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AFRIMAT LIMITED - Financial Results For The Year Ended 28 February 2021 And Dividend Declaration

Release Date: 27/05/2021 07:05
Code(s): AFT     PDF:  
Wrap Text
Financial Results For The Year Ended 28 February 2021 And Dividend Declaration

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

Announcement of audited summary consolidated financial statements
for the year ended 28 February 2021

Highlights
Operating profit up 47,5% to R886,3 million
Revenue up 11,8% to R3,7 billion
HEPS up 27,0% to 441,7 cents
Net debt:equity ratio improved from 8,2% to 3,8%
Return on net operating assets 34,0%

Commentary
BASIS OF PREPARATION
The short-form announcement is the responsibility of the directors and is only a summary of the
information in the full announcement and does not contain full or complete details. The full announcement
was released on SENS on 27 May 2021. The full announcement can be found at:
https://senspdf.jse.co.za/documents/2021/jse/isse/AFT/FY21H2.pdf

Copies of the full announcement is also available for viewing on the Company's website at
www.afrimat.co.za or may be requested at the Company's registered office, at no charge, during office
hours and are also available for inspection at the offices of the sponsor.

Any investment decision should be based on the consideration of the full announcement published on
SENS and the Company's website.

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

While the short-form announcement itself is not audited or reviewed, the full announcement of which this
announcement is a summary, has been independently audited by the Company's auditor,
PricewaterhouseCoopers Inc. The Company's annual financial statements for the year ended 28 February
2021 have been audited by the Company's auditors, PricewaterhouseCoopers Inc., who expressed an
unmodified audit opinion thereon. The full auditor's report includes details of key audit matters and is
available, along with the annual financial statements, on the Company's website at www.afrimat.co.za.

INTRODUCTION
The Group delivered strong results despite the effect caused by the sudden and unexpected global
Covid-19 pandemic and hard lockdown levels imposed during the first half of the financial year. This
disruption was countered by the implementation of proactive measures to manage and minimise the
impact of this pandemic. The Group's strategy of diversification enabled the Group to continue delivering
growth.

FINANCIAL RESULTS
Operating profit increased by an impressive 47,5% from R601,0 million to R886,3 million. Headline
earnings per share grew by 27,0% from 347,7 cents to 441,7 cents per share and revenue increased by
11,8% from R3,3 billion to R3,7 billion.

Net cash from operating activities increased by 13,4% to R767,6 million, which resulted in an improvement
of the net debt:equity ratio from 8,2% in the prior year to 3,8% in the current year.

The effective tax rate of the Group increased from 18,9% to 30,5% in the current period, mainly due to the
utilisation of previously unrecognised assessed losses of R288,3 million, in Afrimat Demaneng Proprietary
Limited ('Demaneng iron ore mine'), in the prior year. No deferred tax assets were recognised on the start-up
losses and assessed losses of Nkomati Anthracite Proprietary Limited ('Nkomati anthracite mine').

OPERATIONAL REVIEW
Afrimat entered the national lockdown with a very strong balance sheet, positioning it strongly for the
uncertainty that was lying ahead. The negative impact of the national lockdown on the Group was
dampened by the partial reopening of the Demaneng iron ore mine and certain Industrial Minerals operations
early during the lockdown period. The reopening was undertaken with utmost care to ensure the safety and
well-being of all employees. From 20 April 2020, as gazetted by the government, industries in the mining
and quarrying sector were granted permission to resume operations. Afrimat ramped up operations
according to market demand and in line with government regulations. The Construction Materials and
Industrial Minerals segments returned to profitability once the hard lockdown levels imposed during the
first half of the financial year were lifted.

In the second half of the year, the Construction Materials segment achieved good growth compared to the
corresponding period in the previous financial year, whilst the Industrial Minerals segment experienced
satisfactory results. The Bulk Commodities segment benefited strongly from favourable iron ore pricing,
which contributed to exceptional growth in profits during the year.

All operating units are 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 consisting of aggregates and concrete-based products,
Industrial Minerals consisting of limestone, dolomite and silica, and Bulk Commodities made up of iron
ore and anthracite.

During the year under review, good labour and community relations continued with no labour action or
community grievances having occurred. The Group remains committed to creating and sustaining
harmonious relationships in the workplace and addressing issues proactively. Afrimat continues to
prioritise staff development, training and education on the human capital agenda.

The Bulk Commodities segment, consisting of the Demaneng iron ore mine and Nkomati anthracite mine
(included in the full year results for three months), delivered an exceptional contribution to the Group
results of 42,9% of revenue. Operating profit increased by 128,4% from R321,7 million to R734,7 million,
as a result of favourable iron ore pricing during the year. This translated into an increase in the operating
margin from 31,0% to 46,4%. The Nkomati anthracite mine contributed start-up losses of R33,8 million for
the three months, December 2020 to February 2021, included in these results.

The Industrial Minerals businesses, across all regions, delivered satisfactorily results. The segment was
able to sell limited quantities of product into certain essential services markets during the national lockdown.
It was, however, impacted by the national lockdown and this caused a decrease in operating profit of
41,9% from R95,6 million to R55,5 million.

The Construction Materials segment was impacted considerably by the national lockdown, which resulted
in no revenue for the month of April, as well as limited revenue during May and June 2020. The segment
recovered post the hard lockdown levels to achieve good growth in the second half of the financial year
compared to the corresponding period in the previous financial year. This resulted in a decrease in operating
profit of 45,5% being recorded from R192,4 million to R104,9 million.

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.

PROSPECTS
The Group is well positioned to capitalise on strategic initiatives and future opportunities. The Group's
future growth will still be driven by the successful execution of its proven strategy, recent acquisitions and
a wider product offering to the market. Many exciting opportunities are being investigated. 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.

These financial statements may contain forward-looking statements that have not been reviewed nor
reported on by the Company's auditors.

On behalf of the Board

MW von Wielligh
Chairman

AJ van Heerden
Chief Executive Officer

Wednesday, 26 May 2021

DIVIDEND DECLARATION
Notice is hereby given that a final gross dividend, No 28 of 112,0 cents per share, in respect of the year
ended 28 February 2021, was declared on Wednesday, 26 May 2021. There are 146 144 764 shares in
issue at reporting date,of which 8 545 257 are held in treasury. The total dividend payable is R163,7 million
(2020: R116,0 million). The Board has confirmed by resolution that the solvency and liquidity test as
contemplated by the Companies Act, No 71 of 2008 has been duly considered, applied and satisfied. This
is a dividend as defined in the Income Tax Act, 1962, 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 89,6 cents and 112,0 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                                                   Monday, 14 June 2021
Commence trading ex dividend                                                    Tuesday, 15 June 2021
Record date                                                                      Friday, 18 June 2021
Dividend payable                                                                 Monday, 21 June 2021

Share certificates may not be dematerialised or rematerialised between Tuesday, 15 June 2021 and Friday,
18 June 2021, both dates inclusive.

FINANCIAL SUMMARY*
                                                                     Audited         Audited
                                                                  year ended      year ended
                                                                 28 February     29 February
                                                                        2021            2020   Change
                                                                       R'000           R'000        %
Revenue                                                            3 693 759       3 304 376     11,8
Operating profit                                                     886 291         600 952     47,5
Profit attributable to shareholders                                  603 827         465 176     29,8
Earnings per ordinary share (cents)                                    444,1           341,6     30,0
Diluted earnings per ordinary share (cents)                            434,6           337,7     28,7
Headline earnings per ordinary share ('HEPS') (cents)                  441,7           347,7     27,0
Diluted HEPS (cents)                                                   432,2           343,6     25,8
Dividends per share (cents)                                            112,0            81,0     38,3
Net cash from operating activities                                   767 580         676 810     13,4
Net asset value per share ('NAV') (cents)                              1 635           1 246     31,2
Net debt:equity ratio (%)                                                3,8             8,2    (53,7)
SEGMENTAL INFORMATION
External revenue
Construction Materials                                             1 595 055       1 714 180
Industrial Minerals                                                  514 291         552 683
Bulk Commodities                                                   1 584 413       1 037 513
                                                                   3 693 759       3 304 376
Operating profit
Construction Materials                                               104 906         192 438
Industrial Minerals                                                   55 481          95 568
Bulk Commodities                                                     734 675         321 665
Services                                                              (8 771)         (8 719)
                                                                     886 291         600 952
Operating profit margin on external revenue (%)                                  
Construction Materials                                                   6,6            11,2
Industrial Minerals                                                     10,8            17,3
Bulk Commodities                                                        46,4            31,0
Overall contribution                                                    24,0            18,2
* This information has not been audited or reviewed, but is extracted from audited/reviewed financial
  statements/reports.

Announcement date: 27 May 2021

Directors
MW von Wielligh*^ (Chairman)
AJ van Heerden (CEO)
PGS de Wit (CFO)
C Ramukhubathi
GJ Coffee*
L Dotwana*
PRE Tsukudu*^
JF van der Merwe*^
HJE van Wyk*^
JHP van der Merwe*^
HN Pool*^
FM Louw*^
* Non-executive director
^ Independent

Registered office
Tyger Valley Office Park No. 2
Corner Willie van Schoor Avenue and Old Oak Road
Tyger Valley
7530
(PO Box 5278, Tyger Valley, 7536)

Sponsor
PSG Capital Proprietary Limited
1st Floor
Ou Kollege Building
35 Kerk Street
Stellenbosch
7600
(PO Box 7403, Stellenbosch, 7599)

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
Rosebank Towers
15 Biermann Avenue
Rosebank
2196
(Private Bag X9000, Saxonwold, 2132)

Company Secretary
C Burger
Tyger Valley Office Park No. 2
Corner Willie van Schoor Avenue and Old Oak Road
Tyger Valley
7530
(PO Box 5278, Tyger Valley, 7536)

www.afrimat.co.za






Date: 27-05-2021 07:05:00
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