23 May 2019 - Afrimat results reflect strength of diversification and entrepreneurial ethos


Highlights

  • Group revenue up 24,6% to R3,0 billion
  • Headline earnings per share ("HEPS") up 29,6% to 234,1 cents
  • Operating profit margin 15,9%
  • Final dividend per share of 62,0 cents
  • Return on net operating assets 25,4%
  • Net debt:equity ratio improved from 35,5% to 23,8%

23 May 2019 - Afrimat, a leading open-pit mining company providing industrial minerals, commodities and construction materials, today released full year results for the year ended 28 February 2019. Group CEO, Andries van Heerden, said he was very pleased with the overall performance, adding that the group continues to deliver excellent results supported by its diversification strategy.

Afrimat’s entry into bulk commodities two years ago proved to be well-timed, contributing handsomely to the sustained earnings growth. Afrimat has maintained a compound average growth rate of almost 20% per annum for the last decade through a well thought-through diversification strategy. Healthy international iron ore prices turned the recently acquired Demaneng iron ore mine into a star performer.

Van Heerden added that the Industrial Minerals segment performance was strong in the second half of the year although a slow first half resulted in the full year performance to be marginally weaker than the previous year.

"Political uncertainty and economic slowdown experienced during the last quarter of the previous financial year continued during the reporting period and impacted the Construction Materials businesses the most. "Nevertheless, our entrepreneurial approach, the diversified product range, our strategic positioning and excellent service delivery all combine to ensure that Afrimat is able to weather the storm, and to a large extent this has insulated us from the prevailing conditions, for which we are thankful. However, our Bulk Commodities segment, consisting of the Demaneng iron ore mine, contributed positively to our results, offsetting lower performance from Construction Materials."

Van Heerden added that the group will continue to focus on its strategy to ensure the group remains a profitable and sustainable entity into the future, adding that new business development remains a critical element of the growth strategy. "Our 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."

From a B-BBEE perspective, existing BEE shareholders and the Afrimat BEE Trust in aggregate hold 32,6% of Afrimat’s issued shares. "Notwithstanding the fully empowered ownership platform in line with the Mining Charter requirements, we are dedicated to enhancing all aspects of B-BBEE on an ongoing basis. We’re committed to a bottom-up approach to transformation and have had a successful year in terms of sustained training, skills development and all-round employee upliftment."

Financial results
Headline earnings per share increased 29,6% from 180,7 cents to 234,1 cents per share.

Net cash from operating activities increased by 46,4% to R410,5 million (excluding once-off employee-related accruals of R79,5 million, in relation to the Afrimat BEE Trust, paid in the prior year), which resulted in a healthy decrease of the net debt:equity ratio from 35,5% in the prior year to 23,8% in the current year.

In line with the group’s dividend policy, which is to maintain a 2,75 times dividend cover, a final dividend of 62,0 cents per share (2018: 42,0 cents) was declared on 22 May 2019, bringing total dividends for the year to 81,0 cents per share (2018: 62,0 cents per share).

Operational review
"All our operating units are strategically positioned to deliver excellent service to our customers, acting as an efficient hedge against volatile local business conditions. The product range is well diversified to include aggregates and concrete-based products as construction materials and limestone, dolomite and silica as industrial minerals as well as iron ore as bulk commodities."

Van Heerden also indicated that labour relations continued to be satisfactory during the period under review, with no labour action having occurred during the year. "Afrimat remains committed to creating and sustaining harmonious relationships in the workplace and addressing issues proactively."

The Demaneng iron ore mine, delivered an exceptional contribution to group results. The business completed the recommissioning of both its dense media separation ("DMS") plants during the first half of the year and completed the expansion of the load-out facility, reaching stable production volumes during the second half of the year. The business also experienced favourable pricing towards the latter part of the current year.

Industrial Minerals businesses across all regions delivered solid results, although the impact of the economic slowdown in the construction sector was experienced by the Lyttelton mine.

"As indicated before, it was our Construction Materials segment that felt the brunt of the slowdown in economic activity, with the KwaZulu-Natal and Gauteng businesses being impacted the most."

Van Heerden said that the KwaZulu-Natal business had successfully completed a restructuring process during the year to improve the business, whilst the Western Cape aggregates business continued to deliver solid results.

The Emfuleni Clinker Ash Dump, situated in Vereeniging and close to Afrimat’s customers, will ensure an additional three to four-year lifespan for the Clinker business, with Clinker continuing to investigate further options in order to secure additional resources for the group.

In Mozambique, the business mainly supplied construction materials to a resettlement village in the north of the country and is well positioned to benefit from the main project which is expected to commence imminently.

Prospects
"The group is well positioned to capitalise on strategic initiatives. We foresee continued growth from an excellent asset base, and expect further expansion of our range of unique products. We also believe that our process of making selective acquisitions will deliver good results."

In line with this, and following the financial year-end, Afrimat announced on SENS on 8 April 2019 that it had made a non-binding indicative offer ("NBIO") to purchase the entire issued share capital of Universal Coal plc ("Universal"), which is listed on the Australian Stock Exchange with operations in South Africa, for a maximum purchase price of A$0,40 for each Universal share held. The NBIO is subject to various conditions precedent, including the completion of a due diligence, the finalisation of financing arrangements, and board and shareholder approval in respect of the proposed transaction. The due diligence is currently underway.

In wrapping up, Van Heerden said that 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. "We expect the current business climate to continue with the group’s future growth driven by the successful execution of our proven strategy, recent acquisitions and wider product offering."

-Ends-


Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Website: www.afrimat.co.za

Account: Keyter Rech Investor Solutions
Contact: Vanessa Rech
Tel: 087-351-3814 or 083-307-5600
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

24 May 2018 - Diversification at Afrimat remains its pillar of strength


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%

24 May 2018 - Afrimat, a leading open-pit mining company providing industrial minerals, commodities and construction materials, today released full year results for the year ended 28 February 2018.

Andries van Heerden, CEO of Afrimat, indicated satisfaction with the results, which were well supported by the group’s diversification strategy. "Despite difficult trading conditions impacted by political uncertainty, which in turn affected business confidence in the first half of the year, the industrial minerals segment of the group faired particularly well."

Van Heerden indicated that the economic slow-down during the last quarter of 2017 exacerbated the operating climate, but the entrepreneurial flair of the businesses that make up the group did not allow market conditions to dictate performance. "Our product range is highly diversified and coupled with our strategic positioning and excellent service delivery, we were able to maintain, and in some instances even gain, market share," he said.

The acquisition of Demaneng, the new name for Diro Manganese Proprietary Limited and Diro Iron Ore Proprietary Limited, added bulk commodities to this already diversified product offering and provides the group with the ability to now market and sell iron ore.

Financial results
Group revenue increased by 10.3% to R2,5 billion (2017: R2,2 billion), with the contribution from operations declining by 13.3% to R351,8 million (2017: R405,6 million). "A large part of the increased cost was as a result of an approved decision to accelerate the ramp-up of Demaneng in order to capitalise on the attractive iron ore price," van Heerden explains.

Headline earnings per share declined by 8,0% to 180,7 cents per share (2017: 196,4 cents).

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 million amortising five-year term facility being introduced to finance the acquisition of the Demaneng mine.

Afrimat declared a final dividend of 42,0 cents per share, taking the total dividend for the year to 62,0 cents per share.

Operational review
The business operates in Aggregates and Industrial Minerals, Commodities and Concrete Based Products.

The Aggregates and Industrial Minerals segment generated a satisfactory result. Van Heerden indicated that he was "particularly happy with the industrial 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 Glen Douglas and Clinker operations 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.

"We are pleased with the acquisition of the Emfuleni Clinker Ash Dump, which is close to Afrimat’s clients and will ensure an additional three to four years to the lifespan for both the Clinker and SA Block businesses," said van Heerden. The Clinker management team continues to investigate further options 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 re-established operations and was at full production during the month of May2018. The Final Investment Decision for the main Liquefied Natural Gas ("LNG")project has not yet been made, but it is expected to be announced during 2018 and Afrimat is well positioned to tender on requirements.

The Concrete Based Products segment was impacted by difficult market conditions. The strategy in this business remains focused on assets with a competitive advantage.

Afrimat created the Commodities segment when it entered the iron ore industry by purchasing Demaneng. Initially Afrimat purchased 60% of the mine, followed by acquiring the remaining 40% stake from minorities. 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 that enables Afrimat to load trains on the Sishen-Saldanha railway line. This was unfortunately impacted by a force majeure event when a number of derailments impacted the capacity of the railway line. "The robustness of the Afrimat operating model was proven during this event when Afrimat reacted quickly to prevent significant losses," van Heerden indicated.

The business experienced a year of labour stability as a result of various human resource interventions to create an amicable, mutually beneficial climate.

Prospects
"We have purposefully set about to create a diversified group that is well positioned to capitalise on strategic initiatives," van Heerden said. He went on to explain that management foresees continued growth from the excellent asset baseit has in place, expects further expansion of its range of unique products, and is positioned to ensure that turnaround initiatives of selective acquisitions do 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.

"Looking forward, this is set to be a taxing year given political and policy uncertainty. We will continue to be prudent on how we allocate capital in the current business climate, which we expect will continue to be demanding to navigate. However, I have resolve that the group’s future growth will be driven by the successful execution of our proven strategy, recent acquisitions and a wide product offering to the market," concluded van Heerden.

-Ends-


Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Website: www.afrimat.co.za

Account: Keyter Rech Investor Solutions
Contact: Vanessa Rech
Tel: 087-351-3814 or 083-307-5600
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

2 November 2017 - Afrimat's diversification drive positions group successfully for continued growth

Highlights

  • HEPS up 7,4% to 102,2 cents
  • Contribution from operations’ margin 16,4%
  • NAV per share of 809 cents
  • Interim dividend 20,0 cents per share
  • Return on net operating assets 22,3%

2 November 2017 – Afrimat, a leading open-pit mining company providing industrial minerals, commodities and construction materials, today released its interim results for the six months ended 31 August 2017.

Andries van Heerden, CEO of Afrimat, expressed his satisfaction with the results, given current market conditions particularly during the first quarter of the financial year. "Afrimat has since its inception subscribed to being diversified across both products and locations, being deeply knowledgeable about its market and products, driven by an awareness of cost management. This stood us in very good stead in this market."

He went on to comment that this consistent and well-executed approach to strategy supported the results.

The first quarter was impacted by an unusually low number of effective trading days in April 2017 and by major political events that severely impacted business confidence. The second quarter however delivered exceptionally good results, almost compensating for the first quarter. The group’s diversification strategy proved its mettle once again, with very good results from relatively newly acquired subsidiaries such as Infrasors and Cape Lime. Good results were also posted by the group’s traditional construction materials business in the Western Cape.

Afrimat successfully entered the iron ore industry with the acquisition of a small iron ore mine, Diro. It was bought out of business rescue after a compromise was accepted by the different creditors. Although only 60% was originally acquired, the remaining 40% was subsequently acquired to give Afrimat access to the full value of Diro.

Prior to Afrimat’s acquisition, DIRO’s operations were halted due to financial distress. The mine was accordingly placed into formal business rescue on 7 June 2016.It exited business rescue on 16 August 2017 and commenced with delivery, now under the ownership of Afrimat.

Financial results
"We are particularly pleased with the results from the traditional construction materials business in the Western Cape and Industrial Minerals divisions Infrasors and Cape Lime" van Heerden said. Revenue was flat at R1,2 billion but headline earnings per share increased by 7,4% from 95,2 cents to 102,2 cents.

Investments in working capital for Diro prior to start-up and in additional clinker stock for SA Block impacted cash generation temporarily.

"We are pleased to advise shareholders that our dividend policy of maintaining a 2,75 times dividend cover remains in place and an interim gross dividend of 20,0 cents per share has been declared," said van Heerden.

Operational review
The contribution from the Aggregates and Industrial Minerals segment to revenue was 69,2%, Commodities 2,5% and Concrete Based Products contributed the balance of 28,3%.

The Aggregates and Industrial Minerals segment generated satisfactory result.

The acquisition of the Emfuleni Clinker Ash Dump, situated in Vereeniging and close to Afrimat’s customers, will ensure an additional three to four years to the lifespan for Clinker Supplies Proprietary Limited. "Clinker is an important product in our offering and we continue to investigate further options to secure additional clinker resources for the group," van Heerden explained.

The Commodities segment was impacted by the DIRO acquisition and related start-up costs. DIRO is included in the Afrimat results for two months. The operations of DIRO are currently in a ramp-up phase, with the first dense medium separation ("DMS") plant already in production. DIRO concluded a final product sale agreement for its iron ore product on 16 August 2017 and commenced delivery soon thereafter. "Good progress is being made with the recommissioning of DIRO and this is largely being assisted by the skill sets that Afrimat has in this commodity," said van Heerden.

The Concrete Based Products segment was impacted by difficult market conditions. "Afrimat experienced market contraction in KwaZulu-Natal, which impacted the results," van Heerden commented.

No labour action occurred in the period, with the group committed to creating and sustaining harmonious relationships in the workplace and addressing issues proactively.

Prospects
"In my opinion Afrimat is well positioned to capitalise on its strategic initiatives, such as the continued growth from the diversified asset base. We have the ability to expand the unique product range and turnaround initiatives of selective acquisitions," van Heerden said.

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

Van Heerden concluded by indicating that Afrimat expects the current business climate to continue, with the group’s growth driven by the successful execution of its proven strategy, recent acquisitions and a wider product offering to the market.

Ends



Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: www.afrimat.co.za

Account: Keyter Rech Investor Solutions
Contact: Vanessa Rech
Tel: 087-351-3814 or 083-307-5600
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

14 February 2018 - For Afrimat, true transformation means giving people the chance to succeed in life


The story of Bongani Nkonyane

Cape Town, 14 February 2018 – For many companies, transformation remains a tick-box exercise; in most cases it's simply about adhering to BEE Codes and ensuring leadership equity. But for Afrimat, a leading open-pit mining company supplying industrial minerals and construction materials to the market, it's about far more than just that. CEO Andries van Heerden is so passionate about grass roots transformation within the Group that he's ensured this approach is enshrined groupwide, without exception.

Van Heerden says: "Like with so many things in life, hard work is rewarded, but in the unique South African case, one sometimes requires an environment where a company is willing to go the extra mile to back an individual it believes has what it takes. The result is success for the individual as well as the company."

So fervent is van Heerden in making a true difference in the lives of Afrimat employees, that he is conversant with the circumstance of practically each person in the Group that has benefited from this approach. But it's best endorsed by someone who has felt the power of this life-changing approach first-hand, and that's Bongani Nkonyane, the Human Resources Assistant at SA Block (Pty) Limited ("SA Block").

The son of a KZN taxi driver who matriculated with the grades required to be accepted by the-then University of Natal, Nkonyane relied on the National Student Financial Aid Scheme (NSFAS) to fund his tertiary education. But his dreams of getting a degree in the social sciences ended abruptly when Natal merged with University of Durban-Westville in 2004, resulting in many changes, including fee increases. When NSFAS announced they could only fund 75% of bursaries, leaving students to come up with the remaining 25% themselves, Nkonyane abandoned his dreams of a full-time university education. He simply could not afford it.

Forced to move to Gauteng in search of work, Nkonyane was hired as a brick loader operator at SA Block. As determined as he was to carry on his studies via distance learning, this was not to be. Living in the nearby compound in often overcrowded and noisy conditions, Nkonyane struggled to find the time and quiet space he needed to study, and so, once again, shelved his plans. However, not one to give up hope, he soon proved himself on the job, and was transferred to SA Block's Alrode head office as a mounted crane operator. The experience served him well, and in 2009, when the company was looking for a sales clerk, back at the Redan site where he'd first been employed, Nkonyane seized the opportunity with both hands, a firm believer that when a chance comes along, one must act on it, never knowing if you'll get one again.

It was in this role that Nkonyane pushed himself harder than ever, working long hours, being left in the main alone to figure things out due to personal circumstances of other colleagues at the time. "I can honestly say this is when I began to understand that nothing is impossible if you believe in yourself."

But it was when Afrimat acquired SA Block, says Nkonyane, that people development headlined the corporate agenda, gaining real impetus. "Afrimat recognised the skills and experience we had, and the fundamental principle entrenched throughout the company now is that while skills and experience can lead you to a certain level, qualifications will push you beyond your limits."

In mid-2013 Nkonyane moved back to Alrode to start another position, this time in the Stores and Procurement department. It was here that his HR manager discovered that he had completed several social science courses at university. "Management responded immediately, inviting me to join the HR team and prove my capabilities. Not only that, but I was given the opportunity to revive my dream of going back to school."

Rubin Bebe, the HR Manager at SA Block, is proud to have Nkonyane on board, attesting to his tenacity and determination to succeed. "Bongani is a very focused individual, with an affinity for working with people." Bebe points out that what sets Nkonyane aside is his willingness to learn and take on new challenges. "I am confident that he will make a success in HR; he has loads of potential and the right disposition for the role."

Nkonyane is currently enrolled at UNISA through the Afrimat Study Assistance programme where he is completing a Managing and Training Development course. He has also completed college courses in basic computer skills and computer literacy. "These last 11 years has been the most amazing journey, and hence my favourite quote, by Arnold Schwarzenegger, is this: 'You can't climb the ladder of success with your hands in your pockets'."

"This is not a story of tokenism. It is a story of opportunity, dedication, long hours, job satisfaction and learning – and the result is a true, meaningful change in the life, not only of Bongani, but of his family too. He has taken all opportunities presented and used these to ensure a sustainable career ahead. I am inspired and proud to have motivated people such as Bongani in the Afrimat Group. Stories such as these are the ones we need told and repeated over and over again," says van Heerden. "I will continue to support this form of upliftment because we have the experience to know that it is both lasting and meaningful."

-Ends-

Notes to the editor:

  • Black ownership in the Group totals 27,10%, in line with Mining Charter requirements.
  • Andries van Heerden, the CEO of Afrimat, is announced the Master winner of the 2017 EY World Entrepreneur Award™ Southern Africa; he will be participating in the EY World Entrepreneur Of The Year™ in June 2018.
  • Afrimat has featured as a Top 10 company in the Sunday Times Top 100 awards for the past 4 years, and is the only company in South Africa that has consistently been in the top 10 since 2014.

Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: www.afrimat.co.za

Issued by: Keyter Rech Investor Solutions
Contact: Vanessa Rech
Tel: 087-351-3814 or 083-307-5600

3 April 2017 - Afrimat puts record straight regarding Competition Commission inquiry

Afrimat puts record straight regarding Competition Commission inquiry

Johannesburg, 3 April 2017 – Afrimat, a leading open pit mining company providing industrial minerals and construction materials, herewith responds to statements in the media concerning the Competition Commission's referral of a complaint to the Competition Tribunal.

Andries van Heerden, CEO of Afrimat confirms that, "the affected subsidiary of Afrimat, Clinker Supplies (Pty) Ltd (‘Clinker Supplies’), has been co-operating fully with the Competition Commission (‘the Commission’) since the Commission commenced its investigation in 2015. We have received notification from the Commission, that it has referred a complaint to the Competition Tribunal (‘the Tribunal’) alleging abuse of dominance, by a subsidiary of the company with regards to excessive pricing." He went on to explain that Clinker Supplies has considered the complaint, taken legal advice and does not consider there to be any merit in the complaint. "Clinker Supplies will vigorously defend itself before the Tribunal," van Heerden went on to say.

Media coverage indicates that the complaint referred and the proposed penalty sought are against Afrimat. Where in fact, the matter referred to the Tribunal concerns the conduct of a subsidiary of Afrimat’s, Clinker Supplies. The initial complaint investigated by the Commission included allegations of price discrimination and margin squeeze in favour of another Afrimat subsidiary, SA Block (Pty) Ltd, however the Commission, following its investigation, only referred an excessive pricing complaint to the Tribunal.

"Afrimat's view is that there is no merit in the excessive pricing allegations and it is with this in mind, that we continued to engage with the Commission." Van Heerden goes on to explain that Clinker Supplies will continue to price clinker competitively against other substitutable aggregates. "Clinker is not a unique product. There are a number of other aggregates with which it can be substituted that are available in the same areas where clinker is sold," van Heerden went on to say.

Van Heerden concludes by indicating that "For the past two years Afrimat has co-operated intensively with the Commission in their investigation. Both Afrimat and Clinker Supplies would value the opportunity to present their case to the Tribunal and look forward to seeing the matter finalised."

Ends


Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Website: www.afrimat.co.za

Account: Keyter Rech Investor Solutions
Contact: Vanessa Rech
Tel: 083 307 5600 or 087-351-3814 (landline)

Date: 3 April 2017