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AFRIMAT LIMITED - Interim Financial Results For The Six Months Ended 31 August 2020 And Dividend Declaration

Release Date: 29/10/2020 07:05
Code(s): AFT     PDF:  
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Interim Financial Results For The Six Months Ended 31 August 2020 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 unaudited condensed consolidated interim financial results
for the period ended 31 August 2020

Operating profit up 11,0% to R353,1 million
HEPS up 1,1% to 183,9 cents
Interim dividend 36,0 cents per share
Operating profit margin 22,7%
Return on net operating assets 32,9%
Net cash from operating activities of R333,7 million
Strong balance sheet with net cash position


The short-form announcement is the responsibility of the directors and is only a summary of the information
in the full announcement. The full announcement was released on SENS on 29 October 2020, and can be
found on the Company's website at Copies of the full announcement may also be
requested at the Company's registered office, at no charge, during office hours and are also available for
inspection at the offices of their sponsor. Any investment decision should be based on the full announcement
released on SENS and published on the Company's website.

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

The Group continued to deliver solid results despite the effect caused by the sudden and unexpected global
Covid-19 pandemic. This disruption was countered by implementing proactive measures by Afrimat
management to manage and minimise the impact of this pandemic, as well as the Group's diversification
strategy, cost reduction and efficiency improvement initiatives.

Headline earnings per share increased by 1,1% from 181,9 cents to 183,9 cents.

Operating profit for the Group increased with 11,0% to R353,1 million despite a decrease of 9,4% in revenue
from R1,7 billion to R1,6 billion. The balance sheet of the Group is strong with a net cash position compared
to a net debt:equity ratio of 9,4% in the prior year, ending the period with cash and cash equivalents of
R330,6 million, an increase of 170,0% from the comparative 2019 period.

The effective tax rate of the Group increased from 16,5% to 28,4% 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.

Afrimat entered the national lockdown with a very strong balance sheet, positioning it strongly for the
uncertainty that may lay ahead. The 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. All business units recovered from the Covid-19 impact
and returned to profitability during August 2020.

All operating units are strategically positioned to deliver outstanding service to the Group's customers,
whilst acting as an efficient hedge against volatile local business conditions. The product range is diversified
and consists of Construction Materials including aggregates and concrete-based products, Industrial
Minerals including limestone, dolomite and silica and Bulk Commodities, which is made up of iron ore.

Good labour relations continued during the period under review, with no labour action occurring in the period.
The Group is 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, continued to make an excellent
contribution to the Group results, delivering growth of 135,8% in operating profit of R325,8 million, compared
to R138,2 million in the prior year. The mine was allowed to operate at 50,0% of its workforce capacity during
April 2020 and 100,0% from May 2020 onwards. The excellent performance was largely due to favourable
iron ore pricing during the reporting period.

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 lockdown. It was, however,
affected by the lockdown and experienced a decrease in operating profit of 60,6% from R62,4 million to
R24,6 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. This resulted in
a decrease in operating profit of 97,7% being recorded from R122,2 million to R2,8 million. The segment,
however, recovered post the hard lockdown levels and is now back to monthly sales levels similar to those
experienced prior to the lockdown.

There is limited clarity on the future impact of the Covid-19 pandemic, but the Group has recovered from
the initial impact and is poised to deliver a strong performance in the second half of the year. The Group is,
furthermore, well positioned to capitalise on its strategic initiatives and future opportunities. The Group's
future growth will continue to be driven by the successful execution of its proven strategy, recent and
current acquisitions and a wider product offering to the market.

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

The announcement 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

AJ van Heerden
Chief Executive Officer

Wednesday, 28 October 2020

Dividend declaration
Notice is hereby given that an interim gross dividend, No. 27 of 36,0 cents per share, in respect of the six
months ended 31 August 2020, was declared by the Board on Wednesday, 28 October 2020.

There are 143 262 412 shares in issue at the reporting date, of which 8 583 978 are held in treasury. The
total dividend payable is R51,6 million (August 2019: R51,6 million).

The Board has confirmed 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 28,8 cents and 36,0 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, 24 November 2020
Commence trading ex-dividend                                                 Wednesday, 25 November 2020
Record date                                                                     Friday, 27 November 2020
Dividend payable                                                                Monday, 30 November 2020

Share certificates may not be dematerialised or rematerialised between Wednesday, 25 November 2020
and Friday, 27 November 2020, both dates inclusive.

Financial summary
                                                          Unaudited    Unaudited
                                                         six months   six months                Audited
                                                              ended        ended             year ended
                                                          31 August    31 August            29 February
                                                               2020         2019   Change          2020
                                                              R'000        R'000        %         R'000
Revenue                                                   1 558 629    1 719 802     (9,4)    3 304 376
Operating profit                                            353 108      317 993     11,0       600 952
Profit attributable to shareholders                         250 135      250 911     (0,3)      465 176
Earnings per ordinary share (cents)                           184,4        183,5      0,5         341,6
Diluted earnings per ordinary share (cents)                   181,9        182,0     (0,1)        337,7
Headline earnings per ordinary                         
share ('HEPS') (cents)                                        183,9        181,9      1,1         347,7
Diluted headline earnings per ordinary                 
share (cents)                                                 181,4        180,3      0,6         343,6
Dividends per share (cents)                                    36,0         36,0        -         117,0
Net cash from normal operating activities                   333 703      425 000    (21,5)      676 810
Net asset value per share ('NAV') (cents)                     1 430        1 134     26,1         1 246
Net debt:equity ratio (%)                                      (3,3)         9,4   (135,1)          8,2
SEGMENTAL INFORMATION                                  
External revenue                                       
Construction Materials                                      651 965      922 917              1 714 180
Industrial Minerals                                         238 749      299 184                552 683
Bulk Commodities                                            667 915      497 701              1 037 513
                                                          1 558 629    1 719 802              3 304 376
Operating profit                                       
Construction Materials                                        2 764      122 161                192 438
Industrial Minerals                                          24 574       62 368                 95 568
Bulk Commodities                                            325 829      138 191                321 665
Services                                                        (59)      (4 727)                (8 719)
                                                            353 108      317 993                600 952
Operating profit margin on external                    
revenue (%)                                            
Construction Materials                                          0,4         13,2                   11,2
Industrial Minerals                                            10,3         20,9                   17,3
Bulk Commodities                                               48,8         27,8                   31,0
Overall contribution                                           22,7         18,5                   18,2

The full announcement can be found at:

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
^ Executive director

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

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

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

Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers
15 Biermann Avenue
(PO Box 61051, Marshalltown, 2107)

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

Date: 29-10-2020 07:05:00
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