Afrimat, a leading southern Africa-based open pit mining group that supplies industrial minerals and construction materials, saw its headline earnings per share (HEPS) for the six months to 31 August 2016 rise by 25.3%. The Group’s revenue (excluding acquisitions) increased by 8.0%, and cash generated from operations increased to R113.7 million ($8.34 million) from R98.9 million ($7.26 million).
Afrimat, a leading southern Africa-based open pit mining group that supplies industrial minerals and construction materials, saw its headline earnings per share (HEPS) for the six months to 31 August 2016 rise by 25.3%. The Group’s revenue (excluding acquisitions) increased by 8.0%, and cash generated from operations increased to R113.7 million ($8.34 million) from R98.9 million ($7.26 million).
Andries van Heerden, Afrimat’s Chief Executive Officer, said a strong performance from most of the producing operations across all regions contributed to the solid results. “This pleasing performance was further supported by improved efficiencies, cost reduction and the disposal of marginal businesses.”
Afrimat revenue (including acquisitions) increased by 15% to R1.2 billion ($88.09 million) against the comparable period of 2015. Profit for the period settled at R139.2 million ($10.21 million), up year-on-year 27.7% year from R109 million ($8 million).
It was a busy period for Afrimat, with the continued focus on the diversification strategy as well as its cost reduction and efficiency improvement initiatives.
Afrimat acquired 100% of the issued ordinary shares of lime and associated products producer Cape Lime Proprietary Limited, effective 31 March 2016. The integration is progressing well and new marketing initiatives are underway to enhance, develop and explore additional markets for these products.
In line with Afrimat’s strategy to diversify, the new greenfield projects that were initiated in Mpumalanga and Mozambique have started contributing positively. The group’s acquisition of the quarry and ancillary business of WG Wearne Limited (‘Wearne’) in Bethlehem was due to be effective from 1 November 2016.
Afrimat has also concluded an agreement to purchase 60% of Diro Manganese Proprietary Limited and Diro Iron Ore Proprietary Limited (‘DIRO’), after these companies were placed into formal Business Rescue. “Given Afrimat’s proven track record of turning struggling businesses around, this is an exciting new challenge for the group. It will supplement its diversification by entering into the iron ore market, exposing it to a commodity that is traded in a hard currency and the acquisition will support the growth strategy,” said van Heerden. The aggregate sum payable for the acquisition of DIRO is R276 million ($20.26 million). The acquisition will complement and augment Afrimat’s product offering and further expand its footprint across South Africa.
All processing plants are fully operational and strategically positioned to deliver a superior service to the group’s customers. New initiatives aimed at restoring profitability in the Infrasors business after the closure of Highveld Steel in the prior year have proven to be very successful.
The Mozambican operations have recouped the initial investment and will benefit from major infrastructure and industrial projects as soon as it commences.
In recent months, the Concrete Based Products segment recovered somewhat after experiencing difficult market conditions early in the financial year.
Post the reporting period, Afrimat received an offer from African Rainbow Capital Proprietary Limited (‘ARC’) to purchase 26.3 million shares in Afrimat from Afrimat Empowerment Investments Proprietary Limited (‘AEI’). The shares comprise approximately 18.36% of the share capital in Afrimat and is subject to various conditions precedent, including the approval of participants of the Afrimat BEE Trust. ARC has agreed to be locked in for a period of at least four years on successful conclusion of the purchase of the Afrimat shares.
Van Heerden says 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.”
“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,” Van Heerden said.
The release of this set of interim results coincides with Afrimat celebrating a decade of being listed on the JSE. “The dream that we had at the time was to build a diversified business, based on strong values, able to weather storms and always being mindful of doing the right things right. The team delivered excellent results by working respectfully with capital and allocating it to ensure excellent returns. This culminated in a company which today, is well diversified and which aided Afrimat in maintaining very strong growth over the past 10 years,” van Heerden concluded.
