Wrap Text
Abridged Audited Consolidated Financial Statements and Notice of AGM
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
www.afrimat.co.za
ABRIDGED AUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 28 FEBRUARY 2018 AND NOTICE OF THE ANNUAL GENERAL MEETING
INTRODUCTION
Afrimat today published its 2018 Integrated Annual Report including its Audited Consolidated Annual
Financial Statements for the year ended 28 February 2018, a copy of which is available on the
company's website www.afrimat.co.za.
MEASUREMENT PERIOD ADJUSTMENTS TO BUSINESS COMBINATIONS
Since the publication of the Condensed Consolidated Provisional Financial Statements for the year
ended 28 February 2018 ('provisional results') released on the Stock Exchange News Service ('SENS')
of the JSE Limited ('JSE') on 24 May 2018, measurement period adjustments relating to deferred tax
were made in finalising the accounting for certain business combinations within the measurement
period and in accordance with the Group's accounting policy.
These updates had no impact on the Statement of Profit or Loss and Other Comprehensive Income,
Earnings per Share ('EPS') or Headline Earnings per Share ('HEPS').
In the Statement of Financial Position at 28 February 2018 comparative information was updated to
reflect the finalisation in the accounting of the Cape Lime Proprietary Limited ('Cape Lime') business
combination. The update resulted in an increase in the fair value of the deferred tax liability,
at the acquisition date of Cape Lime, of R57,4 million which was offset by an increase to goodwill of
R57,4 million.
Further in the Statement of Financial Position, the current year figures were adjusted to reflect an
updated version of the preliminary accounting for the Afrimat Demaneng Proprietary Limited and Diro
Iron Ore Proprietary Limited ('Demaneng') business combination. The adjustment resulted in an
increase in the fair value of the deferred tax liability, at the acquisition date of Demaneng, of
R47,5 million which was offset by an increase in goodwill of R96,4 million and an increase in retained
earnings of R48,9 million.
The retained earnings in the Statement of Changes in Equity was increased with R48,9 million. The
non-controlling interest in the mining asset, which resulted from the Demaneng business combination,
is now recognised and included in the non-controlling interest acquired in the Statement of Changes
in Equity. For further details relating business combinations, refer note 14 below.
STATEMENT OF CASH FLOWS
In the Statement of Cash Flows an amount of R35,0 million was reclassified from 'cash flows from
investing activities' to 'cash flows from financing activities' as the amount was paid to acquire
non-controlling interest in Demaneng after the initial business combination.
NOTICE OF ANNUAL GENERAL MEETING
Shareholders are hereby advised that the Integrated Annual Report will be distributed to shareholders
on 28 June 2018. In addition, the full Integrated Annual Report and Notice of Annual General Meeting
('AGM') are available on Afrimat's website www.afrimat.co.za.
BASIS OF PREPARATION
The Abridged Audited Consolidated Financial Statements ('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 2018.
The financial statements for the year ended 28 February 2018 have been prepared under the
supervision of the Chief Financial Officer ('CFO'), PGS de Wit CA(SA).
AUDITOR'S REPORT
The Abridged Audited Consolidated Financial Statements are extracted from audited information but
is not itself audited. The directors take full responsibility for the preparation of the Abridged Audited
Consolidated Financial Statements and the correct extraction of the financial information included
herein from the Audited Annual Financial Statements. The Annual Financial Statements were audited
by the company's auditor, PricewaterhouseCoopers Inc. Their unmodified opinion is included in the
Annual Financial Statements and also available for inspection at the company's registered office.
On behalf of the board
MW von Wielligh
Chairman
AJ van Heerden
Chief Executive Officer
28 June 2018
ABRIDGED AUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
Audited 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
Audited 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)
ABRIDGED AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited 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 287 036 190 650
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 1 835 513 1 573 979
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 2 590 629 2 323 781
Equity and liabilities
Equity
Stated capital 266 985 285 842
Treasury shares (59 660) (70 999)
Net issued stated capital 207 325 214 843
Reversed acquisition reserve (105 788) (105 788)
Other reserves 5 888 4 525
Retained earnings 1 111 915 1 085 792
Attributable to equity holders of parent 1 219 340 1 199 372
Non-controlling interests 9 980 7 547
Total equity 1 229 320 1 206 919
Liabilities
Non-current liabilities
Borrowings (refer to note 10.1) 271 954 94 999
Deferred tax 207 583 171 301
Provisions 130 288 96 190
Total non-current liabilities 609 825 362 490
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 1 361 309 1 116 862
Total equity and liabilities 2 590 629 2 323 781
Note to Statement of Financial Position:
Net asset value per share (cents) 893 881
Net tangible asset value per share (cents) 673 731
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 (%) 35,5 19,8
* Comparative figures were amended due to a measurement period adjustment relating to business
combinations, refer note 14.
ABRIDGED AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
Audited 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 received 31 623 35 674
Dividends received 54 88
Finance costs paid (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) 4 228 (280 263)
Net cash outflow from investing activities (159 775) (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) (37 521) (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 7 673 (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')
ABRIDGED AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reversed Non-
Stated acquisition Treasury Other Retained controlling Total
capital reserve 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 - - - - - (64 257) (64 257)
Additional non-controlling
interest acquired due to:
- Infrasors (refer to note 13) - - - - (104) 83 (21)
- Demaneng (refer to note 13) - - - - (109 769) 65 769 (44 000)
- Afrimat Bulk Commodities
(refer to note 13) 1 500 - 13 500 - (19 268) 1 768 (2 500)
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 1 111 915 9 980 1 229 320
Audited 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 553 138 784 094
2 590 629 2 323 781
Liabilities
Aggregates and Industrial Minerals 353 605 351 907
Commodities 137 903 -
Concrete Based Products 59 326 46 438
Other* 810 475 718 517
1 361 309 1 116 862
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.
Audited 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
Audited 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.
Audited 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.
Audited 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.
Audited 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.
Audited 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.
Audited 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
13. Acquisition of additional non-controlling interest
Infrasors Holdings Proprietary Limited
Infrasors
Holdings
Proprietary
Limited Total
R'000 R'000
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
Additional 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
Limited Total
R'000 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
Afrimat Demaneng Proprietary Limited
Afrimat
Demaneng
Proprietary
Limited Total
R'000 R'000
February 2018
Additional non-controlling interest acquired 65 769 65 769
Premium paid on additional shares acquired in
subsidiary after initial acquisition (109 769) (109 769)
(44 000) (44 000)
14. Acquisition of businesses
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. 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. 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.
The accounting for this business combination is still within the measurement period and information
pertaining to the fair value of current and deferred tax assets and liabilities have not yet been received.
Provisional details of the acquisition are as follows:
Total
R'000
Carrying amount/fair value of net assets acquired:
Property, plant and equipment* 304 374
Other financial assets 17 557
Inventories 12 446
Trade and other receivables 8 804
Borrowings (307 852)
Trade and other payables (122 910)
Provisions (20 294)
Deferred tax liability (53 454)
Current tax payable (4 542)
Cash and cash equivalents 5 228
Non-controlling interest acquired 64 257
Goodwill 96 386
Net assets -
Net cash inflow from acquisition of subsidiary:
Cash consideration paid -
Cash and cash equivalents acquired 5 228
5 228
* Property, plant and equipment includes the fair value of mining assets of R169,7 million acquired.
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.
Total
R'000
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
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
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 2,0% 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.
Measurement period adjustment
During the 2018 financial year, the 2017 comparative information is adjusted retrospectively to
increase the fair value of the deferred tax liability at the acquisition date by R57,4 million offset by an
increase to goodwill of R57,4 million in finalising of the accounting for this business combination.
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 (64 209)
Provisions (13 783)
Cash and cash equivalents 7 792
Goodwill 57 456
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 of R205,2 million 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 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 was 17 October 2016.
Audited 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 of R1,0 million acquired.
** An amount of R1,0 million was payable on the approval of section 11 by the DMR.
Audited 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.
Abridged Audited 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 offset 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 (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.
Audited 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: 28/06/2018 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
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 
