AFRIMAT LIMITED - Reviewed condensed consolidated provisional financial results for the year ended 28 February 2018

Release Date: 24/05/2018 07:05
Code(s): AFT
 
Wrap Text
Reviewed condensed consolidated provisional financial results for the year ended 28 February 2018

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
http://www.afrimat.co.za

Reviewed condensed consolidated provisional financial results for the year ended 28 February 2018

Highlights
Group revenue of R2,5 billion
Headline earnings per share ("HEPS") of 180,7 cents
Contribution from operations' margin 14,3%
NAV per share of 857 cents
Final dividend per share of 42,0 cents
Return on net operating assets 21,8%
Net debt:equity ratio improved from 42,4% in August 2017 to 37,0%

Commentary
BASIS OF PREPARATION
The reviewed condensed consolidated provisional financial results ("financial statements") for the year
ended 28 February 2018 ("year") contain, as a minimum, the information required by IAS 34: Interim
Financial Reporting and have been prepared in accordance with the Frameworks Concepts and
measurement and recognition requirements of the International Financial Reporting Standards ("IFRS"),
the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, 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 IFRS and are consistent with those applied in the audited annual
financial statements for the year ended 28 February 2017.

The financial statements have been prepared under the supervision of the Chief Financial Officer ("CFO"),
PGS de Wit CA(SA).

INTRODUCTION
The group continues to deliver satisfactory results supported by its diversification strategy despite very
difficult trading conditions experienced during the financial year.

The group results were impacted by major political events that severely impacted business confidence in
the first half of the year. Political uncertainty prevailed for the remainder of 2017 and an economic slow-
down during the last quarter of 2017 exacerbated the operating climate.

FINANCIAL RESULTS
Headline earnings per share declined by 8,0% from 196,4 cents to 180,7 cents per share. Mineral
producing operations across all regions as well as the Western Cape aggregates business delivered solid
results, while the impact of the slow-down in the last few months of 2017 was felt more strongly in
KwaZulu-Natal and southern Gauteng where the operations of Glen Douglas and Clinker experienced
reduced volumes.

The net debt:equity ratio increased from 19,8% in the prior year to 37,0% in the current year, mainly due
to a new R300,0 million amortising five-year term facility introduced to purchase the Investec securities, to
fund the offer to creditors in terms of the business rescue plan and provide working capital requirements
for Afrimat Demaneng Proprietary Limited (previously Diro Manganese Proprietary Limited) and Diro Iron
Ore Proprietary Limited ("Demaneng").

OPERATIONAL REVIEW
All operating units remain strategically positioned to deliver excellent service to the group's customers,
whilst acting as an efficient hedge against volatile local business conditions. The product range is well
diversified to include construction materials such as aggregates and concrete based products as well as
industrial minerals such as limestone, dolomite and silica. The group added bulk commodities to an
already diversified offering, by entering the iron ore industry.

The business experienced a year of labour stability as a result of various human resource interventions to
create an amicable, mutually beneficial climate. The group is committed to creating and sustaining
harmonious relationships in the workplace and addressing issues proactively.

The Aggregates and Industrial Minerals segment delivered solid results in particular the mineral producing
operations across all regions as well as the Western Cape aggregates business. The impact of the slow-
down in the last months of 2017 was felt more strongly in KwaZulu-Natal and southern Gauteng where the
operations of Glen Douglas and Clinker experienced reduced volumes in the last quarter of the 2017
calendar year. The start of 2018 saw demand increase, but not sufficiently to compensate for the poor
demand of the last quarter.

The acquisition of the Emfuleni Clinker Ash Dump, situated in Vereeniging and in close proximity to
Afrimat's clients, will ensure an additional three to four years to the lifespan for both Clinker Supplies
Proprietary Limited ("Clinker") and SA Block Proprietary Limited. The Clinker management team continues
to investigate further options in order to secure additional clinker resources for the group.

The Mozambican operations experienced renewed activity in January 2018 when an order to supply the
construction materials to the resettlement village in Palma was received. Afrimat has reestablished
operations and was at full production during the month of May 2018. The Final Investment Decision for
the main LNG project has not yet been made, but it is expected to be made during 2018 and Afrimat is
well positioned to tender on requirements.

The Concrete Based Products segment was impacted by difficult market conditions. The company's
strategy remains focused on assets with a competitive advantage.

Afrimat created a Commodities segment by entering the iron ore industry. It concluded an agreement to
purchase 60% of Demaneng, as well as a cession and delegation agreement with Investec Limited to
purchase all of its security. The acquisition became unconditional following section 11 approval by the
Department of Mineral Resources ("DMR"), effective 30 June 2017. 

Furthermore, Afrimat concluded a sale of shares and claims agreement with the minorities 
of Demaneng to acquire the remaining 40% stake, effective 31 July 2017 (refer to 
note 14 for further information).

As a direct result of much improved commodity prices, it was decided to accelerate the ramp-up of
Demaneng. Expenses relating to the ramp-up increased substantially in line with the accelerated
production. The mine reached its design production capacity of 1 million tonnes per annum at the end of
February 2018. All processing equipment has been commissioned, together with the commissioning of a
new load out facility which enables Afrimat to load trains on the Sishen-Saldanha railway line.

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
Following the finalisation of the agreement to purchase 60% of Demaneng from Diro Resources
Proprietary Limited, as well as a cession and delegation agreement with Investec Limited, the company
concluded a sale of shares and claims agreement with the minorities of Demaneng to acquire the
remaining 40% stake in Demaneng, effective 31 July 2017.

Prior to Afrimat's acquisition, Demaneng's operations were halted as a consequence of it being under
financial distress and was accordingly placed into formal business rescue on 7 June 2016. Afrimat
Demaneng Proprietary Limited has filed a notice of substantial implementation of its business rescue plan
with the Companies and Intellectual Property Commission, confirming that it exited business rescue on
16 August 2017 and commenced with operations and the mining and delivery of iron ore.

For further details, refer to a SENS announcement published by the company on 22 August 2017.

B-BBEE
Existing BEE shareholders and the Afrimat BEE Trust in aggregate hold 30,25% of Afrimat's issued shares
(excluding treasury shares and mandated investments).

Notwithstanding the fully empowered ownership platform in line with the Mining Charter requirements, the
group 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. A final dividend of 42,0 cents per
share (2017: 50,0 cents) for the year was declared on 23 May 2018. The dividend payable to shareholders
who are subject to dividend tax is 33,6 cents per share (2017: 40,0 cents per share). Total dividends for the
year amount to 62,0 cents per share (2017: 70,0 cents per share).

PROSPECTS
The group is well positioned to capitalise on its strategic initiatives, foresees continued growth from an
excellent asset base, expects further expansion of its range of unique products and turnaround initiatives
of selective acquisitions to deliver.

Operational efficiency initiatives aimed at expanding volumes, reducing costs and developing the required
skill levels across all employees, remains a key focus in all operations.

Afrimat expects the current business climate to continue with the group's future growth driven by the
successful execution of its proven strategy, recent acquisitions and a wider product offering to the market.

AUDITOR'S REVIEW
This report has been reviewed by the company's auditor, PricewaterhouseCoopers Inc. Their unmodified
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.

The auditor's report does not necessarily report on all of the information contained in this report.
Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's
engagement they should obtain a copy of the auditor's report together with the accompanying financial
information, from the issuer's registered office.

On behalf of the board

MW von Wielligh
Chairman

AJ van Heerden
Chief Executive Officer

23 May 2018

DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend, No. 22 of 42,0 cents per share, in respect of the year
ended 28 February 2018, was declared on Wednesday, 23 May 2018.

There are 143 262 412 shares in issue at reporting date, of which 6 654 039 are held in treasury. The total
dividend payable is R60,2 million (2017: R71,6 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 20,0%. The dividend payable to shareholders who are subject to dividend tax and
shareholders who are exempt from dividend tax is 33,6 cents and 42,0 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, 12 June 2018
Commence trading ex dividend                                                  Wednesday, 13 June 2018
Record date                                                                      Friday, 15 June 2018
Dividend payable                                                                 Monday, 18 June 2018

Share certificates may not be dematerialised or rematerialised between Wednesday, 13 June 2018 and
Friday, 15 June 2018, both dates inclusive.

Condensed consolidated statement of profit or loss and other comprehensive income




                                                                    Reviewed      Audited
                                                                  year ended    year ended
                                                                 28 February   28 February
                                                                        2018          2017     Change
                                                                       R'000         R'000          %
Revenue                                                            2 456 782     2 228 157       10,3
Cost of sales                                                     (1 699 417)   (1 464 494)
Gross profit                                                         757 365       763 663       (0,8)
Operating expenses                                                  (406 205)     (357 897)
Profit/(loss) on disposal of plant and equipment                         638          (165)
Contribution from operations                                         351 798       405 601      (13,3)
Impairment of property, plant and equipment
(refer to note 2)                                                     (1 399)       (3 049)
Profit on disposal of subsidiary (refer to note 3)                         -         4 043
Operating profit                                                     350 399       406 595      (13,8)
Finance income                                                        32 930        36 073
Finance costs                                                        (59 432)      (41 589)
Share of profits of joint venture                                          -         1 047
Share of (loss)/profit of associate                                       (8)           82
Profit before tax                                                    323 889       402 208      (19,5)
Income tax expense (refer to note 5)                                 (78 511)     (122 814)
Profit for the year                                                  245 378       279 394      (12,2)
Profit attributable to:
Owners of the parent                                                 245 668       277 824
Non-controlling interests                                               (290)        1 570
                                                                     245 378       279 394
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss
Net change in fair value of available-for-sale
financial assets                                                         183            68
Income tax effect on available-for-sale
financial assets                                                         (41)          (63)
Currency translation differences (refer to note 6)                       961        (7 270)
Other comprehensive income for the year, net of tax                    1 103        (7 265)
Total comprehensive income for the year                              246 481       272 129       (9,4)
Total comprehensive income attributable to:
Owners of the parent                                                 246 771       270 559
Non-controlling interests                                               (290)        1 570
                                                                     246 481       272 129
Earnings per share:
Earnings per ordinary share (cents)                                    180,3         196,0       (8,0)
Diluted earnings per ordinary share (cents)                            179,0         194,0       (7,7)
Note to statement of profit or loss and other
comprehensive income
Shares in issue:
Total shares in issue                                            143 262 412   143 262 412
Treasury shares (refer to note 8)                                 (6 654 039)   (7 187 643)
Net shares in issue                                              136 608 373   136 074 769
Weighted average number of net shares in issue                   136 271 264   141 712 540
Diluted weighted average number of shares                        137 248 315   143 209 240

Reconciliation of headline earnings
                                                                    Reviewed       Audited
                                                                  year ended    year ended
                                                                 28 February   28 February
                                                                        2018          2017     Change
                                                                       R'000         R'000          %
Profit attributable to owners of the parent                          245 668       277 824
(Profit)/loss on disposal of plant and equipment attributable
to owners of the parent                                                 (638)          165
Impairment of property, plant and equipment (refer to note 2)          1 399         3 049
Profit on disposal of subsidiary attributable to owners of the
parent (refer to note 3)                                                   -        (4 043)
Total income tax effects of adjustments                                 (213)        1 301
                                                                     246 216       278 296      (11,5)
Headline earnings per ordinary share ("HEPS") (cents)                  180,7         196,4       (8,0)
Diluted HEPS (cents)                                                   179,4         194,3       (7,7)

Condensed consolidated statement of financial position
                                                                    Reviewed       Audited
                                                                  year ended    year ended
                                                                 28 February   28 February
                                                                        2018          2017
                                                                       R'000         R'000
Assets
Non-current assets
Property, plant and equipment                                      1 417 845     1 058 240
Investment property                                                    3 040         3 040
Intangible assets                                                     12 848        14 575
Goodwill                                                             133 194       133 194
Investment in associate                                                  183           244
Other financial assets (refer to note 7)                              59 446       276 942
Deferred tax                                                          55 115        30 288
Total non-current assets                                           1 681 671     1 516 523
Current assets
Inventories                                                          242 124       162 960
Current tax receivable                                                 9 181         9 279
Trade and other receivables                                          391 603       332 766
Other financial assets (refer to note 7)                                   -           107
Cash and cash equivalents (refer to note 9)                          112 208       244 690
Total current assets                                                 755 116       749 802
Total assets                                                       2 436 787     2 266 325
Equity and liabilities                                         
Equity                                                         
Stated capital                                                       266 985       285 842
Business combination adjustment                                     (105 788)     (105 788)
Treasury shares                                                      (59 660)      (70 999)
Net issued stated capital                                            101 537       109 055
Other reserves                                                         5 888         4 525
Retained earnings                                                  1 063 043     1 085 792
Attributable to equity holders of the parent                       1 170 468     1 199 372
Non-controlling interests                                              9 980         7 547
Total equity                                                       1 180 448     1 206 919
Liabilities                                                    
Non-current liabilities                                        
Borrowings (refer to note 10.1)                                      271 954        94 999
Deferred tax                                                         102 613       113 845
Provisions                                                           130 288        96 190
Total non-current liabilities                                        504 855       305 034
Current liabilities                                            
Borrowings (refer to note 10.1)                                      165 004        79 090
Other financial liabilities (refer to note 11)                        21 856        38 111
Current tax payable                                                   11 485         8 997
Trade and other payables                                             458 455       352 150
Obligation of share of joint venture's losses                          4 481         4 481
Bank overdraft (refer to note 9)                                      90 203       271 543
Total current liabilities                                            751 484       754 372
Total liabilities                                                  1 256 339     1 059 406
Total equity and liabilities                                       2 436 787     2 266 325
Note to statement of financial position:                       
Net asset value per share (cents)                                        857           881
Net tangible asset value per share (cents)                               750           773
Total borrowings                                                     458 814       212 200
(Surplus cash)/overdraft less cash and                         
cash equivalents                                                     (22 005)       26 853
Net debt                                                             436 809       239 053
Net debt:equity ratio (%)                                               37,0          19,8

Condensed consolidated statement of cash flows
                                                                                  Restated
                                                                    Reviewed       audited
                                                                  year ended    year ended
                                                                 28 February   28 February
                                                                        2018          2017
                                                                       R'000         R'000
Cash flows from operating activities                               
Cash generated from operations                                       344 542       531 114
Interest revenue                                                      31 623        35 674
Dividends received                                                        54            88
Finance costs                                                        (52 752)      (36 487)
Tax paid                                                            (122 507)     (124 343)
Net cash inflow from operating activities                            200 960       406 046
Cash flows from investing activities                               
Acquisition of property, plant and equipment                        (118 918)      (78 693)
Proceeds on disposal of property, plant and equipment                 22 975        17 688
Purchase of financial assets                                         (68 060)     (254 916)
Proceeds on sale of financial assets                                       -       138 940
Proceeds on disposal of subsidiary (refer to note 3)                       -         9 083
Acquisition of businesses (refer to note 14)                         (30 772)     (280 263)
Net cash outflow from investing activities                          (194 775)     (448 161)
Cash flows from financing activities                               
Repurchase of Afrimat shares                                         (13 552)       (9 656)
Acquisition of additional non-controlling interest                 
(refer to note 13)                                                    (2 521)          (66)
Net movement in borrowings (refer to note 10.2)                      180 129         5 376
Tax paid on disposal of shares to ARC*                                     -        (8 200)
(Repayment of)/proceeds from other financial                       
liabilities (refer to note 11)                                       (25 143)       38 111
Dividends paid (refer to note 15)                                    (96 240)      (87 666)
Net cash inflow/(outflow) from financing activities                   42 673       (62 101)
Net increase/(decrease) in cash and cash equivalents               
and bank overdrafts                                                   48 858      (104 216)
Cash, cash equivalents and bank overdrafts at the
beginning of the year                                                (26 853)       77 363
Cash, cash equivalents and bank overdrafts at the
end of the year                                                       22 005       (26 853)
* African Rainbow Capital Proprietary Limited ("ARC").

Condensed consolidated statement of changes in equity
                                                                                                Non-
                                                  Business                                  control-
                                       Stated  combination  Treasury     Other   Retained       ling      Total
                                      capital   adjustment    shares  reserves   earnings  interests     equity
                                        R'000        R'000     R'000     R'000      R'000      R'000      R'000
Balance at 1 March 2016               263 611     (105 788)  (40 181)    8 619    892 088      6 737  1 025 086
Changes:                                                                        
Additional non-controlling                                                      
interest acquired due to:                                                       
- Infrasors (refer to note 13)              -            -         -         -       (169)       103        (66)
Share-based payments                        -            -         -     6 023          -          -      6 023
Purchase of treasury shares                 -            -   (69 310)        -          -          -    (69 310)
Treasury shares used for                                                        
acquisition (refer to note 14)           (312)           -    23 908         -          -          -     23 596
Settlement of employee                                                          
Share Appreciation Rights                                                       
exercised and reserve transfer,                                                 
net of tax                            (28 911)           -    14 584    (2 852)     2 852          -    (14 327)
Effect on disposal of treasury                                                  
shares to ARC                          51 454            -         -         -          -          -     51 454
Profit for the year                         -            -         -         -    277 824      1 570    279 394
Other comprehensive income                                                      
for the year                                -            -         -    (7 265)         -          -     (7 265)
Net change in fair value of                                                     
available- for-sale financial                                                   
assets                                      -            -         -        68          -          -         68
Income tax effect                           -            -         -       (63)         -          -        (63)
Currency translation                                                            
differences (refer to note 6)               -            -         -    (7 270)         -          -     (7 270)
Dividends paid (refer to note 15)           -            -         -         -    (86 803)      (863)   (87 666)
Balance at 28 February 2017           285 842     (105 788)  (70 999)    4 525  1 085 792      7 547  1 206 919
Changes:                                                    
Initial non-controlling                                     
interest acquired                           -            -         -         -          -   (113 129)  (113 129)
Additional non-controlling                                  
interest acquired due to:                                   
- Infrasors (refer to note 13)              -            -         -         -       (104)        83        (21)
- Afrimat Demaneng                          -            -         -         -   (158 641)   114 641    (44 000)
- Afrimat Bulk Commodities                                                  
(refer to note 13)                          -            -         -         -    (19 268)     1 768    (17 500)
Treasury shares used for
purchase of minority shares in
Afrimat Bulk Commodities (refer
to note 13)                             1 500            -    13 500         -          -          -     15 000
Share-based payments                        -            -         -     5 456          -          -      5 456
Purchase of treasury shares                 -            -   (13 552)        -          -          -    (13 552)
Settlement of employee Share                   
Appreciation Rights exercised                  
and reserve transfer, net of tax      (20 357)           -    11 391    (5 196)     5 196          -     (8 966)
Profit for the year                         -            -         -         -    245 668       (290)   245 378
Other comprehensive income                                   
for the year                                -            -         -     1 103          -          -      1 103
Net change in fair value of                                  
available- for-sale financial assets        -            -         -       183          -          -        183
Income tax effect                           -            -         -       (41)         -          -        (41)
Currency translation differences                             
(refer to note 6)                           -            -         -       961          -          -        961
Dividends paid (refer to note 15)           -            -         -         -    (95 600)      (640)   (96 240)
Balance at 28 February 2018           266 985     (105 788)  (59 660)    5 888  1 063 043      9 980  1 180 448
 
Notes
                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                        Change           2018           2017
                                                             %          R'000          R'000
1.  Segment information
    Revenue
    External sales
    Aggregates and Industrial Minerals                     1,9      1 582 671      1 553 285
    Commodities                                              -        251 773              -
    Concrete Based Products                               (7,8)       622 338        674 872
                                                          10,3      2 456 782      2 228 157
    Intersegment sales
    Aggregates and Industrial Minerals                                185 367        118 818
    Commodities                                                             -              -
    Concrete Based Products                                             8 838          2 357
                                                                      194 205        121 175
    Total revenue
    Aggregates and Industrial Minerals                              1 768 038      1 672 103
    Commodities                                                       251 773              -
    Concrete Based Products                                           631 176        677 229
                                                                    2 650 987      2 349 332
    Contribution from operations
    Aggregates and Industrial Minerals                                343 651        374 986
    Commodities                                                       (33 443)             -
    Concrete Based Products                                            20 721         39 238
    Other                                                              20 869         (8 623)
                                                                      351 798        405 601
    Contribution from operations margins on
    external revenue (%)
    Aggregates and Industrial Minerals                                   21,7           24,1
    Commodities                                                         (13,3)             -
    Concrete Based Products                                               3,3            5,8
    Overall contribution                                                 14,3           18,2
    Other information
    Assets
    Aggregates and Industrial Minerals                              1 406 136      1 319 965
    Commodities                                                       382 777              -
    Concrete Based Products                                           248 578        219 722
    Other                                                             399 296        726 638
                                                                    2 436 787      2 266 325
    Liabilities
    Aggregates and Industrial Minerals                                353 605        351 907
    Commodities                                                       137 903              -
    Concrete Based Products                                            59 326         46 438
    Other*                                                            705 505        661 061
                                                                    1 256 339      1 059 406
    Capital expenditure (excluding acquisitions through
    business combinations)
    Aggregates and Industrial Minerals                                140 177        106 234
    Commodities                                                        41 633              -
    Concrete Based Products                                            14 610         17 037
    Other                                                               5 800         11 250
                                                                      202 220        134 521
    * Includes the R300,0 million amortising five-year facility with SBSA and FNB.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
2.  Impairment of property, plant and equipment
    Impairment of property, plant and equipment                        (1 399)        (3 049)
    An impairment loss was recognised, relating to property, plant and equipment items written
    off at Afrimat Aggregates (KZN) Proprietary Limited and Afrimat Contracting International
    Proprietary Limited (F2017: Delf Silica Coastal Proprietary Limited), which had no further
    economic value and have been removed from the register.

3.  Disposal of subsidiary
    During F2017, the group disposed of 100% of its shareholding in AFT Aggregates Proprietary
    Limited ("AFT Aggregates") to Nityn Proprietary Limited on 1 April 2016. The company was
    previously included in the "Aggregates and Industrial Minerals" segment.
    Details of the disposal are as follows:
                                                                   
                                                                                         AFT
                                                                                  Aggregates
                                                                                       Total
                                                                                       R'000
    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

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
4.  Depreciation and amortisation                                               
    Depreciation                                                      122 567         98 628
    Amortisation                                                        1 728          2 003
                                                                      124 295        100 631

5. Income tax expense
   The effective tax rate of the group decreased from 30,5% to 24,2% in the current year mainly
   due to the income tax deductibility of expenditure actually incurred in settlement of the shares
   exercised in terms of the Share Appreciation Rights Scheme, by means of the formalisation
   of appropriate cost recharge agreements in the Afrimat Group.

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 the closing
   rate at the date of the statement of financial position and income and expenses at average
   exchange rates for the year 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.
   
                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
7.  Other financial assets                                                      
    Rehabilitation fund trusts and other                               59 446         37 520
    Afrimat Demaneng Proprietary Limited*                                   -        239 529
                                                                       59 446        277 049
    Non-current other financial assets                                 59 446        276 942
    Current other financial assets                                          -            107
                                                                       59 446        277 049
   * Previously Diro Manganese Proprietary Limited.

   The group reinvested previously released unit trusts, resulting in an increase in the investment
   in environmental insurance policies. Further investments in environmental insurance policies
   were acquired as part of the business combination of Demaneng (refer to note 14). 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.
   
                                                                        Number of shares
                                                                  28 February    28 February
                                                                         2018           2017
8.  Movement in number of treasury shares                                       
    Opening balance                                                 7 187 643      1 918 751
    Utilised for Share Appreciation Rights Scheme                    (473 106)      (685 615)
    Utilised to purchase minority shares in                                     
    Afrimat Bulk Commodities                                         (535 714)             -
    Utilised for Cape Lime acquisition                                      -     (1 139 347)
    Shares held by AEI                                                      -      6 653 854
    Purchased during the year                                         475 216        440 000
    Closing balance                                                 6 654 039      7 187 643

    The Afrimat BEE Trust (indirectly through AEI) holds, on an unencumbered basis, 6 653 854
    shares representing 4,64% of the issued share capital of the company.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
9.  Cash and cash equivalents                                                   
    Current assets                                                    112 208        244 690
    Current liabilities                                               (90 203)      (271 543)
                                                                       22 005        (26 853)

    In the prior year funding for the Demaneng acquisition (refer to note 14), was obtained by
    means of utilising the company's current general banking facilities with The Standard Bank
    of South Africa Limited ("SBSA") as well as FirstRand Bank Limited ("FNB"). During the
    current year, the group refinanced the debt included in the general bank facilities into a
    R300,0 million amortising five-year term facility with SBSA and FNB, bearing interest linked
    to the three-month Jibar rate and payable in quarterly instalments commencing on
    30 November 2017.
    
    Included in the prior year's short-term bank deposits is an amount of R110,1 million
    relating to available cash in AEI after the disposal of shares to ARC. During the current year,
    R79,5 million of the available R110,1 million was paid to the South African Revenue
    Service ("SARS") in relation to PAYE, SDL and arrear taxes from participants of Afrimat
    BEE Trust.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
10. Borrowings
    10.1 Capital net movement
         Opening balance                                              174 089        112 885
         Acquired through business combination                          2 740              -
         New borrowings                                               398 506        306 811
         Repayments                                                  (138 377)      (245 607)
         Closing balance                                              436 958        174 089
         Analysis as per statement of financial position 
         Borrowings non-current                                       271 954         94 999
         Borrowings current                                           165 004         79 090
                                                                      436 958        174 089
    10.2 Analysis as per statement of cash flows
         New borrowings                                               318 506        250 983
         Repayments                                                  (138 377)      (245 607)
                                                                      180 129          5 376

         During the year, the group refinanced the debt included in the general bank facilities into a
         R300,0 million amortising five-year term facility with SBSA and FNB, bearing interest linked
         to the three-month Jibar rate and payable in quarterly instalments commencing
         30 November 2017.
         
         During F2017, the group financed plant and machinery with 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 F2017, 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 served as security for the preference share
         funding provided by SBSA. On 8 December 2016, AEI repaid the debt from SBSA
         and was subsequently released from the company pledge and cession agreement
         as set out in the subscription agreement with SBSA.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
11. Other financial liabilities                                                 
    Net capital proceeds owing to Afrimat BEE Trust participants       12 968         38 111
    Deferred liability: Demaneng minorities                             8 888              -
                                                                       21 856         38 111

    Upon implementation of the ARC Transaction, the beneficiaries of the Trust received their
    respective consideration net of liabilities and ceased to be participants under the current
    BEE scheme. This liability exists due to an amount owing to beneficiaries whom could
    not be traced, mostly deceased individuals. Afrimat is in the process of tracking these
    beneficiaries to ensure payment occurs timeously.
    
    On 22 August 2017, the group announced on SENS that Afrimat had concluded a sale of
    shares and claims agreement with the minorities of Demaneng to acquire the remaining 40%
    stake in Demaneng as from 15 August 2017. The purchase consideration of R44,0 million
    is payable in nine tranches as follows: eight monthly instalments of R5,0 million per month
    for eight consecutive months commencing 15 August 2017; and R4,0 million in one final
    instalment.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
12. Authorised capital expenditure                                  
    Not yet contracted for                                              
    - Property, plant and equipment                                   183 915        140 013

                                                                    Infrasors
                                                                     Holdings
                                                                  Proprietary
                                                                      Limited          Total
                                                                        R'000          R'000
13. Acquisition of additional non-controlling interest                  
    Infrasors Holdings Proprietary Limited                              
    February 2018                                                       
    Additional non-controlling interest acquired                          (83)           (83)
    Premium paid on additional shares acquired in subsidiary            
    after initial acquisition                                             104            104
                                                                           21             21
    February 2017                                                       
    Adjustment to non-controlling interest acquired                      (103)          (103)
    Premium paid on additional shares acquired in subsidiary            
    after initial acquisition                                             169            169
                                                                           66             66

    Afrimat Bulk Commodities Proprietary Limited                
                                                                 Afrimat Bulk
                                                                  Commodities
                                                                  Proprietary          Total
                                                                      Limited          R'000
    February 2018                                                       
    Additional non-controlling interest acquired                       (1 768)        (1 768)
    Premium paid on additional shares acquired in subsidiary            
    after initial acquisition                                          19 268         19 268
    Treasury shares issued (issued at R28,00 per share)               (15 000)       (15 000)
                                                                        2 500          2 500

14. Acquisition of businesses
    Afrimat Demaneng Proprietary Limited and Diro Iron Ore Proprietary Limited ("Demaneng")
    The group acquired 60% of the issued shares of Demaneng, as well as a cession and delegation
    agreement with Investec Limited to purchase all of its security. The aggregate purchase
    consideration (including funding provided) for the acquisition of Demaneng was R276,0 million.
    On 13 July 2017, all conditions precedent, including section 11 approval from the Department
    of Mineral Resources ("DMR"), were fulfilled and the agreement became unconditional. On
    22 August 2017, the group announced on SENS that Afrimat had concluded a sale of shares
    and claims agreement with the minorities of Demaneng to acquire the remaining 40% stake in
    Demaneng from 15 August 2017 for an aggregate purchase consideration of R44,0 million.
    The acquisition will complement and augment Afrimat's product offering and further expand its
    footprint across South Africa. Given the nature of Demaneng's reserves and the access to
    infrastructure, together with Afrimat's existing competencies, the transaction allows the ability to
    leverage the combined strengths which will result in developing new revenue opportunities for
    Afrimat in the iron ore space.

    Preliminary details of the acquisition are as follows:
                                                                     Demaneng                                                                                    
                                                       Demaneng  - Additional
                                                      - Initial        shares
                                                    acquisition      acquired          Total
                                                          R'000         R'000          R'000
    Carrying amount/fair value of net assets acquired:
    Property, plant and equipment*                      304 374             -        304 374
    Other financial assets                               17 557             -         17 557
    Inventories                                          12 446             -         12 446
    Trade and other receivables                           8 804             -          8 804
    Borrowings                                         (307 852)            -       (307 852)
    Trade and other payables                           (122 910)            -       (122 910)
    Provisions                                          (20 294)            -        (20 294)
    Deferred tax liability                               (5 940)            -         (5 940)
    Current tax payable                                  (4 542)            -         (4 542)
    Cash and cash equivalents                             5 228             -          5 228
    Additional non-controlling interest acquired        113 129      (113 129)             -
    Premium paid on additional shares acquired in
    subsidiary after initial acquisition                      -       157 129        157 129
    Net assets**                                              -        44 000         44 000
    Net cash inflow from acquisition of subsidiary:  
    Cash consideration paid**                                 -       (35 000)       (35 000)
    Cash and cash equivalents acquired                    5 228             -          5 228
                                                          5 228       (35 000)       (29 772)
    Pro forma revenue assuming the business combination for the full
    period ended 28 February 2018                                                    274 647
    Pro forma loss after tax assuming the business combination for
    the full period ended 28 February 2018                                          (103 836)
    Revenue included in results                                                      251 773
    Loss after taxation included in results                                          (38 790)
    Acquisition costs (including business rescue costs) included in
    operating expenses for the period ended 28 February 2018                           5 782
    *  Property, plant and equipment includes the fair value of mining assets acquired.
    ** The purchase consideration of R44,0 million is payable in nine tranches as follows: eight
       monthly instalments of R5,0 million per month for eight consecutive months commencing
       15 August 2017; and R4,0 million in one instalment (refer to note 11).
    
    At acquisition, the fair value of trade and other receivables was R8,8 million and includes
    trade receivables of R8,0 million. An amount of R8,8 million is reflected as neither impaired
    nor past due.

    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 SBSA'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.
    
    Details of the acquisition are as follows:
    
                                                                                       Total
                                                                                       R'000
    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
    Current tax payable                                                               (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
    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
    * Property, plant and equipment includes the fair value of mining assets acquired.

    At acquisition, 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 Ready-Mix 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 was 17 October 2016.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
    Carrying amount/fair value of net assets acquired:
    Property, plant and equipment*                                      1 000         28 500
    Inventories                                                             -          2 536
    Provisions                                                              -         (2 036)
    Net assets                                                          1 000         29 000
    Consideration paid:
    Cash                                                                1 000         29 000
    Total consideration                                                 1 000         29 000
    Net cash outflow from acquisition of subsidiary:
    Cash consideration paid**                                           1 000         29 000
    Cash and cash equivalents acquired                                      -              -
                                                                        1 000         29 000
    * Property, plant and equipment includes the fair value of mining assets acquired.
    ** An amount of R1,0 million was payable on the approval of section 11 by the DMR.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
15. Dividends
    15.1  Afrimat Limited dividends paid/declared in respect of the current year profits
          Interim dividend paid                                        28 652         28 652
          Final dividend declared/paid                                 60 170         71 631
                                                                       88 822        100 283
    15.2  Dividends cash flow                                                      
          Current year interim dividend paid                           28 652         28 652
          Previous year final dividend paid                            71 631         58 738
          Dividends received on treasury shares                        (4 683)          (587)
                                                                       95 600         86 803
          Dividends paid by subsidiaries to 
          non-controlling shareholders                                    640            863
                                                                       96 240         87 666

16. Comparative figures
    Certain comparative figures have been reclassified to enhance disclosure. These changes have
    no impact on the overall profitability.

    Condensed consolidated statement of cash flows
    Non-cash transactions relating to instalment sale agreements have been excluded from
    "acquisition of property, plant and equipment" and "proceeds from borrowings" in terms of
    paragraph 43 to 44 of IAS 7: Statement of Cash Flows.

    As at year-end 28 February 2017, R69,3 million was reflected as "Repurchase of Afrimat
    shares" in the cash flow statement and included a non-cash flow item of R59,7 million. The
    only cash flow item that should have been reflected was for 440 000 of the company's own
    shares purchased on the JSE Limited via Afrimat Aggregates (Operations) Proprietary Limited.
    The total amount paid to acquire the shares was R9,7 million. The company identified that
    R59,7 million was a non-cash transaction and should have been netted-off against the
    R51,5 million "Effect on disposal of treasury shares to ARC" to reflect the only cash flow
    in the amount of R8,2 million which directly related to the CGT payable by AEI on the
    disposal of shares to ARC.

    The effects of reclassification is as follows:
                                                                  
                                                                     Restated       Previous
                                                                      Audited        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2017           2017
                                                                        R'000          R'000
    Cash flows from investing activities                          
    Acquisition of property, plant and equipment                      (78 693)      (134 521)
    Net cash outflow from investing activities                       (448 161)      (503 989)
    Cash flows from financing activities                          
    Repurchase of Afrimat shares                                       (9 656)       (69 310)
    Net movement in borrowings (refer to note 10.2)                     5 376         61 204
    Tax paid on disposal of shares to ARC                              (8 200)        51 454
    Net cash outflow from financing activities                        (62 101)        (6 273)
    

17. Events after reporting date
    No material events occurred between the reporting date and the date of this announcement.

18. Contingencies
    Guarantees to the value of R87,5 million (2017: R87,2 million) were supplied by SBSA to
    various parties, including the DMR and Eskom, respectively during the year under review.

    Guarantees to the value of R73,9 million (2017: R9,3 million) were supplied by FNB to various
    parties, including the DMR and Eskom, respectively during the year under review. The increase
    in amount with FNB relates to guarantees of R50,0 million provided to the business rescue
    practitioner and compromised creditors in terms of the Demaneng acquisition.
   
    Guarantees to the value of R1,6 million (2017: R23,5 million) by Lombard's Insurance Group,
    R0,5 million (2017: R1,4 million) by ABSA Bank Limited, R94,2 million (2017: R10,9 million)
    by Centriq Insurance Innovation and R2,7 million (2017: R2,7 million) by SIG Guarantee
    Acceptances Proprietary Limited were supplied to various parties, including the DMR,
    Eskom and Chevron South Africa Proprietary Limited. The increase in amount with Centriq
    Insurance Innovation mainly relates to the acquisition of Demaneng and restructuring of
    the environmental rehabilitation guarantees of Infrasors.

    The majority of 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 R10,3 million
    (2017: R4,8 million). An accrual has been raised in respect of commitments made up
    to the end of the year.

    The company received notice on 31 March 2017 from the Competition Commissioner
    that it had referred a complaint to the Competition Tribunal, alleging that the company,
    through its wholly owned subsidiary, Clinker Supplies Proprietary Limited ("Clinker"),
    has engaged in an abuse of dominance by allegedly charging excessive prices. After
    taking legal advice and considering the complaint, the company is of the opinion that
    there is no merit to the complaint and will therefore vigorously defend itself before the
    Competition Tribunal. The case is still ongoing. The Competition Commission is ordering
    an administrative penalty equal to 10% of affected turnover for F2016 which equates
    to R16,3 million.

                                                                     Reviewed        Audited
                                                                   year ended     year ended
                                                                  28 February    28 February
                                                                         2018           2017
                                                                        R'000          R'000
19. Related parties                                                              
    Loan balance owing by associate                                    10 151         11 591
    Loan balance owing by joint venture                                31 011         14 099
    Obligation of share of joint venture's losses                      (4 481)        (4 481)
    Interest received from associate                                      484            806
    Interest received from joint venture                                  887            420

Directors
MW von Wielligh*# (Chairman)
AJ van Heerden (CEO)
PGS de Wit (CFO)
GJ Coffee
L Dotwana*
PRE Tsukudu*#
JF van der Merwe*#
HJE van Wyk*#
JH van der Merwe*#
HN Pool*#
FM Louw*#
* 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
50 Smits Road, Dunkeld, 2196
(PO Box 651010, Benmore, 2010)

Auditor
PricewaterhouseCoopers Inc.
PWC Building
Capital Place, 15 - 21 Neutron Avenue, Technopark
Stellenbosch, 7600
(PO Box 57, Stellenbosch, 7599)

Transfer secretaries
Computershare Investor Services Proprietary Limited
(Registration number 2004/003647/07)
Rosebank Towers, 15 Biermann Avenue
Rosebank, 2196
(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)

Date: 24/05/2018 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
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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,
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