Wrap Text
Announcement of audited summary consolidated financial statements for the year ended 28 February 2022
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 2022
Highlights
- Group revenue up 26,7% to R4,7 billion
- Operating profit margin 23,7%
- HEPS up 22,9% to 542,9 cents
- Net debt:equity ratio of 12,1%
- Final dividend per share of 146,0 cents
- Return on net operating assets 33,0%
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 19 May 2022. The full announcement can be found at:
https://senspdf.jse.co.za/documents/2022/jse/isse/AFT/FY22H2.pdf
Copies of the full announcement are also available for viewing on the Company's website www.afrimat.co.za
or 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 the sponsor.
Any investment decision should be based on consideration of the full announcement published on the
Company's website.
The financial statements have been prepared under the supervision of the Chief Financial Officer ('CFO'),
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 2022
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 continued to deliver strong results during the financial year on the back of favourable iron ore
prices, the expeditious turnaround of Nkomati Anthracite Proprietary Limited ('Nkomati'), the establishment
of Jenkins mining assets and the return to pre-Covid-19 volumes in the Construction Materials and
Industrial Minerals segments, all of which translated into strong operating cash flows.
The Group's strong track record of augmenting acquisitions as part of its diversification strategy, cost
management and efficiency improvement initiatives enabled it to continue delivering strong growth.
Furthermore, future growth, sustainability and access to exciting new products and markets are ensured by
new long-life projects such as Glenover and Gravenhage. The latter is due to contribute to the 2024
financial year. Driehoekspan and Doornpan are iron ore reserves which will come online in the future to
ensure the sustainability of Afrimat's iron ore export business.
FINANCIAL RESULTS
Revenue of the Group increased by 26,7% to R4,7 billion (2021: R3,7 billion), primarily as a result of
increases in volumes as well as attractive iron ore pricing translating into an operating profit increase of
25,1% from the previously reported operating profit of R886,3 million to R1,11 billion. The previously
reported operating profit of R886,3 million was restated to R1,06 billion. The difference of R172,6 million
was mainly as a result of a deferred tax asset raised in Nkomati, with the finalisation of the purchase price
allocation. An overall operating profit margin of 23,7% was attained compared to 24,0% in the previous year.
Headline earnings per share grew by 22,9% from 441,7 cents to 542,9 cents.
Net cash from operating activities remained strong at R736,6 million, whilst the net debt:equity ratio
increased from 3,8% (as previously reported) to 12,1% as a result of the acquisition of Coza Mining Proprietary
Limited, the Glenover transaction, and capital funding for the Nkomati and Jenkins mining assets. If the
stockpiles purchased, as part of the Glenover transaction, of R215,1 million are excluded, the cash flow
generated from operations for the year amounts to R1,3 billion, translating into an increase of 27,5%
compared to the prior year.
OPERATIONAL REVIEW
All three segments, namely Construction Materials, Industrial Minerals and Bulk Commodities experienced
strong growth compared to the previous financial year, considering the effects of the hard-lockdown levels
imposed to limit the spread of Covid-19 in the first half of the prior year. The Bulk Commodities segment
benefited from favourable iron ore pricing and from contributions from the new mine, Jenkins (iron ore sold
in the local market). These additional volumes contributed positively to the second half of the financial year.
Nkomati (anthracite also sold in the local market) was loss making for the first five months of the reporting
period, but turned into a profitable business from August 2021 onwards, recovering the biggest part of the
losses of the first five months.
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 is made up of Construction Materials (consisting of aggregates, concrete-based products and
contracting operations), Industrial Minerals (consisting of limestone, dolomite and industrial sand), and Bulk
Commodities (consisting of iron ore and anthracite).
The Bulk Commodities segment, consisting of the Demaneng and Jenkins iron ore mines, and the
Nkomati anthracite mine, contributed 74,0% to the Group operating profit. The excellent performance
was largely due to increased volumes from the Jenkins mine as well as favourable international iron ore
pricing during the reporting year.
Post year-end, the first blast was undertaken at Driehoekspan, the iron ore asset that will replace
Demaneng mine once it is mined out, which is expected to be in three years' time. Driehoekspan and
Doornpan (as part of the Coza acquisition) are to be brought into production to maintain export volumes
and have a combined life of mine in excess of 15 years.
With Jenkins iron ore mine successfully coming into production, the ramp up is in accordance with strategic
plans and product is sold into the local market through a defined price and volume contract.
The Nkomati anthracite mine, which turned around from realising start-up losses to also contributing
positively to the segment's results from August 2021, produces a high-quality product sold into the local
market, as a replacement for imported anthracite, and is recognised as a consistent, reliable supplier of
anthracite. The long-term sustainable life of mine plan has been enhanced through the opening of two
opencast pits and work has begun on opening the underground operations.
Industrial Minerals businesses delivered returns comparable to pre-Covid-19 volumes across all regions,
delivering an increase in operating profit of 70,2% from R55,5 million to R94,4 million. The acquisition of
the feedlime business (Agri Lime) has strengthened Afrimat's footprint in the agricultural lime market in
support of deeper diversification in this segment.
Similarly the Construction Materials segment also experienced a return to pre Covid-19 volumes, resulting
in a significant improvement in operating profit of 83,5% from R104,9 million to R192,5 million in the year
under review. This is primarily a result of general volumes recuperating to 2019 levels, rather than a result
of a rise in construction activity, as well as a strong focus on operational efficiencies.
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. The success of this division has led to
the establishment of a team to focus on future minerals where a pipeline of projects and commodities is
being built.
PROSPECTS
The Group is well positioned to capitalise on strategic initiatives and future opportunities. The Group's
future growth will continue to 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.
Planning for future growth will continue to be supported by acquisitions that conform to a unique
competitive advantage depending on geographic location; unique metallurgy and structural cost advantage.
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.
CHANGES TO BOARD AND BOARD COMMITTEES
Mr MG (Gerhard) Odendaal has been appointed as the Chief Operating Officer: Mining, as well as an
executive director of the Board and member of the Social, Ethics and Sustainability Committee, effective
from 12 April 2022.
Ms S (Sisanda) Tuku has been appointed as a non-executive director of the Board as well as a member of
the Audit and Risk Committee, effective from 1 May 2022.
Mr MW (Matie) von Wielligh, the current Chairman of the Board and a member of its Audit & Risk,
Remuneration & Nominations, and Social, Ethics & Sustainability Committees, will be retiring by rotation at
Afrimat's next Annual General Meeting ('AGM') and will not be making himself available for re-election.
Deputy Chairman, Mr FM (Francois) Louw, who currently also serves as the Company's Lead Independent
Director will be appointed in his stead.
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, 18 May 2022
Financial summary*
Restated
Audited audited
year ended year ended
28 February 28 February
2022 2021# Change
R'000 R'000 %
Revenue 4 680 078 3 693 759 26,7
Operating profit 1 108 911 1 058 901 4,7
Profit attributable to shareholders 775 168 776 437 (0,2)
Earnings per ordinary share (cents) 560,7 571,6 (1,9)
Diluted earnings per ordinary share (cents) 546,6 559,4 (2,3)
Headline earnings per ordinary share ('HEPS') (cents) 542,9 441,7 22,9
Diluted HEPS (cents) 529,2 432,2 22,4
Dividends per share (cents) 146,0 112,0 30,4
Net cash from operating activities 736 555 767 580 (4,0)
Net asset value per share ('NAV') (cents) 2 170 1 761 23,2
Net debt:equity ratio (%) 12,1 4,0 202,5
SEGMENTAL INFORMATION
External revenue
Construction Materials 1 626 221 1 595 055
Industrial Minerals 632 544 514 291
Bulk Commodities 2 408 710 1 584 413
Services 12 603 -
4 680 078 3 693 759
Operating profit
Construction Materials 192 480 104 906
Industrial Minerals 94 427 55 481
Bulk Commodities 820 210 885 202
Services 1 794 13 312
1 108 911 1 058 901
Operating profit margin on external revenue (%)
Construction Materials 11,8 6,6
Industrial Minerals 14,9 10,8
Bulk Commodities 34,1 55,9
Overall contribution 23,7 28,7
* This information has not been audited or reviewed, but is extracted from audited/reviewed
financial statements/reports.
# Measurement period adjustment - during the current year, the comparative information for
February 2021 was retrospectively adjusted in the process of finalising the accounting for the business
combination.
Dividend declaration
Notice is hereby given that a final gross dividend, No. 30 of 146,0 cents per share, in respect of the year
ended 28 February 2022, was declared on Wednesday, 18 May 2022. There are 146 346 264 shares in
issue at the reporting date, of which 8 200 736 are held in treasury. The total dividend payable is
R213,7 million (2021: R163,7 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 net dividend payable to shareholders who are subject to dividend tax and shareholders who are
exempt from dividend tax is 116,8 cents and 146,0 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, 7 June 2022
Commence trading ex-dividend Wednesday, 8 June 2022
Record date Friday, 10 June 2022
Dividend payable Monday, 13 June 2022
Share certificates may not be dematerialised or rematerialised between Wednesday, 8 June 2022 and
Friday, 10 June 2022, both dates inclusive.
Announcement date: 19 May 2022
Directors
MW von Wielligh*# (Chairman)
FM Louw*# (Deputy Chairman)
AJ van Heerden (CEO)
PGS de Wit (CFO)
C Ramukhubathi
MG Odendaal
GJ Coffee*
L Dotwana*
PRE Tsukudu*#
JF van der Merwe*#
JHP van der Merwe*#
HN Pool*#
S Tuku*#
* 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.
1st Floor
Trumali Forum Building
Trumali Park
Cnr. Trumali Street and R44 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: 19-05-2022 07:05:00
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