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Diversification at Afrimat remains its pillar of strength


– 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.


“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.


Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853

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

Tanya Pretorius

Afrimat: Head of Communications

Vanessa Ingram

Keyter Rech Investor Solutions