AFRIMAT’S DIVERSIFICATION CONTRIBUTES TO STRONG FULL-YEAR RESULTS

Industrial minerals and construction materials group Afrimat has recorded
a good overall performance for the year ended February 28, and achieved
positive results for the period owing to its diversification strategy, Afrimatgroup CEO Andries van
Heerden said in a statement on Thursday.

The group’s entry into bulk commodities two years ago was highlighted as
having been well-timed, given that it contributed considerably to its sustained
earnings growth in the year under review.

Further, the group pointed out that it has, as a result of its
diversification strategy, maintained a compound average growth rate of almost
20% a year for the past decade.

Meanwhile, in the financial year under review,
healthy international iron-ore prices turned the
recently acquired Demaneng iron-ore mine in the Northern
Cape into a notable performer.

The performance of Afrimat’s industrial minerals segment for
the second half of the year under review was also said to have been healthy;
however, a slow first half resulted in the segment’s full-year performance
being marginally weaker than that of the previous year.

Van Heerden indicated that political uncertainty and the economic
slowdown experienced during the last quarter of the previous financial year had continued
during the period under review, with the biggest impact felt by Afrimat’s construction materials businesses.

“Nevertheless, our entrepreneurial approach, the diversified product range, our strategic positions
and excellent service delivery all combined to
ensure that Afrimat was
able to weather the storm and, to a large extent, this has insulated us from
the prevailing conditions.”

Speaking at a results presentation, in Johannesburg, Van Heerden indicated that
the company strategy entailed seeking three elements to engender a competitive
advantage, namely, a good geographic location, quality products or a structural cost
advantage.

Afrimat will continue to focus
on its strategy to ensure that it remains a profitable and sustainable entity into the future, with
new business development remaining
an integral element of the growth strategy.

Afrimat CFO Pieter de
Wit, meanwhile,
said the company had recorded exceptional cash generation, owing to its
diversification strategy.

Group revenue for the year under review increased by 24.6% year-on-year
to R3-billion – a new record for the company.

Headline earnings a share grew by 29.6% to 234.1c.

Industrial mineral producing operations across all regions, as
well as the iron-ore business, were the main contributors
to the positive results.

Net cash from operating activities increased by 46.4% to R410.5-million,
which resulted in a decrease in the net debt: equity ratio from 35.5% in the
prior year to 23.8% in the year under review.

A final dividend 62c a share was declared.

New business development also
remains a key component of the group’s growth strategy.

Afrimat announced in April that
it had made a nonbinding indicative offer to buy the entire issued share
capital of Universal Coal for a maximum purchase
price of A$0.40 for each Universal share held.

The acquisition will benefit Afrimat by allowing
it to diversify into another commodity, while also being cash generative.

Moreover, Van Heerden indicated that South Africa was still reliant on coal for secure electricity supply, with renewable energy not having the required capacity. https://www.engineeringnews.co.za/article/afrimats-diversification-contributes-to-strong-full-year-results-2019-05-23