - -
Operating profit 206 152 159 623 29,1 320 388
Investment revenue 14 813 9 779 21 779
Finance costs (19 929) (10 541) (22 625)
Share of profits/(losses) of joint venture 1 047 (2 723) (4 487)
Share of profit of associate 27 17 67
Profit before tax 202 110 156 155 29,4 315 122
Income tax expense (note 5) (62 884) (47 156) 33,4 (90 930)
Profit for the period 139 226 108 999 27,7 224 192
Profit attributable to:
Owners of the parent 138 571 107 526 222 128
Non-controlling interests 655 1 473 2 064
139 226 108 999 224 192
Other comprehensive income
Items that may be subsequently reclassified to
profit or loss
Net change in fair value of available-for-sale
financial assets 98 (361) 91
Income tax effect on available-for-sale
financial assets (66) 67 (17)
Currency translation differences (note 6) (6 964) (1 548) 91
Income tax effect on currency translation
differences - - (7)
Other comprehensive income for the period,
net of tax (6 932) (1 842) 158
Total comprehensive income for the period 132 294 107 157 23,5 224 350
Total comprehensive income attributable to:
Owners of the parent 131 639 105 684 222 286
Non-controlling interests 655 1 473 2 064
132 294 107 157 224 350
Earnings per share:
Earnings per ordinary share (cents) 97,6 75,3 29,6 156,2
Diluted earnings per ordinary share (cents) 96,4 74,4 29,6 153,8
Note to statement of profit or loss and other
comprehensive income
Shares in issue:
Total shares in issue 143 262 412 143 262 412 143 262 412
Treasury shares (note 7) (998 162) (435 447) (1 918 751)
Net shares in issue 142 264 250 142 826 965 141 343 661
Weighted average number of net shares in issue 141 976 864 142 799 668 142 239 928
Diluted weighted average number of shares 143 752 950 144 574 999 144 451 506
Reconciliation of headline earnings
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 Change 2016
R'000 R'000 % R'000
Profit attributable to owners of the parent 138 571 107 526 222 128
Profit on disposal of plant and equipment
attributable to owners of the parent (2 252) (496) (935)
Profit on disposal of subsidiary attributable
to owners of the parent (note 3) (4 043) - -
Impairment of goodwill (note 2) - 1 300 1 300
Total income tax effects of adjustments 2 831 139 261
135 107 108 469 24,6 222 755
Headline earnings per ordinary share
("HEPS") (cents) 95,2 76,0 25,3 156,6
Diluted HEPS (cents) 94,0 75,0 25,3 154,2
Condensed consolidated statement of financial position
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment* 996 717 746 004 763 156
Investment property 3 040 3 040 3 040
Intangible assets 15 576 17 684 16 550
Goodwill 133 194 133 194 133 194
Investment in associate 213 200 250
Other financial assets (note 8) 168 754 164 420 156 424
Deferred tax 25 427 17 741 20 754
Total non-current assets 1 342 921 1 082 283 1 093 368
Current assets
Inventories 168 392 138 929 132 702
Current tax receivable 10 627 10 180 7 968
Trade and other receivables 368 886 344 278 295 552
Other financial assets (note 8) 6 316 803 875
Cash and cash equivalents 157 192 77 512 117 241
Total current assets 711 413 571 702 554 338
Total assets 2 054 334 1 653 985 1 647 706
Equity and liabilities
Equity
Stated capital 255 224 263 611 263 611
Business combination adjustment (105 788) (105 788) (105 788)
Treasury shares (21 214) (8 334) (40 181)
Net issued stated capital 128 222 149 489 117 642
Other reserves 2 889 4 300 8 619
Retained earnings 973 748 804 774 892 088
Attributable to equity holders of parent 1 104 859 958 563 1 018 349
Non-controlling interests 6 976 11 773 6 737
Total equity 1 111 835 970 336 1 025 086
Liabilities
Non-current liabilities
Borrowings (note 9) 241 599 50 614 47 321
Deferred tax 114 404 104 826 108 387
Provisions* 89 417 72 097 75 565
Total non-current liabilities 445 420 227 537 231 273
Current liabilities
Borrowings (note 9) 90 421 60 542 65 564
Current tax payable 11 238 5 667 2 607
Trade and other payables 298 596 280 210 277 832
Obligation of share of joint venture's losses 4 481 3 702 5 466
Bank overdraft 92 343 105 991 39 878
Total current liabilities 497 079 456 112 391 347
Total liabilities 942 499 683 649 622 620
Total equity and liabilities 2 054 334 1 653 985 1 647 706
Note to the statement of financial position:
Net asset value per share (cents) 777 671 720
Net tangible asset value per share (cents) 672 565 615
Total borrowings 332 020 111 156 112 885
(Surplus cash)/overdraft less cash and cash equivalents (64 849) 28 479 (77 363)
Net debt 267 171 139 635 35 522
Net debt:equity ratio (%) 24,0 14,4 3,5
* Increase due to Cape Lime acquisition.
Condensed consolidated statement of cash flows
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 180 344 143 345 399 373
Interest revenue 8 823 7 458 25 429
Dividends received 64 197 197
Finance costs (17 380) (10 032) (18 465)
Tax paid (58 103) (42 030) (86 195)
Net cash inflow from operating activities 113 748 98 938 320 339
Acquisition of property, plant and equipment (39 543) (64 471) (131 264)
Proceeds on disposal of property, plant and equipment 11 804 3 797 14 310
Purchase of financial assets (7 276) (6 111) (2 101)
Proceeds on sale of financial assets 316 - -
Proceeds on disposal of subsidiary (note 3) 9 083 - -
Acquisition of businesses (note 12) (251 263) - -
Net cash outflow from investing activities (276 879) (66 785) (119 055)
Repurchase of Afrimat shares (9 656) (18 253) (50 100)
Acquisition of additional non-controlling interest (note 11) (66) (3 145) (3 747)
Infrasors treasury buy-back (note 11) - - (9 647)
Net movement in borrowings (note 9.2) 219 135 (11 265) (9 536)
Dividends paid (note 13.2) (58 796) (53 219) (76 141)
Net cash inflow/(outflow) from financing activities 150 617 (85 882) (149 171)
Net (decrease)/increase in cash and cash equivalents
and bank overdrafts (12 514) (53 729) 52 113
Cash, cash equivalents and bank overdrafts at the beginning
of the period 77 363 25 250 25 250
Cash, cash equivalents and bank overdrafts at the end of
the period 64 849 (28 479) 77 363
Condensed consolidated statement of changes in equity
Business Non-
Stated combination Treasury Other Retained controlling Total
capital adjustment shares reserves income interests equity
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 March 2015 295 328 (105 788) (8 056) 7 506 748 010 12 437 949 437
Changes:
Increase in effective
shareholding in Infrasors
due to:
- Increase in shares held
in treasury by Infrasors
(note 11) - - - - (1 358) (1 787) (3 145)
Share-based payments - - - 2 101 - - 2 101
Purchase of treasury shares - - (18 253) - - - (18 253)
Settlement of employee
Share Appreciation Rights
exercised and reserve
transfer, net of tax (31 717) - 17 975 (3 465) 3 465 - (13 742)
Profit for the period - - - - 107 526 1 473 108 999
Other comprehensive
income for the period - - - (1 842) - - (1 842)
Net change in fair value
of available-for-sale
financial assets - - - (361) - - (361)
Income tax effect - - - 67 - - 67
Currency translation
differences (note 6) - - - (1 548) - - (1 548)
Income tax effect - - - - - - -
Dividends paid (note 13.2) - - - - (52 869) (350) (53 219)
Balance at 31 August 2015 263 611 (105 788) (8 334) 4 300 804 774 11 773 970 336
Balance at 1 March 2015 295 328 (105 788) (8 056) 7 506 748 010 12 437 949 437
Changes:
Additional non-controlling
interest acquired due to:
- Infrasors (note 11) - - - - (1 899) (1 848) (3 747)
Increase in effective
shareholding in Infrasors
due to:
- Increase in shares held in
treasury by Infrasors
(note 11) - - - - (4 331) (5 316) (9 647)
Share-based payments - - - 4 676 - - 4 676
Purchase of treasury shares - - (50 100) - - - (50 100)
Settlement of employee Share
Appreciation Rights
exercised and reserve
transfer, net of tax (31 717) - 17 975 (3 721) 3 721 - (13 742)
Profit for the year - - - - 222 128 2 064 224 192
Other comprehensive income
for the year - - - 158 - - 158
Net change in fair value
of available-for-sale
financial assets - - - 91 - - 91
Income tax effect - - - (17) - - (17)
Currency translation
differences (note 6) - - - 91 - - 91
Income tax effect - - - (7) - - (7)
Dividends paid (note 13.2) - - - - (75 541) (600) (76 141)
Balance at 29 February 2016 263 611 (105 788) (40 181) 8 619 892 088 6 737 1 025 086
Changes:
Adjustment to
non-controlling interest
due to:
- Infrasors (note 11) - - - - (163) 97 (66)
Share-based payments - - - 2 737 - - 2 737
Purchase of treasury shares - - (9 656) - - - (9 656)
Treasury shares used for
acquisition (312) - 23 908 - - - 23 596
Settlement of employee Share
Appreciation Rights
exercised and reserve
transfer, net of tax (8 075) - 4 715 (1 535) 1 535 - (3 360)
Profit for the period - - - - 138 571 655 139 226
Other comprehensive income
for the period - - - (6 932) - - (6 932)
Net change in fair value of
available-for-sale
financial assets - - - 98 - - 98
Income tax effect - - - (66) - - (66)
Currency translation
differences (note 6) - - - (6 964) - - (6 964)
Income tax effect - - - - - - -
Dividends paid (note 13.2) - - - - (58 283) (513) (58 796)
Balance at 31 August 2016 255 224 (105 788) (21 214) 2 889 973 748 6 976 1 111 835
Notes
Split six Unaudited Split six Unaudited
months six months months six months Split Audited
ended ended ended ended year ended year ended
31 August 31 August 31 August 31 August 29 February 29 February
2016 2016 2015 2015 2016 2016
% R'000 % R'000 % R'000
1. Segment information
Revenue
External sales
Mining & Aggregates/Minerals 70,8 816 452 73,3 734 883 71,6 1 409 937
Concrete Based Products 29,2 336 806 26,7 268 354 28,4 559 849
100,0 1 153 258 100,0 1 003 237 100,0 1 969 786
Intersegment sales
Mining & Aggregates/Minerals 97,4 57 214 97,6 52 454 97,7 116 374
Concrete Based Products 2,6 1 540 2,4 1 297 2,3 2 733
100,0 58 754 100,0 53 751 100,0 119 107
Total revenue
Mining & Aggregates/Minerals 72,1 873 666 74,5 787 337 73,1 1 526 311
Concrete Based Products 27,9 338 346 25,5 269 651 26,9 562 582
100,0 1 212 012 100,0 1 056 988 100,0 2 088 893
Contribution from operations
Mining & Aggregates/Minerals 97,2 196 530 91,7 147 640 87,6 281 838
Concrete Based Products 4,8 9 789 9,9 15 935 12,7 40 878
Other (2,0) (4 210) (1,6) (2 652) (0,3) (1 028)
100,0 202 109 100,0 160 923 100,0 321 688
Contribution from operations
margins on external revenue
(%)
Mining & Aggregates/Minerals 24,1 20,1 20,0
Concrete Based Products 2,9 5,9 7,3
Overall contribution 17,5 16,0 16,3
Other information
Assets
Mining & Aggregates/Minerals 1 305 506 1 019 815 981 224
Concrete Based Products 235 417 221 805 219 012
Other 513 411 412 365 447 470
2 054 334 1 653 985 1 647 706
Liabilities
Mining & Aggregates/Minerals 395 635 316 136 303 175
Concrete Based Products 78 797 66 451 67 375
Other 468 067 301 062 252 070
942 499 683 649 622 620
Capital expenditure (excluding
acquisitions through business
combinations)
Mining & Aggregates/Minerals 28 391 55 545 105 880
Concrete Based Products 9 347 8 098 23 411
Other 1 805 828 1 973
39 543 64 471 131 264
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
2. Impairment of goodwill
Impairment of goodwill - (1 300) (1 300)
An impairment was recognised relating to goodwill at
Scottburgh due to declining financial returns.
3. Disposal of subsidiary
The group disposed of 100% of its shareholding in AFT
Aggregates Proprietary Limited to Nityn Proprietary
Limited on 1 April 2016. The company was previously
included in the "Mining & Aggregates/Minerals" segment.
Details of the disposal are as follows:
Carrying amount of net assets over which control was lost
Property, plant and equipment 12 655 - -
Inventories 1 892 - -
Trade and other receivables 1 972 - -
Tax liability (2 824) - -
Trade and other payables (3 553) - -
Deferred tax liability (2 553) - -
Provisions (2 549) - -
Cash and cash equivalents 917 - -
Net assets derecognised 5 957 - -
Consideration received:
Cash 10 000 - -
Total consideration 10 000 - -
Profit on disposal of subsidiary:
Consideration received 10 000 - -
Net asset derecognised (5 957) - -
Profit on disposal of subsidiary 4 043 - -
Net cash inflow from disposal of subsidiary:
Cash consideration received 10 000 - -
Cash and cash equivalents disposed of (917) - -
9 083 - -
4. Depreciation and amortisation
Depreciation 48 024 39 030 79 585
Amortisation 1 002 1 161 2 296
49 026 40 191 81 881
5. Income tax expense
The effective tax rate of the group increased from 30,2% to 31,1% in the current period mainly due
to the Mozambique operations (exclusive of foreign exchange variances) being taxed on 32,0%.
6. Currency translation differences
Foreign currency transactions relating to the Mozambique operations are translated into the
presentation currency (ZAR or R) by means of translating assets and liabilities at closing rate at
the date of the statement of financial position and income and expenses at average exchange rate
for the period and recognising all resulting exchange differences in other comprehensive income.
Exchange differences arising on monetary items that form part of the group's net investment in the
Mozambique operations are recognised in other comprehensive income, whilst all other translations,
including those on short-term receivables, are recognised in profit or loss.
Number of shares
31 August 31 August 29 February
2016 2015 2016
7. Movement in number of treasury shares
Opening balance 1 918 751 505 829 505 829
Utilised for share appreciation rights scheme (221 242) (1 069 171) (1 069 171)
Utilised for Cape Lime acquisition (note 12) (1 139 347) - -
Purchased during the period/year 440 000 998 789 2 482 093
Closing balance 998 162 435 447 1 918 751
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
8. Other financial assets
Funding provided to Afrimat employees
(BEE share purchase scheme) 145 999 142 035 137 775
Rehabilitation fund trusts and other 29 071 23 188 19 524
175 070 165 223 157 299
Non-current other financial assets 168 754 164 420 156 424
Current other financial assets 6 316 803 875
175 070 165 223 157 299
Included in the above balance are investments in
environmental insurance policies of R14,7 million
(August 2015: R12,2 million) measured at fair value.
The fair value of unquoted unit trusts is derived
using the adjusted net asset method. The adjusted
net asset method determines the fair value of the
investment in the unit trust by reference to the fair
value of the individual assets and liabilities
recognised in a unit trust's statement of financial
position. The significant inputs to the adjusted net
asset method are the fair values of the individual
assets and liabilities whose fair value is derived
from quoted market prices in active markets. The fair
values are indirectly derived from prices quoted in
Level 1, and therefore included in Level 2 of the
fair value hierarchy.
9. Borrowings
9.1 Capital net movement
Opening balance 112 885 122 421 122 421
New borrowings 268 551 30 931 68 754
Repayments (49 416) (42 196) (78 290)
Closing balance 332 020 111 156 112 885
Analysis as per statement of financial position
Borrowings non-current 241 599 50 614 47 321
Borrowings current 90 421 60 542 65 564
332 020 111 156 112 885
9.2 Analysis as per statement of cash flows
New borrowings 268 551 30 931 68 754
Repayments (49 416) (42 196) (78 290)
219 135 (11 265) (9 536)
During the year, the group financed plant and
machinery with the Standard Bank of South Africa
Limited ("SBSA"), to fund capital expenditure and
working capital requirements to support the growth
and expansion of the group. A vehicle asset finance
facility of R109,6 million over 36 months at prime
rate minus 1,5%, repayable in monthly instalments
of capital and interest, was agreed upon for
this purpose.
During the year, SBSA provided funding to AEI in the
amount of R141,3 million for the redemption by AEI
of all of its existing preference shares in issue
and to pay the existing preference share aggregate
redemption quantum to Afrimat Limited. The company's
shares held by AEI/Afrimat BEE Trust serve as
security for the preference share funding provided
by SBSA.
10. Authorised capital expenditure
Not yet contracted for
- Property, plant and equipment 85 198 111 202 123 996
11. Acquisition of additional non-controlling interest
Infrasors Holdings Proprietary Limited
On 31 March 2016, a special shareholders' meeting was held and the following special resolutions
were passed without modification: conversion of the company to a private company; conversion of
ordinary shares to no par value shares; cancellation of 7 333 011 treasury shares held by Infrasors
Management Services Proprietary Limited; and replacing the company's memorandum of incorporation.
Infrasors
Holdings
Infrasors Proprietary
Holdings Limited*
Proprietary - Treasury
Limited* buy back Total
R'000 R'000 R'000
August 2016
Adjustment to non-controlling interest acquired (97) - (97)
Premium paid on adjustment to non-controlling
interest after initial acquisition 163 - 163
66 - 66
August 2015
Additional non-controlling interest acquired 1 787 - 1 787
Premium paid on additional shares acquired in
subsidiary after initial acquisition 1 358 - 1 358
3 145 - 3 145
February 2016
Additional non-controlling interest acquired 1 848 5 316 7 164
Premium paid on additional shares acquired in
subsidiary after initial acquisition 1 899 4 331 6 230
3 747 9 647 13 394
* Infrasors Holdings Limited was converted to a private company, Infrasors Holdings
Proprietary Limited.
12. Acquisition of businesses
Cape Lime Proprietary Limited ("Cape Lime")
The group acquired 100% of the issued ordinary shares of lime and associated products producer,
Cape Lime, on 31 March 2016. The aggregate purchase consideration paid for the acquisition of Cape
Lime was R282,6 million and was settled in cash amounting to R259,0 million and reissuing of
treasury shares of R23,6 million. Included in the purchase consideration was an interest amount of
R6,6 million. The original cash consideration of R252,4 million bore interest at the Standard Bank
of South Africa Limited's prime overdraft rate less 2% from 10 December 2015, or from such earlier
date in the event that all approvals were received from the authorities. The acquisition will
complement and augment Afrimat's industrial mineral product offering and further expand its
footprint across South Africa.
The parties to the acquisition recognise the scale of potential business opportunities that such a
relationship presents, as Afrimat and Cape Lime have different and complementary strengths.
Leverage from the combined strengths will result in developing new revenue opportunities for
Afrimat and Cape Lime.
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
Details of the acquisition are as follows:
Carrying amount/fair value of net assets acquired
Property, plant and equipment* 264 248 - -
Intangible assets 28 - -
Other financial assets 3 695 - -
Inventories 16 467 - -
Trade and other receivables 29 054 - -
Tax liability (1 093) - -
Trade and other payables (17 004) - -
Deferred tax liability (6 753) - -
Provisions (13 783) - -
Cash and cash equivalents 7 792 - -
Net assets 282 651 - -
* Property, plant and equipment includes the fair
valuation of mining assets acquired.
Consideration paid:
Cash 259 055 - -
Treasury shares issued (issued at R20,71 per share) 23 596
Total consideration 282 651 - -
Net cash outflow from acquisition of subsidiary:
Cash consideration paid 259 055 - -
Cash and cash equivalents acquired (7 792) - -
251 263 - -
Unaudited pro forma revenue assuming the business
combination for the full period ended 31 August 2016 87 684 - -
Unaudited pro forma profit after tax assuming
the business combination for the full period
ended 31 August 2016 16 390 - -
Revenue included in results 70 256 - -
Profit after taxation included in results 12 934 - -
Acquisition costs included in operating expenses
for the period ended 31 August 2016 736 - -
The property, plant and equipment was revalued as at 31 March 2016 based on the replacement value or
market value of current assets.
The fair value of trade and other receivables is R29,1 million and includes trade receivables of
R26,9 million. An amount of R25,1 million is reflected as neither impaired nor past due.
Bethlehem quarry and ancillary businesses from WG Wearne Limited ("Wearne")
Wearne Aggregates Proprietary Limited and Wearne Readymix Concrete Proprietary Limited both wholly
owned subsidiaries of Wearne entered into an agreement with Afrimat Aggregates (KZN) Proprietary
Limited and Afrimat Concrete Products Proprietary Limited, both wholly owned subsidiaries of Afrimat,
on 6 July 2016 to dispose of the Bethlehem quarry and ancillary businesses as a going concern for
R28,0 million. Furthermore Wearne also agreed to dispose of Erf 4038, Bethlehem, Free State to Rodag
Holdings Proprietary Limited, a wholly owned subsidiary of Afrimat, for R2,0 million. The effective
date of the transaction being 17 October 2016.
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
Acquisition information is as follows:
Unaudited pro forma revenue assuming the business
combination for the full period ended 31 August 2016 10 918 - -
Unaudited pro forma loss after tax assuming
the business combination for the full period ended
31 August 2016 (1 046) - -
Acquisition costs included in operating expenses
for the period ended 31 August 2016 52 - -
The initial accounting for this business combination was incomplete at the time of the interim
financial results. Further disclosure required 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.
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
13. Dividends
13.1 Afrimat Limited dividends paid/declared in
respect of the current period profits
Interim dividend declared/paid 28 652 22 922 22 922
Final dividend declared - - 58 738
28 652 22 922 81 660
13.2 Dividends cash flow
Current year interim dividend paid - - 22 922
Previous year final dividend paid 58 738 53 007 53 007
Dividends received on treasury shares (455) (138) (388)
58 283 52 869 75 541
Dividends paid by subsidiaries to
non-controlling shareholders 513 350 600
58 796 53 219 76 141
14. Events after reporting date
African Rainbow Capital Proprietary Limited ("ARC")
On 23 September 2016, Afrimat announced on SENS that ARC has offered to purchase 26,3 million shares
in Afrimat from AEI. The shares comprise approximately 18,36% of the share capital in Afrimat.
The transaction is subject to various conditions precedent, including the participants of the
Afrimat BEE Trust voting in favour of the offer. ARC has agreed to be locked in for at least four
years on successful conclusion of the purchase of the Afrimat shares.
Following the implementation of the ARC Transaction, the beneficiaries will receive their respective
consideration net of any liabilities, and will cease to be participants under the Current Scheme.
Furthermore, all of the funding associated with the Afrimat shares will be settled.
In order to facilitate the purchase of Afrimat shares by ARC, the current trust deed of the Afrimat
BEE Trust is being amended. These changes were sent to Afrimat shareholders in a circular on
21 October 2016 and were also provided to scheme participants for approval.
Bethlehem quarry and ancillary businesses for WG Wearne Limited ("Wearne")
Refer to note 12 for the acquisition of the Bethlehem quarry and ancillary businesses from Wearne
with effective date commencing 17 October 2016.
Diro Manganese Proprietary Limited and Diro Iron Ore Proprietary Limited ("DIRO")
As announced on SENS on 11 October 2016, Afrimat has concluded an agreement to purchase 60% of DIRO,
as well as a cession and delegation agreement with Investec Limited to purchase all of its security.
DIRO's operations have been halted as a consequence of it being under financial distress and was
accordingly put into formal business rescue on 7 June 2016. The aggregate purchase consideration
payable (including funding provided) for the acquisition of DIRO is R276,0 million.
The effective date of acquisition is the first business day following the date on which the
conditions precedent are fulfilled or waived and the agreement becomes unconditional and enforceable
in all respects. The conditions precedent include the approval of the competition authorities,
Section 11 approval from the Department of Mineral Resources ("DMR") and all other regulatory
approvals as may be required. For further details, refer to the SENS announcement published on
11 October 2016.
15. Contingencies
Guarantees to the value of R79,5 million (August 2015: R80,9 million) were supplied by SBSA to
various parties, including the DMR and Eskom, respectively during the period under review.
Guarantees to the value of R9,8 million (August 2015: R9,8 million) were supplied by FirstRand
Bank Limited to various parties, including the DMR and Eskom, respectively during the period
under review.
Guarantees to the value of R23,5 million (August 2015: R23,5 million) by Lombard's Insurance
Group, R1,4 million (August 2015: R1,4 million) by ABSA Bank Limited, R9,8 million (August 2015:
R8,2 million) by Centriq Insurance Innovation and R2,7 million (August 2015: R2,7 million) by
SIG Guarantee Acceptances Proprietary Limited were supplied to various parties, including the
DMR, Eskom and Chevron South Africa Proprietary Limited.
These guarantees are in respect of environmental rehabilitation and will only be payable in the
event of default by the group.
A contingent liability exists due to the uncertain timing of cash flows with regards to future
local economic development ("LED") commitments made to the DMR in respect of companies with
mining rights. These commitments are dependent on the realisation of the future agreed upon LED
projects. Future commitments amount to R6,1 million (August 2015: R6,1 million). An accrual has
been raised in respect of commitments made up to the end of the period.
Unaudited six Unaudited six Audited
months ended months ended year ended
31 August 31 August 29 February
2016 2015 2016
R'000 R'000 R'000
16. Related parties
Loan balance owing by associate 8 117 7 680 8 811
Loan balance owing by joint venture 12 612 11 150 19 565
Obligation of share of joint venture's losses 4 481 3 702 5 466
Interest received from associate 404 243 588
Interest received from joint venture 66 - -
Directors
MW von Wielligh*# (Chairman)
AJ van Heerden (CEO)
PGS de Wit (FD)
GJ Coffee
L Dotwana*
F du Toit*
PRE Tsukudu*#
JF van der Merwe*#
HJE van Wyk*#
* Non-executive director
# Independent
Registered office
Tyger Valley Office Park No. 2
Cnr. Willie van Schoor Avenue and Old Oak Road
Tyger Valley, 7530
(PO Box 5278, Tyger Valley, 7536)
Sponsor
Bridge Capital Advisors Proprietary Limited
2nd Floor, 27 Fricker Road, Illovo, 2196
(PO Box 651010, Benmore, 2010)
Auditor
Mazars
Mazars House, Rialto Road, Grand Moorings Precinct
Century City, 7441
(PO Box 134, Century City, 7446)
Transfer secretaries
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Ground Floor, 70 Marshall Street
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Company secretary
M Swart
Tyger Valley Office Park No. 2
Cnr. Willie van Schoor Avenue and Old Oak Road
Tyger Valley, 7530
(PO Box 5278, Tyger Valley, 7536)
www.afrimat.co.za
Date: 03/11/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
