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ANNUAL REPORT
FOCUSED ON INFRASTRUCTURE’09
www.afrimat.co.za
AFR
IMA
T AN
NU
AL R
EPO
RT ’09
AFRIMAT LIMITed(Registration number 2006/022534/06)
Registered officeTyger Valley Office Park No. 2Corner Willie van Schoor Avenue and Old Oak RoadTyger Valley, 7530(PO Box 5278, Tyger Valley, 7536)Telephone: +27 21 917 8840Facsimile: +27 21 914 1174Email: [email protected]: www.afrimat.co.za
Company secretaryRoutledge Modise in association with Eversheds2nd Floor, Wanderers Building, The Campus57 Sloane StreetBryanston, 2021(PO Box 78333, Sandton City, 2146)Telephone: +27 11 523 6110Facsimile: +27 86 674 8658
AttorneysWebber Wentzel10 Fricker Road,Illovo, 2196(PO Box 61771, Marshalltown, 2107)Telephone: +27 11 530 5000Facsimile: + 27 11 530 5111
Transfer secretariesComputershare Investor Services (Pty) Limited(Registration number 2004/003647/07)Ground Floor, 70 Marshall Street,Johannesburg, 2001(PO Box 61051, Marshalltown, 2107)Telephone: +27 11 370 5000Facsimile: +27 11 688 5200
SponsorBridge Capital Advisors (Pty) Limited2nd Floor, 27 Fricker Road, Illovo, 2196(PO Box 651010, Benmore, 2010)Telephone: +27 11 268 6231Facsimile: +27 11 268 6538
AuditorsMazars Moores Rowland27th Floor, 1 Thibault SquareCape Town, 8001(PO Box 2817, Cape Town, 8000)Telephone: +27 21 405 4000Facsimile: +27 21 405 4140
Commercial bankersThe Standard Bank of South Africa LimitedBusiness Banking12th Floor, East Towers, Bedford CentreCorner Bradford and Smith StreetsBedfordview, 2047(Private Bag X23, Garden View, 2047)Telephone: +27 11 601 4536/5Facsimile: +27 11 631 8132
ADmINISTRATION
Maxx Corporate Communications©
CONTENTS
PAGE
Financial Highlights 1
Company Profile 1
Directorate 2
Chairman’s Report 4
CEO’s Report 6
Corporate Governance 8
Sustainability Report 13
Value Added Statement 15
Annual Financial Statements 16
Analysis of Shareholders 61
Share Performance 62
Shareholders’ Diary 62
Notice of Annual General Meeting 63
Form of Proxy 67
Administration IBC
DEFINITIONS“ASPASA” Aggregate and Sand Producers Association of South Africa
“BEE” Black economic empowerment
“the board” The board of directors of Afrimat Limited
“CEO” Chief Executive Officer
“the company” or “Afrimat” Afrimat Limited
“the group” Afrimat Limited and its subsidiaries
“IFRS” International Financial Reporting Standards
“JSE” JSE Limited
“King II Report” King Report on Corporate Governance for South Africa 2002
“the previous/prior year” The year ended 29 February 2008
“SA” South Africa
“SENS” Stock Exchange News Service
“SARMA” South African Readymix Association
“the year” or “the year under review” The year ended 28 February 2009
1AFRIMAT ANNUAL REPORT ’09
FInAncIAl hIghlIghTs
n net asset value per
share of 369 centsn capital expenditure
R122,3 millionn net debt: equity ratio
18,8%n Operating margin
13,83%
cOMpAny pROFIle
Afrimat is a leading black empowered construction materials
supplier with more than 45 years’ experience in supplying
high quality aggregates, readymix concrete and concrete
manufactured products to the infrastructure, civils,
construction and building markets.
Since listing on the JSE Main Board – ‘Construction and
Building Materials’ sector – in 2006, Afrimat has achieved
significant growth both organically and through strategic
acquisitions. The group has successfully driven expansion in
its existing markets as well as penetrated new markets,
positioning Afrimat to capitalise on the ongoing infrastructure
development in SA. The group now operates across the
Western and Eastern Cape, KwaZulu-Natal, Free State,
Gauteng, Limpopo, Mpumalanga and Namibia.
Afrimat’s flexibility positions it to supply materials to a range
of clients from major infrastructure and construction groups
through to small operations.
Led by a professional management team with extensive
experience and a depth of skills, the group maintains
tight cost structures, highly efficient mining practices and
impeccable equipment maintenance standards.
VIsIOn AnD VAlUes
VISIONTo be the most admired construction
materials supply company in southern Africa.
ValueSWe strive to integrate values of trust,
integrity, respect, accountability,
teamwork and customer satisfaction
into every aspect of our culture and our
performance.
Afrimat operates through three key divisions:
AggRegATes
n Commercial quarries (24)
n Sand mines (8)
n Gravel mines (2)
n Contract and rubble crushing equipment
n Drilling and blasting
ReADyMIx cOncReTe
n Batching sites (23)
cOncReTe MAnUFAcTUReD pRODUcTs
n Concrete brick and block factories (8)
The group’s quarries supply the majority of raw material for
the Readymix Concrete and Concrete Manufactured Products
divisions. Afrimat continually ensures that stone reserves are
adequate for the long-term needs of the group.
2 AFRIMAT ANNUAL REPORT ’09
DIRecTORATe
eXeCuTIVe DIReCTORS
Andries J van heerden (43)
ceO
B.eng (Mech) MBA (University of stellenbosch)
government certificate of competence
Andries has held a number of senior board positions. He has
extensive experience in strategic positioning, marketing and
finance and was involved in the aggressive growth of APL
Cartons. During 2001 he joined the Prima group as director
and became Managing Director two years later. He left Prima
in 2005 and formed a consortium which acquired the
Lancaster group, of which he became CEO before merging
the two groups to form Afrimat in 2006.
hendrik p Verreynne (52)
Financial Director
B.compt hons, cA(sA)
Prior to joining Afrimat Hendrik, a chartered accountant, was
Financial Director for Oceana Brands Limited. Previously he
was a senior executive in finance for Woolworths and Borden
Foods and the Financial Director of Sea Harvest. He was
appointed to Afrimat’s board in October 2007.
peter g corbin (60)
B.sc B.eng (University of stellenbosch)
Peter has extensive experience in the engineering sector and
particularly in road construction, having worked as an
engineer at the Department of Internal Affairs and as the
resident engineer at VKE Consulting Engineers. He was
divisional director at Concor Construction (Pty) Limited prior
to joining Prima in 1985, where he was promoted to Managing
Director in 2005 and remains today.
NON-eXeCuTIVe DIReCTORS
loyiso Dotwana (45)
B.sc civil engineering (University of cape Town)
Loyiso has worked as a civil engineer in design and project
management for more than twenty years. He specialised in
design and contract administration of township services,
rural and urban roads and national roads. He has been
involved in the conceptual and detailed design of bulk services
for the Coega Industrial Development Zone in Port Elizabeth.
Loyiso founded Illiso Consulting (Pty) Limited, one of South
Africa’s largest black-owned consulting engineering
companies, of which he is currently a director and the major
shareholder.
Francois du Toit (62)
Francois joined Prima Klipbrekers (Pty) Limited as Managing
Director in 1967 and helped establish the Prima group twelve
years later, where he remained as Managing Director until
2003 and thereafter as Chairman.
Marthinus (Matie) W von Wielligh (57)
chairman
B.sc (Mech. eng.) (University of pretoria)
MBA (University of stellenbosch), stanford executive
programme (stanford University UsA)
Matie has over 30 years’ professional experience at Iscor
Limited and Kumba Resources. At Iscor he served in various
management positions before becoming Managing Director
of Sishen Iron Ore Company until 2006. At Kumba Resources
he was general manager of the Iron Ore Business. He has
extensive experience in strategic and financial management,
corporate finance, new business development, feasibility
studies, project management, human resources management
and BEE. He currently serves on various boards.
INDePeNDeNT NON-eXeCuTIVe DIReCTORS
Monty Kaplan (80)cA(sA)
Monty has held various board positions including Deputy
Chairman and CEO of the Cape of Good Hope Bank and a
director of S.A. Post Office Limited. He is currently Chairman
of Wooltru Limited, Trematon Capital Investments Limited
and SA Reit Limited (previously Shops for Africa Limited).
hendrik (hennie) Je van Wyk (65)B.com cA(sA)
Hennie qualified as a chartered accountant in 1975 with Brink
Roos & Du Toit, where he became partner three years later.
In 1987 he was appointed lead partner in the Cape Town office
of Theron du Toit and in 1990 lead partner of Coopers &
Lybrand at the time of the merger with Theron du Toit. In 1998
he became Managing Partner of PricewaterhouseCoopers
Inc. until his retirement.
Seated left to right: Francois du Toit, Matie von Wielligh (Chairman), Andries van Heerden (CEO), Monty Kaplan
Standing left to right: Hennie van Wyk, Loyiso Dotwana, Peter Corbin, Hendrik Verreynne (Financial Director)
3AFRIMAT ANNUAL REPORT ’09
4 AFRIMAT ANNUAL REPORT ’09
chAIRMAn’s RepORT
Against the backdrop of an increasingly challenging trading
environment, Afrimat extended its geographic footprint and
posted a reasonable performance for the year. Focus on cost
rationalisation and future growth initiatives ensured that the
group consolidated to cement a solid platform for growth.
Operational highlights included the completion of the capacity
enhancement programme at the relevant operations and the
successful conclusion of a further acquisition which
entrenched the group’s commanding presence in the growth
province of KwaZulu-Natal.
BUsIness enVIROnMenTThe global financial crisis has generated a tough macro-
economic environment in SA. Tangible adverse consequences
such as tight credit restraints, exacerbated by inevitable
negative sentiment, dramatically affected the residential
sector and small-scale construction industry during the year.
Consequently investment by government in domestic
infrastructure has not been sufficient to ensure immunity for
SA against the impact of the global recession.
The weakening economic indicators have also resulted in
investor confidence being at a very low base.
AFRIMAT sTRATegyThe group seeks to add value along the supply chain from
aggregates, upwards.
The business development team will continue to focus on
growth through product enhancement and extension as well
as through strategic geographic diversification into high-
growth areas – particularly those benefiting from high public
sector spend on infrastructure. Continued focus on cost and
innovation will enhance our competitive position.
In doing so Afrimat aims to realise its strategic objective
to ‘be there first’, which is underpinned by the group’s
operational ability and flexibility to ‘go where the work is’ by
leveraging its widespread geographic presence and well-
equipped fleet of mobile crushers.
Growth in shareholding by empowerment groups will be a
key focus while simultaneously strengthening our visibility as
a responsible corporate citizen.
FInAncIAl ResUlTsVolumes were negatively affected by the economic downturn.
Headline earnings therefore reflect a decline from the
previous year, further impacted by project delays and
postponements while the group nonetheless continued to
incur business establishment costs.
The financial results are commented on by the CEO in further
detail, and full details are set out in the annual financial
statements and accompanying notes.
BeeThe group remains committed to improving broad-based
BEE to ensure genuine transformation and so contribute
meaningfully to the SA business and socio-economic
environment.
Increasing black ownership at group level is a business
imperative, with the ultimate objective of achieving 26%
black ownership prior to 2014 in line with Mining Charter
requirements.
To this end an agreement was concluded during the year with
the Mvela Consortium, giving the Mvela Consortium options
to acquire Afrimat shares in due course. Regrettably the
agreement was later terminated by mutual consent in light of
world markets. All endeavours will be expended to reach
similar agreement with an appropriate party to which effect
can be given in order to achieve this objective. In addition the
group will continue to focus on all remaining scorecard areas
to continually enhance broad-based BEE at Afrimat.
5AFRIMAT ANNUAL REPORT ’09
sUsTAInABIlITy, cORpORATe gOVeRnAnce AnD RIsK MAnAgeMenTBeing a responsible corporate citizen is a key focus area
for Afrimat. With this as a framework, the group’s current
safety performance has been determined by the board to
be unsatisfactory. As a result appropriate policies and
procedures have now been implemented and systems are
already firmly in place to ensure that this improves. (See
‘Sustainability Report’ for further detail.)
On the positive side, Afrimat has made commendable
progress in the implementation of best practice corporate
governance processes and procedures. In addition risk
management systems have been formalised throughout
the group.
DIRecTORATeNonhlanhla Jiyane resigned from the board with effect from
15 January 2009. The board thanks her for her contribution.
OUTlOOKProspects for the construction and materials supply industries
remain contingent on the general economic outlook, which at
this stage does not lend itself to certain prediction. In the
short-term we expect the difficult business conditions to
prevail. Afrimat will therefore focus on enhancing the key
value drivers of the business to maximise their contribution.
This should help in countering the macro-economic
pressures and enable the group to continue consolidating
for growth once an upturn starts to take effect.
In the year ahead specific emphasis will be placed on the
complete integration of all acquisitions to better unlock and
capitalise on synergies. Improved support/management
information systems are also in the process of being introduced
to optimise value creation and boost the bottom line.
The board is confident that notwithstanding economic
deterioration, and should this not increase further, Afrimat’s
flexibility, geographical positioning and diverse product
range stand the group in good stead to benefit from an
economic uptick.
AppRecIATIOnI extend my appreciation to Andries, the executive directors,
the management team and all Afrimat employees for their
hard work and commitment in a testing year demanding
tenacity. I also thank my colleagues on the board for their
support and wise counsel during the year.
I finally wish to thank our advisors, business consultants,
suppliers, customers and shareholders for their ongoing
loyal support.
Matie von Wielligh
chairman
12 June 2009
6 AFRIMAT ANNUAL REPORT ’09
ceO’s RepORT
Although weak market conditions as a result of the global
economic crisis dampened operations during the year,
satisfactory performances from Readymix Concrete and
Concrete Manufactured Products offset this to an extent.
In order to give effect to an intensified focus on infrastructure
projects, the group implemented a number of organic capacity-
enhancement initiatives which included geographic expansion
in Gauteng, Limpopo and Mpumalanga. Capital expenditure,
excluding acquisitions, amounted to R122,3 million.
FInAncIAl ResUlTs AnD sTATUsRevenue increased year-on-year to R687,1 million from
R611,7 million. However headline earnings declined,
impacted by challenging macro-economic conditions, lower
volumes in the Aggregates division, once-off new business
start-up costs, transaction costs incurred on the change in
BEE shareholding and increased fuel and cement prices.
Taking core headline earnings, which excludes the once-off
and non-recurring costs and therefore provides a more
meaningful comparison to headline earnings in the prior year,
the group experienced a decline of 26,6% to R69,7 million.
The net debt-to-equity ratio of 18,8% remains healthy
and borrowings remain below the limit set by the board
of directors.
OpeRATIOnsAfrimat continued to make inroads into the Gauteng, Limpopo
and Mpumalanga markets and expanded its geographical
footprint in KwaZulu-Natal with the acquisition of Sunshine
Crushers.
AggRegATes
A tough trading environment saw the division perform below
expectations. Falling demand in the Western Cape resulted
in lower volumes, which was further compounded by delays
in the authorisation of projects in the region, lower provincial
expenditure on infrastructure and a severe downturn in
residential property development.
In KwaZulu-Natal operations were negatively affected by
once-off production cost pressures and changes to the
product mix.
In contrast, the commissioning of the new plant boosted
performance at the Denver quarry which supplies the high
growth Port Elizabeth metropole.
Further afield the group secured the rights to supply large-
scale projects in Gauteng, Limpopo and Mpumalanga.
Processing plants have been established in these regions
and are now fully operational. These are well-placed to
supply government infrastructure projects and significantly
boost the division’s revenue going forward.
ReADyMIx cOncReTe
Readymix Concrete performed satisfactorily benefiting
from higher volumes as a result of exposure to increased
government infrastructure development.
cOncReTe MAnUFAcTUReD pRODUcTs
Capitalising on ongoing government housing projects,
this division posted increased volumes to record a solid
performance.
AcqUIsITIOn
In line with the group strategy of geographic expansion,
Afrimat acquired Sunshine Crushers in Dundee. The
acquisition comprises a quarry and readymix plant and
further entrenches Afrimat’s strategic peripheral presence
in KwaZulu-Natal.
7AFRIMAT ANNUAL REPORT ’09
pROspecTs
The board is confident that government’s commitment to
infrastructure investment will continue to stimulate demand
for Afrimat’s products. The new business development team
is a key strategic tool for the group’s growth and is adding
significant value by identifying opportunities in existing
markets as well as in new markets projected to benefit from
high infrastructure spending.
Business activities for the current year ending 28 February
2010 are expected to improve significantly as large-scale
infrastructure projects gather momentum and the benefits
of the company’s aggressive efficiency-improvement
programme begin to be realised.
AppRecIATIOn
I wish to thank all management and staff for their efforts and
dedication which sustained Afrimat’s performance in a poor
trading environment. My appreciation also to the board for
their invaluable insight and guidance.
andries van Heerden
ceO
12 June 2009
8 AFRIMAT ANNUAL REPORT ’09
cORpORATe gOVeRnAnce
The directors’ commitment to sound corporate governance
practice is reflected in Afrimat’s implementation of the Code
of Corporate Practices and Conduct set out in the King II
Report. The board does not consider this a static responsibility,
and continually monitors compliance to ensure ongoing
improvement of operational and corporate practices.
The BOARDAt year-end the unitary board consisted of eight directors and
was chaired by independent non-executive director MW von
Wielligh. In accordance with King II the Board comprises a
majority (five) of non-executive directors, of which three are
classified as independent. GN Jiyane resigned as a non-
executive director of the company effective 15 January 2009.
The Board Charter codifies the board’s composition,
appointment, authorities, responsibilities and processes and
sets out the fiduciary duty and role of each director to the
company. Responsibilities include retaining full and effective
control of the company, monitoring key risk areas and
performance indicators of the group’s business, setting the
group’s strategic direction and approving financial and non-
financial objectives.
The board meets at least four times a year with additional
meetings when necessary to review strategy, planning,
financial performance, resources, operations, risk, capital
expenditure, standards of conduct, transformation, diversity,
employment equity and human resources and environmental
management.
Director’s attendance at board and committee meetings
during the year 1 March 2008 to 28 February 2009 is set out
below. The number attended of the total meetings held is
indicated for each director. Further indicated are directors, if
not a committee member, who attended by invitation:
Directors
Board
meetings
Audit
Committee
meetings
Remuneration
and Nomination
Committee
meetings
Safety, Health
and Environment
Committee
meetings
Non-Executive
Directors’
meetings
PG Corbin 5/5 3/3
L Dotwana*^ 5/5 4/4 3/4 3/3 2/2
F du Toit* 4/5 2/2
GN Jiyane* (resigned 15 January 2009) 0/4 0/3 0/3 0/1
M Kaplan*•# 5/5 4/4 4/4 2/2
AJ van Heerden (ceO) 5/5 4/4† 4/4† 3/3
HP Verreynne (FD) 5/5 4/4†
HJE van Wyk*• 5/5 4/4 2/2
MW von Wielligh (chairman)*•~ 5/5 4/4 4/4 3/3† 2/2
#Audit Committee Chairman *Non-executive~Remuneration Committee Chairman •Independent^Safety, Health and Environment Committee Chairman †Attended by invitation
9AFRIMAT ANNUAL REPORT ’09
In accordance with the articles of association, two of the
directors of the company will retire by rotation at every annual
general meeting and their re-appointment will be subject to
shareholders’ approval. M Kaplan and MW von Wielligh will
retire at the upcoming annual general meeting and MW von
Wielligh, being eligible, will stand for re-election. M Kaplan
will not stand for re-election. In addition, all new directors
are subject to re-election by shareholders at the annual
general meeting at the first opportunity after their initial
appointment. No new directors were appointed to Afrimat’s
board during the year.
The offices of Chairman and CEO, and the responsibilities of
the remaining executive and non-executive directors, are
separated, ensuring that no individual director can exercise
unfettered powers of decision-making. The Chairman
provides leadership to the board and oversees its efficient
operation while the CEO is responsible for proposing,
updating, implementing and maintaining the strategic
direction of Afrimat as well as ensuring that the day-to-day
affairs of the group are appropriately supervised and
controlled. Executive directors assist the CEO and are
responsible for implementing strategy and operational
decisions in respect of the company’s day-to-day operations.
The non-executive directors are high merit individuals who
contribute a wide range of skills, knowledge and experience
to the board’s decision-making process and are not involved
in the daily operations of the company.
All directors have unrestricted access to the advice and
services of the company secretary and to company records,
information, documents and property. Non-executive
directors also have unfettered access to management at any
time. All directors are entitled, at Afrimat’s expense, to seek
independent professional advice on any matters concerning
the affairs of the group.
BOARD pROcessesshARe DeAlIngs AnD cOnFlIcT OF InTeResTDirectors are required to declare their shareholdings,
additional directorships, potential conflicts of interest and
any dealings in securities of the company to the Chairman
and the Company Secretary, who together with the sponsor
ensure that such dealings are published on SENS.
In addition, all directors and management with access to
financial and any other price-sensitive information are
prohibited from dealing in the shares of the company during
‘closed periods’, as defined by the JSE.
neW AppOInTMenTsNew board appointments are vetted by the Remuneration
and Nomination Committee taking into account a blend of
skills and experience as well as concerns such as diversity.
The committee is responsible for making recommendations
to the full board for approval.
A comprehensive induction programme is in place which
includes introductions to key senior management and site
visits. New appointees receive copies of the latest interim
announcements and annual financial statements and are
introduced to the company’s accounting systems. The General
Manager Human Resources is responsible for implementing
this induction programme which also sets out the new
directors’ responsibilities and fiduciary duties, as well as
advises on the relevant statutory and regulatory framework.
It is intended that the directors’ induction programme also be
applied to new senior management in due course,
notwithstanding that Afrimat has a consistently low turnover
in this team year-on-year.
selF-eVAlUATIOnAfrimat is committed to the King II Report’s recommendation
of a board self-evaluation procedure as well as the need for
the sub-committees to conduct annual self-evaluation
exercises. Accordingly, a formal self-evaluation was
conducted during the year and the findings were
communicated to the board. The evaluation brought to light
minor areas of shortfall which are currently being addressed
by the Chairman.
The CEO’s performance was evaluated by the non-executive
directors and the Chairman and the Financial Director’s
performance was evaluated by the Audit Committee and CEO.
Executive director PG Corbin’s performance was evaluated
by the CEO.
sUccessIOn plAnnIngFormal succession plans for key executives have been
prepared and reviewed by the Remuneration and Nomination
Committee. Succession planning for the CEO is the
responsibility of the Chairman assisted by the board.
cOMpAny secReTARyThe Company Secretary acts as advisor to the board and
notifies the directors of any relevant regulatory changes and
new developments in corporate governance. Whenever
deemed necessary s/he also reviews the rules and procedures
applicable to the conduct of the affairs of the board. Where
10 AFRIMAT ANNUAL REPORT ’09
cORpORATe gOVeRnAnce CONTINUED
appropriate, the Company Secretary will involve the sponsor
and other experts in this regard to ensure that the directors
have adequate information to discharge their responsibilities
efficiently.
RegUlATORy AnD legIslATIVe cOMplIAnceThe Company Secretary is responsible for ensuring the group
complies with all applicable regulations and legislation.
Particularly with regard to compliance with the South African
Companies Act, 1973 and the King II Report, s/he liaises closely
with the group’s sponsor. Further the group completes an
annual checklist of compliance with King II. The group is now
substantially compliant.
New legislation is discussed at board meetings and methods
of implementation are instituted. The potential impact of the
new King III report has been assessed by the board.
BOARD cOMMITTeesAll committees have satisfied their responsibilities during
the year in compliance with their Charters. The chairmen of
the committees or another committee member nominated by
them, attend the company’s annual general meeting.
execUTIVe cOMMITTee (“excO”)EXCO comprises the group’s three executive directors
together with the managing directors of Lancaster Precast,
Lancaster Quarries, Afrimat Readymix (Cape) and the General
Manager Human Resources, General Manager Strategic
Projects and General Manager New Business Development.
The committee is responsible for overseeing all operational
aspects of the business, ensuring that targets are met,
deadlines are reached and potential risks are identified and
addressed timeously. EXCO is scheduled to meet six times
each year on a formal basis with frequent ad hoc
communication to ensure ongoing efficient operations.
nOn-execUTIVe DIRecTORs’ MeeTIngsThe non-executive directors hold separate meetings to
discuss the performance of the business and that of the
executive directors.
AUDIT cOMMITTeeThe Audit Committee is chaired by independent non-
executive director M Kaplan and comprises independent
non-executive group Chairman MW von Wielligh,
independent non-executive director HJE van Wyk and non-
executive director L Dotwana, who acts independently. Afrimat
acknowledges that in accordance with new legislation all
members of the Audit Committee should be non-executive
directors who act independently , and will be cognisant of this
recommendation when considering future board and
committee appointments. The committee met four times
during the year. Attendance is set out in the table on page 8.
During the year the Audit Committee Charter was reviewed
by the Audit Committee and the board and was deemed to be
adequate and effective. The Charter tasks the committee
with reviewing the interim and annual financial statements
and understanding management’s accounting processes and
the method by which it compiles financial information, as
well as the nature and extent of the external auditor’s
involvement in these processes. Further responsibilities
include:
• confirming and monitoring the internal audit process;
• monitoring internal control procedures including
accounting policies, legislative compliance, regulatory
matters and governance;
• recommending the appointment of external auditors, who
in the opinion of the committee are independent of the
company, for approval by shareholders at the annual
general meeting;
• approval of the remuneration of the external auditors and
assessment of their performance;
• an annual assessment of the independence of the external
auditors. The committee confirms that it is satisfied with
the independence of the group’s external auditors and the
respective audit partners;
• setting the principles for recommending the use of
external auditors for non-audit purposes;
• determining the key risk areas facing the group and
recommending risk mitigation measures; and
• advising and updating the board on issues ranging from
accounting standards to published financial information.
The Audit Committee has discharged the functions in
terms of its Charter and ascribed to it in accordance with
the requirements of the Corporate Laws Amendment
Act 24 of 2006.
The external auditors have unrestricted access to the Audit
Committee and its chairman throughout the year.
As per the JSE Listings Requirements, the committee
must consider and be satisfied, on an annual basis, of
the appropriateness of the expertise and experience of the
11AFRIMAT ANNUAL REPORT ’09
Financial Director and the company must confirm this by
reporting to the shareholders in its annual report that the
Audit Committee has executed this responsibility.
In respect of the above the Audit Committee believes that
Hendrik Verreynne, the Financial Director, possesses the
appropriate expertise and experience to meet his
responsibilities in that position.
ReMUneRATIOn AnD nOMInATIOn cOMMITTeeThe Remuneration and Nomination Committee is chaired by
independent non-executive group Chairman MW von Wielligh
and comprises non-executive director L Dotwana and
independent non-executive director M Kaplan. The CEO
attends meetings by invitation and is excluded from
deliberations in respect of his own remuneration. The
committee met four times during the year as set out on
page 8.
During the year the Remuneration and Nomination Committee
Charter was reviewed by the board and the committee and
found to be fully effective. No changes were made. The
Charter sets out the committee’s roles and responsibilities
including:
• setting the criteria for board nomination;
• identifying and recommending nominees to the board of
directors;
• annually reviewing directors’ credentials;
• assessing executive remuneration; and
• determining short- and long-term incentive pay structures
for group executives.
The Remuneration and Nomination committee determines,
agrees and develops the general remuneration policy for the
CEO and executive directors for approval by the board and
recommends to the board the basic salaries, benefits, annual
bonuses, performance-based incentives, share-based
incentives, pensions and other benefits paid to the directors.
In order to attract and retain high calibre candidates
remuneration packages are market-related and take into
account employees’ qualifications, experience and
performance.
The committee is further responsible for reviewing the scope
and composition of the board and its sub-committees and for
making recommendations on new appointments. Before
nomination, appropriate background checks are performed
on proposed new directors.
sAFeTy, heAlTh AnD enVIROnMenT (“she”) cOMMITTeeThe SHE committee is chaired by non-executive director
L Dotwana and further comprises executive directors
PG Corbin and AJ van Heerden. It is tasked with reviewing the
group’s SHE policies and their progressive implementation by
Afrimat and its subsidiaries.
The committee met three times during the year. Attendance
at meetings is set out in the table on page 8.
AccOUnTIng AnD AUDITIngexTeRnAl AUDITThe independent external auditors, as recommended by the
Audit Committee and appointed by the shareholders, are
responsible for reporting on whether the annual financial
statements are fairly presented in compliance with IFRS. The
preparation of the annual financial statements remains the
responsibility of the directors.
It is the policy of the board not to engage the external auditors
for any non-audit services, including tax compliance and
assisting with company secretarial duties. Where the external
auditors, as an exception, are appointed for non-audit
services, the board ensures that there is a strict separation of
divisions in order to maintain independence.
InTeRnAl AUDITAn Internal Audit Charter is in place, with its own terms of
reference clearly defined and monitored by the Audit
Committee. Afrimat outsources the internal audit function to
KPMG. The internal auditors report directly to the CEO and
have unfettered access to the Chairman of the board and the
Audit Committee.
InTeRnAl cOnTROl AnD RIsK MAnAgeMenTInTeRnAl cOnTROlThe group emphasises the importance of systems of internal
control and the management of risk to ensure that all
employees have a clear understanding of their roles and
obligations. The board is responsible for the management of
the overall internal control systems but is assisted by the
Audit Committee and the Financial Director in this regard.
12 AFRIMAT ANNUAL REPORT ’09
cORpORATe gOVeRnAnce CONTINUED
The Audit Committee is tasked with evaluating the security of
computer systems and applications and the contingency
plans for processing financial information in the event of a
systems breakdown. It further evaluates the adequacy and
effectiveness of internal control systems and processes and
monitors whether internal control recommendations made
by the Financial Director, external auditors and internal
auditors have been implemented.
These systems of internal control are designed to provide
reasonable, but not absolute assurance as to the integrity
and reliability of the financial statements, to safeguard and
maintain accountability of the group’s assets and to identify
and minimise significant fraud, potential liability, loss and
material misstatement, while complying with applicable
statutory laws and regulations. There are inherent limitations
to the effectiveness of any system of internal control,
including the possibility of human error and the circumvention
or overriding of controls. The system is therefore designed
to manage rather than eliminate risk of failure and
opportunity risk.
Nothing has come to the attention of the board to indicate
that there has been a material breakdown in the internal
systems of control during the year.
RIsK MAnAgeMenTEXCO assists the Audit Committee with identifying, evaluating
and managing key risk areas and performance indicators of
Afrimat, as well as the non-financial aspects relevant to the
group. The board, together with the Audit Committee and
EXCO, are responsible for ensuring that appropriate risk
management procedures are in place.
Key risks currently facing the group include:
Risk Risk mitigation
• Broad-based BEE (BBBEE)
BBBEE team coordinates BBBEE activities and BBBEE ratings of subsidiaries
• Skills development
Human resources team developed and co-ordinates a talent management programme
• Volatile macro economic situation
Continuous process to ensure Afrimat is correctly positioned to capitalise on opportunities. Focus on:• increased sales revenue;• cost reduction; and• discipline.
sTAKehOlDeR cOMMUnIcATIOnAfrimat is committed to timely, consistent and transparent
communication with all stakeholders and encourages an
open culture throughout the group. The group aims to present
in all its communications, a balanced and logical assessment
of its position. Tools such as a quarterly staff newsletter,
regular meetings with unions and non-unionised employees
and the group’s website are used to communicate with staff.
The group encourages stakeholder attendance at general
meetings and where appropriate provides full and
comprehensive explanations of the effects of resolutions to
be proposed at these meetings.
Company announcements are released on SENS and posted
on the company’s website. Financial results announcements
are also posted to shareholders. The CEO wherever possible
engages with the financial media to ensure accurate
reporting. Communications with institutional shareholders
and investment analysts are maintained through semi-annual
presentations of financial results, one-on-one visits, trading
statements and press announcements, as well as availability
for ad hoc meetings when requested.
InDUsTRy AssOcIATIOnsThe relevant subsidiaries are members of:
ASPASA; and
SARMA.
cODe OF eThIcs (“The cODe”)Every employee and director of Afrimat is expected to
subscribe to the Code, which sets out the group’s commitment
to best-practice corporate governance at all times including
transparent communications with all stakeholders and
procedures for avoiding conflicts of interest and insider
trading. In addition, the Code contains guidelines on
confidentiality, fair and ethical market competition and sound
environmental practices. Any violation of the Code is
considered a serious offence and is dealt with accordingly.
13AFRIMAT ANNUAL REPORT ’09
sUsTAInABIlITy RepORT
Afrimat endorses the Department of Trade and Industry’s
BBBEE Codes of Good Practice (“the Codes”). One of the
Codes’ requirements is for companies to produce a balanced
and integrated report on its economic, social and
environmental performance (the triple bottom line).
The aim of this report is to demonstrate our commitment to
sustainable development by sharing information and statistics
with our stakeholders about what we are doing and our plans
to ensure our future sustainability.
BeeAfrimat’s broad-based BEE rating in terms of the Codes will
be conducted at subsidiary level.
Afrimat’s black shareholding is 24,53%, determined on the
modified flow-through method. The group’s main BEE partner
is Mega Oils (Pty) Limited, a 100% black-owned company.
Loyiso Dotwana represents Mega Oils on Afrimat’s board.
The group is committed to increasing black ownership.
During the year an agreement entered into between Afrimat
and the Mvela Consortium, giving the Mvela Consortium
options to acquire Afrimat shares, was terminated by mutual
consent. The group continues to explore methods of
increasing its BEE shareholding with the ultimate objective of
achieving 26% black ownership prior to 2014, as required by
the Mining Charter.
Broad-based BEE is a strategic priority of Afrimat and is being
addressed through areas in addition to ownership including:
Management, Employment Equity, Skills Development,
Preferential Procurement, Enterprise Development and
Socio-Economic Development as set out in the Codes.
Of the group’s 1 462-strong workforce, 82% comprises of
historically disadvantaged individuals (HDIs).
pReFeRenTIAl pROcUReMenTAfrimat uses the Preferential Procurement Act, Broad-Based
Black Empowerment Act and the Codes as the primary points
of reference for BEE procurement. The group has embarked
on a policy to maximise procurement from suppliers with
high broad-based BEE ratings and to assist and develop
black-owned enterprises.
eMplOyMenT eqUITyThe group is committed to non-discriminatory employment
practices that recognise and reward initiative, effort and
merit across the board while at the same time prioritising the
advancement of designated groups.
Group recruitment policies are codified in accordance with
the Employment Equity Act to attract the necessary
competencies while creating equal employment.
Notwithstanding tough market conditions there remains an
industry-wide shortage of skilled professional black
candidates which continues to pose a challenge.
To address the prevalent skills shortage, a “Talent
Management Programme” was launched in 2008. The
programme includes succession planning, identification of
key performers, staff retention (motivation and reward),
BEE, young talent development and a performance
management system.
sKIlls DeVelOpMenT AnD TRAInIngAfrimat is committed to empowering employees to perform
better in their current positions and to ensure that they are
equipped with the technical, administrative and management
skills for promotion. The group prioritises ongoing training
offering internal training and using external suppliers to
facilitate continuous development of its skills-base. In this
way Afrimat accelerates advancement and promotion of
personnel, particularly black candidates.
During the year a total of 199 employees benefited from
internal and external training of which 72% were black.
Courses ranged from Adult Basic Education and Training
(ABET) through university degrees to computer literacy and
technical, supervisory and management skills. This also
included operational and safety training as well as
administrative skills development.
In line with succession planning candidates have been
identified and are receiving personal mentorship in addition
to support in furthering their formal education and operational
knowledge. Managing Directors are mentoring four HDI’s
who have been appointed as Trainee/Assistant Managers as
part of two to three year development programmes. Further
two HDI’s are currently being developed as accountants, one
as an HR practitioner and one as a transport manager.
sAFeTy, heAlTh AnD enVIROnMenTThe group is committed to a safe and healthy working
environment and ensures Afrimat’s strict compliance with
the South African Occupational Health and Safety Act, 1993,
and regulations.
During the year Afrimat embarked on the process of
developing reporting formats regarding health and safety
training at group level. This will ensure that all legal
appointees receive the relevant training associated with their
appointment. These reports will be available by June 2009.
14 AFRIMAT ANNUAL REPORT ’09
sUsTAInABIlITy RepORT CONTINUED
Afrimat sponsors the De La Bat School for the Deaf in Worcester as part of its social development programme. A matric scholar, Rudolf van der Merwe (17), drew this picture in appreciation of the sponsorship.
During 2008 employees were trained in good safety practices and legal appointees (safety representatives, first aiders) were also trained.
A dedicated Health and Safety Officer is appointed for every geographical region to support the operational sites. A Health and Safety Representative is elected and appointed for each operational site, who reports to the regional Health and Safety Officer.
Health and safety risks are identified through process-based Hazard Identification Risk Assessments (HIRA) at each site. Risks identified during the HIRA process are mitigated and/or managed by writing and implementing Safe Work Procedures. HIRA and risk mitigation are performed using Afrimat’s established scoring mechanisms. Site-specific Safe Work Procedures (SWP’s) and other related controls are developed for hazards with an unacceptable risk rating. SWP’s and controls are implemented and all affected staff trained. Hazards are re-rated after implementing SWP’s and controls. The process is repeated until all hazards and associated risks are at acceptable levels.
To ensure compliance with the relevant health and safety regulations the group undertakes continuous monitoring by means of site self-audits, internal Health and Safety audits headed by the relevant Representative, as well as external audits (eg. Department of Minerals and Energy and ASPASA audits).
As the group’s activities may have an inadvertent effect on the environment in the ordinary course of projects of this nature, Afrimat is committed to identifying means of limiting the harmful effect on the environment. The group is well respected for environmental management programmes that comply with all legislation as well as global best practice. To ensure that policies are in line with international standards, Afrimat continually monitors national and international regulatory and technical developments and guidelines in the fields of safety, health and environmental management. Third party audits by ASPASA, SARMA and external
consultants assist management in identifying improvement opportunities. Environmental progress reports are submitted annually to the Department of Minerals and Energy in terms of mining license requirements.
Mine rehabilitation assessments are conducted by external consultants and provisions are raised to meet these future obligations.
hIV/AIDs AnD OTheR RelATeD heAlTh IssUesAfrimat is concerned about the HIV/AIDS pandemic threatening South Africans and to this end a formal HIV/AIDS policy is in place. This is aimed at preventing discrimination in the workplace of any nature against employees living with HIV/AIDS and to encourage early detection and treatment.
Afrimat undertook an extensive HIV/AIDS awareness drive in 2007. Further, the group continues to highlight issues around HIV/AIDS awareness through channels such as the staff newsletter.
cORpORATe sOcIAl InVesTMenT (“csI”)Afrimat is committed to socio-economic development and empowerment of the local communities in which it operates. The group has a target expenditure of 1% of Profit After Tax by each subsidiary that requires BBBEE rating and is committed to expenditure and actions in terms of the social and labour plans required by the Department of Minerals and Energy for mining licence purposes. An annual progress report in this regard is submitted to the Department of Minerals and Energy.
The group actively supports a number of initiatives. Local management identifies potential projects and also liaises with the local economic fora in this regard.
15AFRIMAT ANNUAL REPORT ’09
VAlUe ADDeD sTATeMenTFOR THE yEAR ENDED 28 FeBRUARy 2009
Set out below is the wealth created by the group and its employees during the year under review and how it was applied:
2009
R
2008
R
Revenue 687 090 781 611 659 677
Cost of services provided 418 918 172 329 491 296
Value added by operations 268 172 609 282 168 381
Non-operating income 4 521 552 6 030 784
Total value added 272 694 161 288 199 165
Applied as follows:
To remunerate employees:
– Salaries, wages, pensions, bonus and other benefits 135 904 070 112 170 369
To reward providers of capital:
– Dividends 28 112 815 9 363 369
– Interest on loans 13 222 654 9 176 401
To the State:
– Direct taxes 28 249 317 38 561 713
To replace assets:
– Depreciation 37 612 796 33 305 777
To expand the group:
– Retained earnings 29 592 509 85 621 536
Total value added 272 694 161 288 199 165
16 AFRIMAT ANNUAL REPORT ’09
AnnuAl FInAncIAl sTATeMenTsfOR ThE yEAR ENdEd 28 FeBRuARY 2009
conTenTs PAGe
directors’ Statement of Responsibility 17
declaration by Company Secretary 17
Report of the Independent Auditors 18
directors’ Report 19
Balance Sheet 22
Income Statement 23
Statement of Changes in Equity 24
Cash flow Statement 26
Notes to the Annual financial Statements 27
Segmental Report 60
17AFRIMAT ANNUAL REPORT ’09
The annual financial statements set out on pages 19 to 60 are the responsibility of the directors. The directors are responsible for selecting and adopting sound accounting practices, for maintaining an adequate and effective system of accounting records, for safeguarding assets and for developing and maintaining systems of internal control that, among other things, will ensure the preparation of annual financial statements that achieve fair presentation.
The annual financial statements set out in this annual report have been prepared by the directors in accordance with IfRS. They are based on appropriate accounting policies which have been consistently applied, unless otherwise indicated, and which are supported by reasonable and prudent judgements and estimates.
The annual financial statements have been prepared on the going concern basis since the directors have every reason to believe that the company and the group have adequate resources in place to continue operations for the foreseeable future. The external auditors have concurred with the directors’ statement on going concern.
The external auditors are responsible for independently auditing and reporting on these annual financial statements in conformity with International Standards on Auditing.
The annual financial statements were approved by the board and were signed on its behalf by:
AJ van Heerden HP Verreynneceo Financial Director
Cape Town12 June 2009
We declare that, to the best of our knowledge, the company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of the South African Companies Act, 1973, and that all such returns are true, correct and up-to-date.
Routledge Modise in association with Evershedscompany secretary
Johannesburg12 June 2009
DIRecToRs’ sTATeMenT oF ResPonsIBIlITY
DeclARATIon BY coMPAnY secReTARY
18 AFRIMAT ANNUAL REPORT ’09
We have audited the group annual financial statements and annual financial statements of Afrimat Limited, which comprise the consolidated and separate balance sheets as at 28 february 2009, and the consolidated and separate income statements, the consolidated and separate statements of changes in equity and consolidated and separate cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the directors’ report, as set out on pages 19 to 60.
DiREctoRs’ REsPonsibility foR tHE finAnciAl stAtEMEntsThe company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with International financial Reporting Standards, and in the manner required by the Companies Act of South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
AuDitoR’s REsPonsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
oPinionIn our opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of Afrimat Limited as at 28 february 2009, and its consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with International financial Reporting Standards, and in the manner required by the Companies Act of South Africa.
MAZARs MooREs RoWlAnDRegistered Auditor
Partner: D DollmanRegistered Auditor
12 June 2009Cape Town
RePoRT oF The InDePenDenT AuDIToRsTo The MeMBeRs oF AFRIMAT lIMITeD
19AFRIMAT ANNUAL REPORT ’09
The directors of Afrimat Limited present their report for the group for the year ending 28 february 2009.
nAtuRE of businEssAfrimat is a black empowered construction supplies manufacturer servicing the building, construction, road building, railroad and mining sectors. The group operates in the Western and Eastern Cape, KwaZulu-Natal, free State, Gauteng, Limpopo, Mpumalanga and Namibia.
finAnciAl REsultsThe annual financial statements presented on pages 19 to 60 set out fully the financial position, results of operations and cash flows for the year.
core headline earningsCore headline earnings is defined as headline earnings excluding once-off start-up and BEE costs as well as non-recurring expenses, and therefore offers a more meaningful comparison year-on-year.
Core headline earnings of R69,7 million reflects a decrease of 26,6% from R94,9 million in the previous year. Core hEPS declined from 72,3 cents in the previous year to 52,2 cents.
Headline earningsheadline earnings decreased by 41,6% to R54,1 million and hEPS by 42,5% to 40,5 cents.
oPERAtionAl REViEW“Aggregates” performed below expectations against the backdrop of tough trading conditions. demand in the Western Cape slowed in line with the province’s economic decline, which resulted in lower volumes. This was compounded by delays in municipal authorisation of projects, unusually low expenditure on infrastructure budget by the provincial government and a severe slowdown in residential property development.
Although the division’s performance improved in the third quarter of the financial year, it deteriorated in the fourth quarter due to the traditional month-long ‘builder’s holiday’ and the further delay in off-take of large-scale infrastructure projects to April 2009.
The KwaZulu-Natal operations were also impacted by once–off production cost pressures and changes in product mix.
In contrast following the commissioning of the new plant the denver quarry, which supplies the Port Elizabeth metropole, performed exceptionally well throughout the year.
Afrimat further secured the rights to supply large-scale projects in the Gauteng, Limpopo and Mpumalanga regions. Processing plants have been established in these regions and are now fully operational. These are well-placed to supply government infrastructure projects and significantly boost the division’s revenue going forward.
“Readymix concrete” posted a satisfactory performance, benefitting from higher volumes as a result of exposure to increased government infrastructure development.
“concrete Manufactured Products” similarly leveraged ongoing government housing projects to record increased volumes.
during the year Afrimat commissioned new quarries at Randfontein and Witbank, a quarry was acquired in dundee and a non-profitable quarry in Port Alfred was closed. Three new readymix sites were commissioned and a plant was acquired in dundee. Three Concrete Manufactured Products factories were upgraded to meet the increased demand from customers.
Accounting PoliciEsdetailed accounting policies are set out on pages 27 to 37 of the annual financial statements.
DiViDEnDAn interim dividend of 5,0 cents (2008: 7,0 cents), amounting to R6,7 million (2008: R9,3 million), was declared and paid to the shareholders of Afrimat during the year under review. The board declared a final dividend of 8,0 cents per share (2008: 16,0 cents) on 13 May 2009, amounting to R10,7 million (2008: R21,4 million) a total dividend for the year of 13,0 cents per share (2008: 23,0 cents per share). Secondary tax on companies amounting to R1,1 million will be payable on the final dividend declared.
AutHoRisED sHARE cAPitAlThe total authorised ordinary share capital at year-end was R10,0 million, consisting of 1 000 000 000 ordinary shares of 1 cent each with no change from the previous year.
issuED sHARE cAPitAlThe total issued ordinary share capital at year-end was R1 339 324, consisting of 133 762 412 ordinary shares (2008: R1 339 327 consisting of 133 762 738 ordinary shares). On 28 february 2009 the company cancelled 326 shares.
PRoPERty, PlAnt AnD EquiPMEntThere has been no major change in the nature and use of property, plant and equipment during the year under review.
DiREctoRsThe directors of the company at the date of this annual report are set out on pages 2 and 3 of the annual report.
DiREctoRs’ AnD officERs’ intEREsts in contRActsNo material contracts in which directors have an interest were entered into during the year other than the transactions detailed in note 31 to the annual financial statements.
DiREctoRs’ EMoluMEnts AnD EMPloyMEnt contRActsdetails of directors’ emoluments are set out in note 34 to the annual financial statements. The employment contracts for executive directors PG Corbin and AJ van heerden will terminate on 6 November 2011.
DIRecToRs’ RePoRTfOR ThE yEAR ENdEd 28 FeBRuARY 2009
20 AFRIMAT ANNUAL REPORT ’09
DiREctoRs’ sHAREHolDing As At 28 fEbRuARy 2009
Number of shares held
director
direct Indirect Percentageheld
(%)BeneficiallyNon-
beneficially BeneficiallyNon-
beneficially2009PG Corbin 4 586 413 3,43L dotwana 6 210 701 4,64f du Toit 19 748 502 14,77GN Jiyane (resigned 15 January 2009) –M Kaplan 160 000 0,12AJ van heerden 5 475 026 4,09hJE van Wyk 112 000 0,08hP Verreynne 100 000 0,07MW von Wielligh 1 000 000 0,75
10 321 439 – 6 210 701 20 860 502 27,952008PG Corbin 4 596 413 3,44L dotwana 6 210 701 4,64f du Toit 19 470 297 14,56GN Jiyane 392 638 0,29M Kaplan 160 000 0,12AJ van heerden 5 475 026 4,09hJE van Wyk 112 000 0,08hP Verreynne –MW von Wielligh 1 000 000 0,75
10 231 439 – 6 603 339 20 582 297 27,97
Between year-end and the date of this report the following director’s dealing took place: f du Toit purchased 40 000 shares as published on SENS on friday, 27 february 2009.
coMPAny sEcREtARyRoutledge Modise in association with Eversheds remains the company secretary. Routledge Modise’s business and postal addresses are set out in the Administration section of this annual report.
AuDitoRsMazars Moores Rowland will continue in office as auditors of the company in accordance with section 270(2) of the South African Companies Act, 1973 subject to shareholder approval at the upcoming annual general meeting.
AcquisitionsThe group acquired 100% of Sunshine Crushers (Pty) Limited with effect from 1 August 2008 as well as dormant companies Bechini Investments 73 (Pty) Limited from 3 November 2008 and Intshinga Mining (Pty) Limited from 28 february 2009. during the previous year the group acquired the Malans Group and denver Quarries with effect from 1 June 2007 as well as the Scottburgh/Maritzburg quarries with effect from 1 July 2007. Amounts included are as follows:
2009 2008
sunshinecrushers
R
MalansGroup
R
denverQuarries
R
Scottburgh/Maritzburg
R
Carrying amounts of net assets
– Property, plant and equipment 6 268 408 48 235 236 31 205 864 5 037 599
– Other (3 910 745) (797 063) (16 815 211) 912 087
2 357 663 47 438 173 14 390 653 5 949 686
fair value of assets
– Property, plant and equipment 6 268 408 62 054 571 31 205 864 6 937 599
– Other (3 910 745) (2 800 820) (16 815 211) 9 078 143
2 357 663 59 253 751 14 390 653 16 015 742
DIRecToRs’ RePoRT CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
21AFRIMAT ANNUAL REPORT ’09
2009 2008
sunshinecrushers
R
MalansGroup
R
denverQuarries
R
Scottburgh/Maritzburg
R
Goodwill 5 723 351 17 038 976 39 137 357 1 900 000
Purchase consideration 8 081 014 76 292 727 53 528 010 17 915 742
Profit after tax included in results 1 092 756 15 152 554 781 221 (158 067)
Pro forma profit after tax assuming business combinations for full year 2 618 741 18 581 000 2 638 000 44 000
Pro forma revenue assuming business combinations for full year 9 755 434 156 110 720 72 904 757 –
DisPosAlsBusiness disposals during the year were 7.3% of Brickrush (Pty) Limited and 15% of AfT Aggregates (Pty) Limited. Business disposals during the prior year were Prima Quarries 1987 (Pty) Limited, from 30 November 2007, and 12,5% of Capmat (Pty) Limited, from 6 January 2008.
2009 2008
7,3% brickrush
R
15% AftAggregates
R
Prima Quarries
1987R
12,5%Capmat
R
Carrying amounts of net assets
– Plant and equipment 323 578 – 2 805 608 232 642
– Other 1 243 263 168 041 4 143 035 660 963
1 566 841 168 041 6 948 643 893 605
fair value of assets
– Plant and equipment 323 578 – 2 805 608 232 642
– Goodwill 806 294 – – –
– Other 1 243 263 168 041 4 143 035 660 963
2 373 135 168 041 6 948 643 893 605
Proceeds on disposal 3 833 960 168 041 11 014 561 102 459
Profit after tax included in results
– Profit on disposal of businesses 1 198 960 (23 526) 3 674 561 (676 429)
– Profit after tax for period to disposal date – 2 633 672 975 36 282
1 198 960 (20 893) 4 347 536 (640 147)
intEREst in subsiDiARiEsThe interest in subsidiaries is presented in note 5 to the annual financial statements. The interest of the holding company in the profits and losses of the subsidiaries, after taxation and profits attributable to minority interests, is as follows:
2009R
2008R
Profits 59 944 155 87 171 972
Losses (2 097 006) (1 126 926)
sPEciAl REsolutionsA general authority was approved by the shareholders at the Annual General Meeting held on 30 July 2008 to acquire ordinary shares issued by the company, in terms of sections 85(2), 85(3) and 89 of the Companies Act and in terms of the Listings Requirements of the JSE.
boRRoWingsIn terms of the Articles of Association the directors may exercise all the powers of the company to borrow money, as they consider appropriate.
Post-bAlAncE sHEEt EVEntNo material events have occurred since the financial year-end to the date of this report.
12 June 2009
22 AFRIMAT ANNUAL REPORT ’09
BAlAnce sheeTAT 28 FeBRuARY 2009
Notes
Group Company
2009R
2008R
2009R
2008R
AssEtsnon-current assetsProperty, plant and equipment 2 382 539 041 309 674 682 1 161 876 211 079
Intangible assets 3 15 138 612 15 771 340 – –
Goodwill 4 101 331 899 96 394 940 – –
Investments in subsidiaries 5 – – 374 312 182 293 828 319
Other financial assets 6 3 727 865 3 978 334 – –
Retirement benefit asset 8 11 792 354 11 058 963 – –
514 529 771 436 878 259 375 474 058 294 039 398
current assetsInventories 9 75 402 311 59 690 764 – –
Loans to subsidiaries 5 – – 20 701 280 45 588 414
Current tax receivable 10 593 068 4 551 295 252 907 –
Trade and other receivables 10 132 367 525 120 474 341 16 748 418 58 384
Cash and cash equivalents 11 21 688 808 38 819 885 3 896 621 2 916 906
240 051 712 223 536 285 41 599 226 48 563 704
total assets 754 581 483 660 414 544 417 073 284 342 603 102
Equity AnD liAbilitiEsEquityShare capital 12 1 339 624 1 339 627 1 337 624 1 337 627
Share premium 13 325 169 773 326 115 905 325 169 773 326 115 905
Business combination adjustment 13 (105 788 129) (105 788 129) – –
Treasury shares 14 (4 119 601) (886 648) – –
Net issued share capital 216 601 667 220 780 755 326 507 397 327 453 532
Reserves 16 2 259 701 934 981 925 644 92 500
Retained income 272 077 246 242 484 737 46 294 989 10 819 380
Equity attributable to equity holders of parent 490 938 614 464 200 473 373 728 030 338 365 412
Minority Interest 2 830 347 700 947 – –
total equity 493 768 961 464 901 420 373 728 030 338 365 412
liAbilitiEsnon-current liabilitiesBorrowings long-term 17 58 202 467 27 419 606 – –
Provisions 18 12 009 256 8 522 172 – –
deferred tax 19 53 712 973 49 096 550 133 591 –
123 924 696 85 038 328 133 591 –
current liabilitiesLoans from subsidiaries 5 – – 40 011 480 –
Borrowings short-term 17 42 919 233 37 045 256 – –
Current tax payable 7 306 778 13 565 255 – 703 522
Trade and other payables 7a 73 264 323 58 609 794 3 200 183 3 534 168
Bank overdraft 11 13 397 492 1 254 491 – –
136 887 826 110 474 796 43 211 663 4 237 690
total liabilities 260 812 522 195 513 124 43 345 254 4 237 690
total equity and liabilities 754 581 483 660 414 544 417 073 284 342 603 102
23AFRIMAT ANNUAL REPORT ’09
IncoMe sTATeMenTfOR ThE yEAR ENdEd 28 FeBRuARY 2009
Notes
Group Company
2009R
2008R
2009R
2008R
Revenue 20 687 090 781 611 659 677 16 937 381 11 107 279
Cost of sales (525 376 664) (435 356 855) – –
Gross profit 161 714 117 176 302 822 16 937 381 11 107 279
Other income 5 054 299 8 504 408 2 038 505 –
Operating expenses (71 720 685) (47 690 250) (17 713 295) (8 257 270)
operating profit 21 95 047 731 137 116 980 1 262 591 2 850 009
Investment revenue 22 4 521 552 6 030 784 68 134 312 15 677 284
finance costs 23 (13 222 654) (9 176 401) (2 058 438) (1 333 504)
Profit before taxation 86 346 629 133 971 363 67 338 465 17 193 789
Taxation 24 (28 249 317) (38 561 713) (3 772 825) (2 607 982)
Profit for the year 58 097 312 95 409 650 63 565 640 14 585 807
Attributable to:
Ordinary shareholders 57 702 852 94 949 832 63 565 640 14 585 807
Minority interest 394 460 459 818 – –
58 097 312 95 409 650 63 565 640 14 585 807
shares in issueTotal shares in issue 133 762 412 133 762 738 – –
Treasury shares (855 829) (119 583) – –
Net shares in issue 132 906 583 133 643 155 – –
net shares in issueMarch 133 643 155 124 299 497 – –
April 133 643 155 124 299 497 – –
May 133 625 365 124 299 497 – –
June 133 615 257 133 762 738 – –
July 133 576 909 133 762 738 – –
August 133 571 909 133 762 738 – –
September 133 571 909 133 762 738 – –
October 133 571 909 133 762 738 – –
November 133 544 409 133 762 738 – –
december 133 532 909 133 762 738 – –
January 132 957 909 133 699 113 – –
february 132 906 583 133 643 155 – –
Weighted average number of net shares in issue 133 480 115 131 381 660 – –
Earnings per ordinary share (cents) 43,2 72,3 – –
diluted earnings per ordinary share (cents) 43,2 72,3 – –
24 AFRIMAT ANNUAL REPORT ’09
sTATeMenT oF chAnGes In equITYfOR ThE yEAR ENdEd 28 FeBRuARY 2009
Share capital
R
Sharepremium
R
Treasuryshares
R
Businesscombinationadjustment
R
Otherreserves
R
Retainedincome
R
Minorityinterest
R
Total equity
R
gRouPbalance at 1 March 2007 1 244 995 245 425 754 – (105 788 129) 335 846 156 863 201 24 603 298 106 270
Changes:
Acquisition equity adjustments – – – – – 35 073 216 526 251 599
Issue of shares 94 632 – – – – – – 94 632
Premium on shares issued – 80 690 151 – – – – – 80 690 151
Net income (expenses)
recognised directly in equity – – – – 359 135 – – 359 135
fair value adjustment on available-for-sale financial assets – – – – 399 416 – – 399 416
deferred tax on fair value adjustment – – – – (40 281) – – (40 281)
Employee share option scheme:
– Value of services provided – – – – 240 000 – – 240 000
Movement in treasury shares – – (886 648) – – – – (886 648)
Profit for the year – – – – – 94 949 832 459 818 95 409 650
dividends paid – – – – – (9 363 369) – (9 363 369)
Total changes 94 632 80 690 151 (886 648) – 599 135 85 621 536 676 344 166 795 150
balance at 29 february 2008 1 339 627 326 115 905 (886 648) (105 788 129) 934 981 242 484 737 700 947 464 901 420
Changes:
disposal equity adjustments – – – – (2 372) 2 472 1 734 940 1 735 040
Issue/(Cancellation) of shares (3) – – – – – – (3)
Premium/(Adjustment) on shares issued – (946 132) – – – – – (946 132)
Net income/(expenses)
recognised directly in equity – – – – (247 370) – – (247 370)
fair value adjustment on available-for-sale financial assets – – – – (279 993) – – (279 993)
deferred tax on fair value adjustment – – – – 32 623 – – 32 623
Employee share option scheme:
– Value of services provided – – – – 1 574 462 – – 1 574 462
Movement in treasury shares – – (3 232 953) – – – – (3 232 953)
Profit for the year – – – – – 57 702 852 394 460 58 097 312
dividends paid – – – – – (28 112 815) – (28 112 815)
Total changes (3) (946 132) (3 232 953) – 1 324 720 29 592 509 2 129 400 28 867 541
balance at 28 february 2009 1 339 624 325 169 773 (4 119 601) (105 788 129) 2 259 701 272 077 246 2 830 347 493 768 961
25AFRIMAT ANNUAL REPORT ’09
Share capital
R
Sharepremium
R
Treasuryshares
R
Businesscombinationadjustment
R
Otherreserves
R
Retainedincome
R
Minorityinterest
R
Total equity
R
coMPAnybalance at 1 March 2007 1 242 995 245 425 754 – – – 5 596 942 – 252 265 691
Changes:
Profit for the year – – – – – 14 585 807 – 14 585 807
Issue of shares 94 632 – – – – – – 94 632
Premium on shares issued 80 690 151 – – – – – 80 690 151
Employee share option scheme:
– Value of services provided – – – – 92 500 – – 92 500
dividends paid – – – – – (9 363 369) – (9 363 369)
Total changes 94 632 80 690 151 – – 92 500 5 222 438 – 86 099 721
balance at 29 february 2008 1 337 627 326 115 905 – – 92 500 10 819 380 – 338 365 412
Changes:
Profit for the year – – – – – 63 565 640 – 63 565 640
Issue/(Cancellation) of shares (3) – – – – – – (3)
Premium/(Adjustment) on shares issued – (946 132) – – – – – (946 132)
Employee share option scheme:
– Value of services provided – – – – 833 144 – – 833 144
dividends paid – – – – – (28 090 031) – (28 090 031)
Total changes (3) (946 132) – – 833 144 35 475 609 – 35 362 618
balance at 28 february 2009 1 337 624 325 169 773 – – 925 644 46 294 989 – 373 728 030
26 AFRIMAT ANNUAL REPORT ’09
cAsh Flow sTATeMenTfOR ThE yEAR ENdEd 28 FeBRuARY 2009
Notes
Group Company
2009R
2008R
2009R
2008R
cash flows from operating activitiesCash generated from operations 25.1 119 478 763 114 505 531 (16 810 312) 6 980 931
Interest income 4 495 435 6 011 032 3 167 572 6 313 892
dividends received 26 117 19 752 26 935 570 9 363 392
finance costs (13 222 654) (9 176 401) (2 058 438) (1 333 504)
Tax paid 25.2 (38 190 527) (39 937 256) (4 804 761) (4 198 737)
net cash from operating activities 72 587 134 71 422 658 6 429 631 17 125 974
cash flows from investing activitiesAcquisition of property, plant and equipment 2 (122 269 300) (60 484 600) (1 107 272) (214 940)
Proceeds on sale of property, plant and equipment 21 742 452 11 046 343 – –
Acquisition of businesses 27 (7 802 995) (113 571 160) (8 081 014) (116 636 483)
Proceeds on sale of businesses 28 4 002 000 6 343 550 4 002 000 –
Loans received/(repaid) – – 28 772 536 10 675 798
Proceeds/(purchase) of financial assets (29 524) 44 353 037 – 42 808 787
net cash from investing activities (104 357 367) (112 312 830) 23 586 250 (63 366 838)
cash flows from financing activitiesProceeds on share issue/(Shares cancelled) 25.3 (3) 65 221 (3) 65 221
Proceeds and premium/(adjustment) on shares issued 25.4 (946 132) 58 219 567 (946 132) 58 219 567
Purchase of treasury shares (3 232 953) (886 648) – –
Proceeds from borrowings 89 897 197 32 027 941 – –
Repayment of borrowings (55 109 139) (42 012 337) – –
dividends paid 26 (28 112 815) (9 363 369) (28 090 031) (9 363 369)
net cash from financing activities 2 496 155 38 050 375 (29 036 166) 48 921 419
Total cash movement for the year (29 274 078) (2 839 797) 979 715 2 680 555
Cash at the beginning of the year 37 565 394 40 405 191 2 916 906 236 351
total cash at the end of the year 11 8 291 316 37 565 394 3 896 621 2 916 906
27AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTsfOR ThE yEAR ENdEd 28 FeBRuARY 2009
PREsEntAtion of AnnuAl finAnciAl stAtEMEntsThe annual financial statements have been prepared in accordance with International financial Reporting Standards and the Companies Act of South Africa. The annual financial statements have been prepared using a combination of the historical cost and fair value basis of accounting. Those categories to which the fair value basis of accounting has applied are indicated in the individual accounting policy notes below.
The preparation of financial statements in conformity with IfRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in note 1.18.
The principal accounting polices are set out below. These accounting polices are consistent with the previous year, unless otherwise stated.
1. Accounting PoliciEs1.1 business combination Prima, a subsidiary, was regarded as the acquirer for accounting purposes in terms of IfRS 3. Consequently the group
consolidated financial statements represent a continuation of the financial statements of the legal subsidiary.
(a) basis of consolidation Group financial statements The group financial statements comprise the consolidated financial statements of the company and its subsidiaries. The
financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group.
company financial statements Investments in subsidiaries are initially recognised at cost. The cost of an investment in subsidiary is the aggregate of the
fair value, at the date of exchange, of assets given, liabilities incurred or assumed, equity instruments issued and the direct costs attributable to the acquisition of the subsidiary.
Investments in subsidiaries are subsequently measured at cost less any accumulated impairment.
(b) Minorities The group applies a policy of treating transactions with minority interests as transactions with parties external to the group.
disposals to minority interests results in gains and losses for the group and are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary.
(c) share trusts The group consolidates the Afrimat BEE Trust and the Afrimat Share Incentive Trust.
1.2 Property, plant and equipment Property, plant and equipment is initially recognised at cost. The cost of property, plant and equipment includes amounts
incurred initially to acquire or construct an item of property, plant and equipment and amounts incurred subsequently to add to or replace part of the asset. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised. day-to-day servicing costs, such as labour and consumables, are expensed in the income statement as repairs and maintenance.
The cost of an item of property, plant and equipment includes the initial estimate of the cost of dismantling and removing the asset and restoring the site on which it is located. When this initial estimate of costs is included in the cost of the item of
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property, plant and equipment, a corresponding provision is created for the obligation. The initial estimate of the expenditure required to settle the present obligation is determined using a current market-based discount rate.
Property, plant and equipment are subsequently measured at cost less accumulated depreciation and any accumulated impairment losses.
depreciation is provided on all property, plant and equipment other than freehold land, to write down the cost, less residual value, on the straight-line basis over their useful lives as follows:
Leasehold property 10 to 50 years Plant and machinery 5 to 20 years Motor vehicles 3 to 10 years Office equipment 3 to 5 years
Where a part of an item of property, plant and equipment is significant in relation to the cost of the item, that part is depreciated separately. The depreciation charge for each period is recognised as an expense in the income statement.
The residual values, useful lives and depreciation methods applied to property, plant and equipment are reviewed, and adjusted if necessary, on an annual basis. These changes are accounted for as a change in estimate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
The gain or loss arising from the derecognition of an item of property, plant and equipment is included in the income statement and is calculated as the difference between the net disposal proceeds, if any, and the carrying amount of the item at the date of derecognition.
1.3 goodwill Goodwill arises from business combinations and is initially measured at cost. Cost represents the excess of the purchase
consideration over the fair value of the group’s share of the identifiable assets, liabilities and contingent liabilities acquired at the date of the acquisition.
Subsequently, goodwill is carried at cost less any accumulated impairment.
Where the fair value of the group’s share of the identifiable assets, liabilities and contingent liabilities acquired in a business combination is greater than the cost of the combination, the difference is recognised in the income statement immediately.
Goodwill is reviewed for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired.
At the acquisition dates, goodwill is allocated to each of the cash-generating units expected to benefit from a business combination. Impairment is determined by assessing the recoverable amount of the cash-generating unit to which goodwill relates. The recoverable amount is determined as the value in use of each cash-generating unit by estimating the expected future cash flows in each unit and choosing a suitable discount rate in order to calculate the present value of those cash flows.
Where the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, an impairment loss is recognised in the income statement beginning with the write off of the goodwill allocated to such cash-generating unit. Where the goodwill is insufficient to cover the amount of the impairment adjustment, the remaining assets in the cash-generating unit are impaired on a pro-rata basis.
An impairment loss recognised for goodwill is not subsequently reversed.
1.4 intangible assets Intangible assets are initially recognised at cost.
Where an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date.
Intangible assets are subsequently measured at cost less accumulated amortisation and any accumulated impairment losses.
for all intangible assets, amortisation is provided on the straight-line basis so to write down the cost of the intangible assets, less their residual values, on the straight-line basis over their useful lives estimated to be 30 years.
The amortisation charge is recognised as an expense in the income statement. The amortisation period and amortisation method applied to an intangible asset with a finite useful life is reviewed, and adjusted if necessary, on an annual basis. These charges are accounted for as a change in estimate.
Where the recoverable amount is less than the carrying amount of the assets or the cash-generating unit, an impairment loss is recognised in the income statement.
29AFRIMAT ANNUAL REPORT ’09
The useful life of an intangible asset with a finite life is reviewed annually to determine whether the finite life assessment continues to be supportable. If not, the change in the useful life assessment is made prospectively.
Intangible assets are derecognised upon disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the derecognition on an intangible asset is included in the income statement and is calculated as the difference between the net disposal proceeds, if any, and the carrying amount of the asset at the date of derecognition.
1.5 financial instruments initial recognition financial instruments carried on the balance sheet include cash and bank balances, investments, trade and other receivables,
trade and other payables, and borrowings.
The group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.
financial assets and financial liabilities are recognised on the group’s balance sheet when the group becomes party to the contractual provisions of the instrument.
financial assets The group classifies its financial assets in the following categories: at fair value through profit or loss; available-for-sale;
and loans and receivables. The classification is dependent on the purpose for which the financial assets were acquired. Management determines the classification of financial assets at the time of the purchase and re-evaluates such designation at every reporting date.
Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of
the other categories. They are included in non-current assets unless management intends to dispose of the investment within twelve months of the balance sheet date.
Regular purchases and sales of financial assets are recognised on the trade date – the date on which the group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs. financial assets are derecognised when the rights to receive cash flows from the investment have expired or have been transferred and the group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value with changes in fair value recognised in equity.
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognised in equity are included in the income statement. The fair values of quoted investments are based on current bid prices. If the market for available-for-sale assets is not active, the group uses discounted cash flow analyses to calculate the fair value.
financial assets at fair value through profit or loss financial assets at fair value through profit or loss are financial assets held-for-trading. A financial asset is classified in this
category if acquired principally for the purpose of selling in the short term. Assets in this category are classified as current assets.
The fair values of quoted investments are based on current bid prices. Gains or losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are presented in the income statement in the period in which they arise. dividend income from financial assets at fair value through profit or loss is recognised in the income statement when the group’s right to receive payment is established.
loans and receivables Loans and receivables are non-derivative assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for maturities greater than twelve months after balance sheet date.
Loans and receivables are carried at amortised cost using the effective interest rate method. Interest on loans and receivables are calculated using the effective interest method and recognised in the income statement.
impairment of financial assets The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of
financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement. Impairment testing of trade receivables is disclosed under trade receivables.
If there is objective evidence that an impairment loss on loans or receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated
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future cash flows discounted at the loan or receivable’s original effective interest rate. This impairment loss is recognised in the income statement.
trade and other receivables Trade receivables are initially recognised at fair value, being the original invoice amount, and subsequently carried at
amortised cost. An allowance for estimated irrecoverable amounts is recognised in the income statement when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments are considered indicators that the trade receivables are impaired.The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the income statement within operating expenses. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in the income statement.
cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash
and are subject to insignificant risk in change in value; these are initially and subsequently recorded at fair value.
for purposes of the cash flow statements, cash and cash equivalents comprise cash and cash equivalent defined above, net of outstanding bank overdrafts.
bank overdrafts and borrowings Bank overdrafts and borrowings are initially measured at fair value, which is the cash consideration received less transaction
costs. Subsequently, bank overdrafts and borrowings are measured at amortised cost using the effective interest rate method. The amortised cost method results in the accrual of interest in each period by applying the effective interest rate implicit to the outstanding balance on the borrowings. Borrowings are reduced when repayments are made.
share capital Share capital issued by the company is recorded at the proceeds received, net of issue costs.
Where any group company purchases the company’s equity share capital (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the company’s equity holders.
trade and other payables Trade and other payables are initially recognised at fair value, being the original invoice amount. Subsequently trade and
other payables are carried at amortised cost using the effective interest method.
1.6 inventories Inventories are measured at lower of cost and net realisable value.
Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.
The cost of inventories comprises of all costs of purchase, cost of conversion and other costs incurred in bringing the inventories to their present location and condition.
The cost of the inventories is assigned using the first-in, first-out (“fIfO”) formula. The same cost formula is used for all inventories having similar nature and use to the entity. The cost of consumable stores is determined on the weighted average basis.
When inventories are sold, the carrying amount of those inventories is recognised as an expense in the period in which the related revenue is recognised. The amount of any write-down of inventories to net realisable value and all losses of inventories are recognised as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realisable value, is recognised as a reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.
1.7 tax current tax assets and liabilities Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in
respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities, using the tax rates (tax laws) that have been enacted or substantively enacted by the balance sheet date.
31AFRIMAT ANNUAL REPORT ’09
Deferred tax assets and liabilities A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability
arises from: – the initial recognition of goodwill; or – the initial recognition of an asset or liability in a transaction which: – is not a business combination; and – at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
A deferred tax liability is recognised for all taxable differences associated with investments in subsidiaries, branches and associates, and interest in joint ventures, except to the extent that both the following conditions are satisfied:
– the parent, investor or venturer is able to control the timing of the reversal of the temporary difference; and – is probable that the temporary difference will not reverse in the foreseeable future.
A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised, unless the deferred tax asset from the initial recognition of an asset or liability in a transaction that:
– at the time of transaction, affects neither accounting profit nor taxable profit (tax loss).
A deferred tax asset is recognised for all deductible temporary differences arising from investment in subsidiaries, branches and associates, and interests in joint ventures, to the extent that it is probable that:
– the temporary difference will reverse in the foreseeable future; and – taxable profit will be available against which the unused tax losses and unused secondary tax on companies credits can
be utilised.
A deferred tax asset is recognised for the carry forward of unused tax losses and unused secondary tax on companies credits to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unused secondary tax on companies credits can be utilised.
deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date.
The measurement of deferred tax assets and liabilities reflect the tax consequences that would follow from the manner in which the group expects to recover or settle the carrying amounts of its assets and liabilities at the balance sheet date.
deferred tax assets and liabilities are offset for presentation in the balance sheet where the company has a legally enforceable right to do so and the income taxes relate to the same tax authority.
Therefore, deferred tax assets and deferred tax liabilities arising in the group financial statements from different subsidiaries are not offset because there is no allowance in South African tax law that allows income tax from different entities to be offset.
tax expense Current and deferred taxes are recognised as income or an expense and included in the income statement, except to the
extent that the tax arises from: – a transaction or event which is recognised, in the same or a different period, directly in equity, or a business
combination.
Current tax and deferred taxes are charged or credited to equity if the tax relates to items that are credited or charged, in the same or different period, directly to equity.
The current tax payable is based on taxable profit. Taxable profit differs from profit reported in the income statement when there are items of income or expense that are taxable or deductible in other years and it also excludes items that are never taxable or deductible under existing tax legislation.
Secondary taxation on companies is provided in respect of declared dividends, net of dividends received or receivable, and is recognised as a taxation charge in the income statement in the year the related dividend is declared.
1.8 leases as lessee and instalment purchase agreements Instalment purchase agreements are recognised as assets and liabilities in the balance sheet at amounts equal to the fair
value of the financed asset or, if lower, the present value of the minimum instalment payments. The corresponding liability to the lessee is included in the balance sheet as borrowings.
The discount rate used in calculating the present value of the minimum instalment payments is the interest rate implicit in the instalment purchase agreement.
The instalment purchase payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.
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Assets held under instalment purchase agreements are depreciated over their expected useful lives on the same basis as owned assets.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments are recognised as an operating lease liability. This liability is not discounted.
Contingent rentals are not accounted for on a straight-line basis, but are expensed in the income statement in the period in which they occur.
1.9 impairment of non-financial assets The company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such
indication exists, the company estimates the recoverable amount of the asset.
Irrespective of whether there is any indication of impairment, the company also tests intangible assets with an indefinite useful life and goodwill acquired in a business combination for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test is performed annually at the same time every year.
The accounting policy that deals with the impairment of intangible assets with an indefinite useful life and goodwill are included in the respective accounting policy notes for those assets.
1.10 Employee benefits short-term employee benefits The cost of short-term employee benefits, (those payable within twelve months after the service is rendered, such as paid
vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care), are recognised in the period in which the service is rendered and are not discounted.
The expected cost of compensated absences is recognised as an expense as the employee renders service that increases their entitlement or, in the case of non-accumulating absences, when the absence occurs.
The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal constructive obligation to make such payments as a result of past performance.
share-based compensation The group operates a number of equity-settled, share-based compensation plans. The fair value of the employee services
received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
Defined contribution plans Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.
Defined benefit plans for defined benefit plans the cost of providing the benefits is determined using the projected unit credit method. Actuarial
valuations are conducted annually by independent actuaries separately for each plan. Consideration is given to any event that could impact the funds up to balance sheet date where the interim valuation is performed at an earlier date.
Past service costs are recognised immediately to the extent that the benefits are already vested, and are otherwise amortised on a straight-line basis over the average period until the amendment benefits become vested.
To the extent that, at the beginning of the financial year, any cumulative unrecognised actuarial gain or loss exceeds 10% of the greater of the present value of the projected benefit obligation and the fair value of the plan assets (the corridor), that portion is recognised in the income statement as an expense over the average remaining service lives of participating employees. Actuarial gains or losses within the corridor are not recognised.
funding shortfalls arising in the defined benefit plan are met by the company through lump sum payments or an increase in the future rate of the company’s and/or employees’ contributions or a reduction in future benefits or any other combination of these alternatives.
The amount recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for unrecognised actuarial gains and losses and unrecognised past service cost, and reduced by the fair value of plan assets.
33AFRIMAT ANNUAL REPORT ’09
Any asset is limited to unrecognised actuarial losses, plus the present value of available refunds and reduction in future contributions to the plan.
1.11 Provisions Provisions are recognised when the group has a present obligation as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the obligation.
The amount of a provision is the present value of the expenditure expected to be required to settle the obligation. Provisions are reviewed annually to reflect current best estimates of the expenditure required to settle the obligation.
Where some or all of the expenditure required to settle a provision is expected to be reimbursed by another party, the reimbursement shall be recognised when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement shall be treated as a separate asset. The amount recognised for the reimbursement shall not exceed the amount of the provision.
1.12 Revenue Revenue from the sale of goods is recognised when the significant risks and rewards of ownership are transferred to the
buyer. Revenue is measured at the fair value of the consideration received or receivable, which is represented by the invoiced amount excluding value added tax, trade discounts and volume rebates.
Revenue arising from the rendering of services is recognised when the outcome of the transaction can be estimated reliably by reference to the stage of completion of the transaction. Revenue is measured at the fair value of the consideration received or receivable, excluding value added tax and trade discounts.
1.13 Accounting for bEE transactions Where equity instruments are issued to a BEE party at less than fair value, these are accounted for as share-based payments
in terms of IfRS2: Share-based payments, IfRIC8: Scope of IfRS2 and AC503: Accounting for Black Economic Empowerment transactions.
1.14 foreign currency transactions The consolidated financial statements are presented in South African Rand which is the company’s functional and
presentation currency. Translation of operations conducted in Namibia due to the fixed exchange rate, do not result in translation gains or losses.
1.15 borrowing costs Borrowing costs are recognised as an expense in the period in which they are incurred.
1.16 Decommissioning and quarry rehabilitation Group companies are required to restore quarry and manufacturing sites at the end of their productive lives to a condition
acceptable to the relevant authorities.
The expected cost of any decommissioning programme, discounted to its net present value, has been capitalised at current date and amortised over the estimated remaining useful life of the asset. The increase or decrease in the net present value of the expected cost is included in finance costs.
The expected increase or decrease in the cost of any rehabilitation programme, discounted to its net present value, is charged as an expense in the year in which the increase or decrease occur and is included in cost of sales. The increase or decrease in the net present value of the expected cost is included in finance costs.
1.17 segment information The principal segments of the group have been identified on a primary basis by business segment. The basis is representative
of the internal structure used for management reporting.
Segment revenue reflects both sales to external parties and inter-group transactions across segments. The segment result is presented as segment profit before net finance costs and taxation.
Segment operating assets and liabilities are only those items that can be specifically identified within a particular segment.
1.18 significant accounting judgements and estimates In the process of applying the group’s accounting policies, management has not made any judgements, apart from those
involving estimations, which have a significant effect on the amounts recognised in the financial statements.
Property, plant and equipment The useful lives and residual values of items of property, plant and equipment are assessed annually in order for depreciation
to be provided. The actual lives and residual values of assets may vary depending on several factors. Consideration has to be given to whether subsequent expenditure is to be treated as maintenance or to be capitalised.
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fOR ThE yEAR ENdEd 28 FeBRuARY 2009
trade and other receivables Impairment of trade and other receivables requires the consideration of the impairment indicators, namely significant
financial difficulties of the debtor, or delinquency in payments.
Decommissioning and rehabilitation provisions Quantifying the future costs of these obligations is complex and requires various estimates to be made thereof, as well as
interpretations of and decisions regarding regulatory requirements, particularly with respect to the degree of rehabilitation required, with reference to the sensitivity of the environmental area surrounding the sites. Consequently, the guidelines issued for quantifying the future rehabilitation cost of a site, as issued by the department of Mineral and Energy, have been used to estimate future rehabilitation costs. Management has also contracted independent consultants to estimate the amount of provisions required.
fair value of available-for-sale investments In determining the fair value of available-for-sale investments significant judgement is applied in estimating the rate of
return, discount rate and risk profile used to assess fair value.
impairment of goodwill Goodwill has been allocated to cash-generating units. The carrying value of goodwill is assessed using a discounted
methodology based on forecasts including assumptions on operating profit, depreciation, working capital movements and capital expenditure.
Amortisation of intangible assets The best estimate of the useful life of mining rights is used in assessing the period over which the group amortises mining
rights.
share-based payment expense calculation The group uses the Black Scholes valuation model to determine the fair value of the options granted. The significant inputs
into the model are disclosed in the note 15.
1.19 interpretations effective in 2009 and relevant to the group The following interpretation to published standards is mandatory for accounting periods beginning on or after 1 January
2008 and is relevant to the group’s operations:
– IfRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’, provides guidance on assessing the limit in IAS 19 on the amount of the surplus that can be recognised as an asset. It also explains how the pension asset or liability may be affected by a statutory or contractual minimum funding requirement. This interpretation does not have any impact on the group’s financial statements, as the group is not subject to any minimum funding requirements.
– IfRIC 11, ‘IfRS 2 – Group and treasury share transactions’, provides guidance on whether share-based transactions involving treasury shares or involving group entities (for example, options over a parent’s shares) should be accounted for as equity-settled or cash-settled share-based payment transactions in the stand-alone accounts of the parent and group companies. This interpretation does not have an impact on the group’s financial statements, as all share-based transactions are accounted for as equity-settled.
1.20 interpretations effective in 2009 but not relevant The following interpretation to published standards is mandatory for accounting periods beginning on or after 1 January
2008 but is not relevant to the group’s operations:
– IfRIC 12, ‘Service concession arrangements’.
– IfRIC 13, ‘Customer loyalty programmes’.
1.21 standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the group and are likely to have an impact on the group
The following standards and amendments to existing standards have been published and are mandatory for the group’s accounting periods beginning on or after 1 January 2009 or later periods, but the group has not early adopted them:
– IfRS 1 (Amendment) first time adoption of IfRS, and IAS 27 Consolidated and separate financial statements. The amended standard allows first-time adopters to use a deemed cost of either fair value or the carrying amount under previous accounting practice to measure the initial cost of investments in subsidiaries, jointly controlled entities and associates in the separate financial statements. The amendment also removes the definition of the cost method from IAS 27 and replaces it with a requirement to present dividends as income in the separate financial statements of the investor. The amendment will not have any impact on the group’s financial statements.
– IfRS 8, Operating Segments (effective from 1 January 2009). IfRS 8 replaces the previous IAS 14. The new standard requires a “management approach”, under which segment information is presented on the same basis as that used for
35AFRIMAT ANNUAL REPORT ’09
internal reporting purposes. The group will apply IfRS 8 from 1 March 2009. Management does not expect IfRS 8 to have a significant impact.
– IAS 23 (Amendment), Borrowing Costs (effective from 1 January 2009). The amendment requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of the asset. The option of immediately expensing those borrowings costs will be removed. The group will apply IAS 23 (Amendment) from 1 March 2009. Management does not anticipate that this will have a significant impact on the group’s consolidated financial statements.
– IAS 1 (Revised), Presentation of financial statements (effective from 1 January 2009). The revised standard prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity, requiring ‘non-owner changes in equity’ to be presented separately from owner changes in equity. All non-owner changes in equity is required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they are required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and the comparative period. The group will apply IAS 1 (Revised) from 1 March 2009. It is likely that both the income statement and statement of comprehensive income will be presented as performance statements.
– IfRS 2 (Amendment), Share-based payment (effective from 1 January 2009). The amended standard deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. These features would need to be included in the grant date fair value for transactions with employees and others providing similar services; they would not impact the number of awards expected to vest or valuation thereof subsequent to grant date. All cancellations, whether by the entity or by other parties, should receive the same accounting treatment. The group will apply IfRS 2 (Amendment) from 1 March 2009. Management does not expect that this will have a material impact on the group’s consolidated financial statements.
– IAS 32 (Amendment), financial instruments: Presentation, and IAS 1 (Amendment), Presentation of financial statements – Puttable financial instruments and obligations arising on liquidation (effective from 1 January 2009). The amended standards require entities to classify puttable financial instruments and instruments, or components of instruments that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation as equity, provided the financial instruments have particular features and meet specific conditions. The group will apply the IAS 32 and IAS 1 (Amendment) from 1 March 2009. It is not expected to have any impact on the group’s consolidated financial statements.
– IAS 27 (Revised), Consolidated and separate financial statements (effective from 1 July 2009). The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. This will no longer result in goodwill or gains and losses. It also specifies the accounting when control is lost. Any remaining interest in the entity is remeasured to fair value with a gain or loss recognised in the income statement. The group will apply IAS 27 (Revised) prospectively to transactions with non-controlling interests from 1 March 2010.
– IfRS 3 (Revised), Business combinations (effective from 1 July 2009). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. for example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair vale or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The group will apply IfRS 3 (Revised) prospectively to all business combinations from 1 March 2010.
– IfRS 5 (Amendment), Non-current assets held-for-sale and discontinued operations (and consequential amendment to IfRS 1, first-time adoption) (effective from 1 July 2009). The amendment is part of the IASB’S annual improvements project published in May 2008. The amendment clarifies that all of a subsidiary’s assets and liabilities are classified as held-for-sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met. A consequential amendment to IfRS 1 states that these amendments are applied prospectively from the date of transition to IfRSs. The group will apply the IfRS 5 (Amendment) prospectively to all partial disposals of subsidiaries from 1 March 2010.
– IAS 23 (Amendment), Borrowing costs (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. The definition of borrowing costs has been amended so that interest expense is calculated using the effective interest method defined in IAS 39 financial instruments: Recognition and measurement. This eliminates the inconsistency of terms between IAS 39 and IAS 23. The group will apply the IAS 23 (Amendment) prospectively to the capitalisation of borrowing costs on qualifying assets from 1 March 2009.
– IAS 28 (Amendment), Investments in associates (and consequential amendments to IAS 32, financial Instruments: Presentation, and IfRS 7, financial instruments: disclosures) (effective from 1 January 2009). The amendment is part of
36 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
the IASB’s annual improvements project published in May 2008. An investment in associate is treated as a single asset for the purposes of impairment testing. Any impairment loss is not allocated to specific assets included within the investment, for example, goodwill. Reversals of impairment are recorded as an adjustment to the investment balance to the extent that the recoverable amount of the associate increases. The group will apply the IAS 28 (Amendment) to impairment tests related to investments in subsidiaries and any related impairment losses from 1 March 2009.
– IAS 36 (Amendment), Impairment of assets (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. Where fair value less costs to sell is calculated on the basis of discounted cash flows, disclosures equivalent to those for value-in-use calculation should be made. The group will apply the IAS 28 (Amendment) and provide the required disclosure where applicable for impairment tests from 1 March 2009.
– IAS 38 (Amendment), Intangible assets (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. A prepayment may only be recognised in the event that payment has been made in advance of obtaining right of access to goods or receipt of services. The group will apply the IAS 38 (Amendment) from 1 March 2009.
– IAS 19 (Amendment), Employee benefits (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008.
– The amendment clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment, while an amendment that changes benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation.
– The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation.
– The distinction between short term and long term employee benefits will be based on whether benefits are due to be settled within or after 12 months of employee service being rendered.
– IAS 37, Provisions, contingent liabilities and contingent assets, required contingent liabilities to be disclosed, not recognised. IAS 19 has been amended to be consistent.
The group will apply the IAS 19 (Amendment) from 1 March 2009.
– IAS 39 (Amendment), financial instruments: Recognition and measurement (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008.
– This amendment clarifies that it is possible for there to be movements into and out of the fair value through profit or loss category where a derivative commences or ceases to qualify as a hedging instrument in cash flow or net investment hedge.
– The definition of financial asset or financial liability at fair value through profit or loss as it relates to items that are held-for-trading is also amended. This clarifies that a financial asset or liability that is part of a portfolio of financial instruments managed together with evidence of an actual recent pattern of short-term profit-taking is included in such a portfolio on initial recognition.
– The current guidance on designation and documenting hedges states that a hedging instrument needs to involve a party external to the reporting entity and cites a segment as an example of a reporting entity. This means that in order for hedge accounting to be applied at segment level, the requirements for hedge accounting are currently required to be met by the applicable segment. The amendment removes the example of a segment so that the guidance is consistent with IfRS 8, Operation segments, which requires disclosure for segments to be based on information reported to the chief operating decision-maker. Currently, for segment reporting purposes, each subsidiary designates contracts with group treasury as fair value or cash flow hedges so that the hedges are reported in the segment to which the hedged items relate. This is consistent with the information viewed by the chief operating decision-maker. After the amendment is effective, the hedge will continue to be reflected in the segment to which the hedged items relate (and information provided to the chief operating decision-maker) but the group will not formally document and test this relationship.
– When remeasuring the carrying amount of a debt instrument on cessation of fair value hedge accounting, the amendment clarifies that a revised effective interest rate (calculated at the date fair value hedge accounting ceases) are used.
The group will apply the IAS 39 (Amendment) from 1 March 2009. It is not expected to have an impact on the group’s consolidated income statement.
– IAS 1 (Amendment), Presentation of financial statements (effective from 1 January 2009). The amendment is part of the IASB’s annual improvements project published in May 2008. The amendment clarifies that some rather than all financial assets and liabilities classified as held-for-trading in accordance with IAS 39, financial instruments: Recognition and measurement, are examples of current assets and liabilities respectively. The group will apply the IAS 39 (Amendment) from 1 March 2009. It is not expected to have an impact on the group’s consolidated financial statements.
There are a number of minor amendments to IfRS 7, financial instruments: disclosures, IAS 8, Accounting policies, changes in accounting estimates and errors, IAS 10, Events after the reporting period, IAS 18, Revenue and IAS 34,
37AFRIMAT ANNUAL REPORT ’09
Interim financial reporting, which are part of the IASB’s annual improvements project published in May 2008. (not addressed above). These amendments are unlikely to have an impact on the group’s accounts and have therefore not been analysed in detail.
– IfRIC 16, hedges of a net investment in a foreign operation (effective 1 October 2008). IfRIC 16 clarifies the accounting treatment in respect of net investment hedging. This includes the fact that net investment hedging relates to differences in functional currency not presentation currency, and hedging instruments may be held anywhere in the group. The requirements of IAS 21, The effects of changes in foreign exchange rates, do apply to the hedged item. The group will apply IfRIC 16 from 1 March 2009. It is not expected to have a material impact on the group’s consolidated financial statements.
1.22 standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted and not relevant for the group’s operations
The following interpretations and amendments to existing standards have been published and are mandatory for the group’s accounting periods beginning on or after 1 January 2009 or later periods but are not relevant for the group’s operations:
– IAS 16 (Amendment), Property, plant and equipment (and consequential amendment to IAS 7, Statement of cash flows) (effective from 1 January 2009).
– IAS 27 (Amendment), Consolidated and separate financial statements (effective from 1 January 2009).
– IAS 28 (Amendment), Investments in associates (and consequential amendments to IAS 32, financial Instruments: Presentation and IfRS 7, financial instruments: disclosures) (effective from 1 January 2009).
– IAS 29 (Amendment), financial reporting in hyperinflationary economies (effective from 1 January 2009).
– IAS 31 (Amendment), Interests in joint ventures (and consequential amendments to IAS 32 and IfRS 7) (effective from 1 January 2009).
– IAS 38 (Amendment), Intangible assets (effective from 1 January 2009).
– IAS 40 (Amendment), Investment property (and consequential amendments to IAS 16) (effective from 1 January 2009).
– IAS 41 (Amendment), Agriculture (effective from 1 January 2009).
– IAS 20 (Amendment), Accounting for government grants and disclosure of government assistance (effective from 1 January 2009).
– IfRIC 15, Agreements for construction of real estates (effective from 1 January 2009).
38 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
2009 2008cost/
ValuationR
Accumulateddepreciation
R
carryingvalue
R
Cost/Valuation
R
Accumulateddepreciation
R
Carryingvalue
R
2. PRoPERty, PlAnt AnD EquiPMEntgroupLand and buildings 39 895 409 (413 043) 39 482 366 36 181 368 (599 474) 35 581 894Leasehold property 5 227 161 (1 115 778) 4 111 383 3 936 275 (733 427) 3 202 848Plant and machinery 256 241 495 (49 403 050) 206 838 445 236 968 959 (64 837 982) 172 130 977Motor vehicles 185 831 291 (59 979 524) 125 851 767 144 254 004 (50 571 390) 93 682 614Office equipment 4 654 271 (2 620 794) 2 033 477 4 729 586 (3 336 250) 1 393 336dismantling costs 6 394 168 (2 172 565) 4 221 603 5 580 697 (1 897 684) 3 683 013total 498 243 795 (115 704 754) 382 539 041 431 650 889 (121 976 207) 309 674 682companyOffice equipment 1 345 294 (183 418) 1 161 876 238 022 (26 943) 211 079
Movements in carrying value
openingcarrying
valueR
AdditionsR
Additionsthrough
businesscombinations
R
changein category
RDisposals
RDepreciation
R
closingcarrying
valueR
group 2009Land and buildings 35 581 894 3 904 807 – – – (4 335) 39 482 366Leasehold property 3 202 848 1 161 022 15 945 58 953 – (327 385) 4 111 383Plant and machinery 172 130 977 97 552 209 3 682 491 (30 707 045) (15 800 663) (20 019 524) 206 838 445Motor vehicles 93 682 614 17 057 116 2 548 511 31 234 754 (2 259 890) (16 411 338) 125 851 767Office equipment 1 393 336 1 780 674 21 461 (586 662) – (575 332) 2 033 477dismantling costs 3 683 013 813 472 – – – (274 882) 4 221 603total 309 674 682 122 269 300 6 268 408 – (18 060 553) (37 612 796) 382 539 041
group 2008Land and buildings 7 147 975 2 770 422 25 717 678 – – (54 181) 35 581 894Leasehold property 2 258 701 1 276 558 26 308 – – (358 719) 3 202 848Plant and machinery 94 570 416 38 731 228 63 392 871 – (6 306 785) (18 256 753) 172 130 977Motor vehicles 82 488 950 15 624 407 10 498 589 – (1 438 862) (13 490 470) 93 682 614Office equipment 723 609 950 584 562 648 – (6 933) (836 572) 1 393 336dismantling costs 3 341 545 1 131 401 – – (480 851) (309 082) 3 683 013total 190 531 196 60 484 600 100 198 094 – (8 233 431) (33 305 777) 309 674 682
openingcarrying
valueR
AdditionsR
Additionsthrough
businesscombinations
R
changein category
RDisposals
RDepreciation
R
closingcarrying
valueR
company 2009Office equipment 211 079 1 107 272 – – – (156 475) 1 161 876
39AFRIMAT ANNUAL REPORT ’09
Openingcarrying
valueR
AdditionsR
Additionsthrough
businesscombinations
R
Changein category
Rdisposals
Rdepreciation
R
Closingcarrying
valueR
2. PRoPERty, PlAnt AnD EquiPMEnt continued
company 2008Office equipment 22 441 214 940 – – – (26 302) 211 079
A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is available for inspection at the registered office of the company.
Certain property, plant and equipment has been encumbered as security for interest-bearing borrowings (note 17) Group2009
R2008
RCarrying value of assets pledged as security:Property, plant and equipment 148 243 350 108 142 172
3. intAngiblE AssEtsMining rights 15 138 612 15 771 340Gross amount 19 119 291 19 208 179Accumulated amortisation and impairment (3 980 679) (3 436 839)Carrying value 15 138 612 15 771 340
carrying value – opening balance 15 771 340 7 040 269Additions – 11 434 055disposals (88 888) (791 145)Amortisation for the year (543 840) (543 839)Impairment of mining rights – (1 368 000)
carrying value – closing balance 15 138 612 15 771 340 Mining rights are amortised on a straight-line basis over the best estimate of their useful lives. None of the mining rights included in intangible assets have indefinite lives.
4. gooDWillGross amount 102 303 418 97 256 826Accumulated impairment (971 519) (861 886)Carrying value 101 331 899 96 394 940
carrying value – opening balance 96 394 940 39 180 494Additions through business combinations 5 723 351 58 076 332Adjustments 129 535 –disposals (806 294) –Impairment of goodwill (109 633) (861 886)
carrying value – closing balance 101 331 899 96 394 940Goodwill acquired through business combinations has been allocated to cash-generating units as follows:
AmountLancaster Precast 20 468 422Lancaster Quarries 16 877 717Rodag 1 057 984Prima Klipbrekers 122 216Boublok 176 995Malans 15 738 322denver 39 266 892Scottburgh 1 900 000Sunshine Crushers 5 723 351
The group applied a discounted cash flow methodology to value goodwill. These cash flows were based on forecasts which included assumptions on operating profit, depreciation, working capital movements and capital expenditure. The discount rate applied to the cash flow projections was 19% (2008: 19%). The key assumptions used were growth rates of 10% to 15% (2008: 15%) over a period of 10 years.
The recoverable amount has been determined using the value in use calculations. during the year ended 28 february 2009 goodwill in the amount of R109 633 (2008: R861 886) was identified as not recoverable and was subsequently written off as impaired.
40 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Name of companyNature ofbusiness
Total share
capital
%holding
2009
%holding
2008
carryingamountshares
2009
Carryingamountshares
2008
carryingamount
indebtness2009
Carryingamount
indebtness2008
5. inVEstMEnts in subsiDiARiEsAfrimat Share Incentive Trust Investment – – – – – 1 401 779 900 000AfT Aggregates (Pty) Limited Quarry 20 85,0 100,0 – – 70 000 –Boublok (Pty) Limited Bricks 100 100,0 100,0 888 831 – (1 036 023) –Boublok Tuinmure (Pty) Limited dormant 100 100,0 100,0 – – – –Capmat (Pty) Limited Quarry 4 000 87,5 87,5 6 255 231 – 280 000 –Christalpine holdings 107 (Pty) Limited dormant 100 50,0 50,0 – – – –Ikapa Quarries (Pty) Limited dormant 300 75,0 75,0 225 – – –Lancaster Group (Pty) Limited dormant 1 025 100,0 100,0 – 48 903 711 – 32 158 870Lancaster Pre-Cast (Pty) Limited
Bricks & Readymix 10 000 100,0 100,0 67 378 835 – 8 189 417 –
Lancaster Quarries (Pty) Limited Quarry 30 000 100,0 100,0 35 182 874 – 2 123 088 –Afrimat Readymix (Cape) (Pty) Limited Readymix 200 100,0 100,0 5 267 084 – 969 589 847 197Prima Klipbrekers (Pty) Limited Quarry 100 100,0 100,0 106 220 430 – (17 284 880) –Prima Quarries (Pty) Limited dormant 2 000 100,0 100,0 – 105 788 130 – 8 289 804Prima Quarries Namibia (Pty) Limited Quarry 100 100,0 100,0 100 – – –Prima Readymix Concrete (Pty) Limited dormant 200 100,0 100,0 – – – –Rodag holdings (Pty) Limited Property 4 100,0 100,0 3 829 110 – (283 923) –Rodag Properties (Pty) Limited Property 1 000 100,0 100,0 4 382 087 – (2 259 591) –Tradeselect 5 (Pty) Limited dormant 100 100,0 100,0 – – – –Maritzburg Quarries (Pty) Limited Quarry 70 000 100,0 100,0 1 295 741 1 295 741 457 490 457 490Scottburgh Quarries (Pty) Limited Quarry 100 100,0 100,0 8 020 000 8 020 000 5 731 –denver Quarries (Pty) Limited Quarry 600 100,0 100,0 53 181 208 53 528 010 (16 274 318) (201 391)Brickrush (Pty) Limited Quarry 5 000 92,7 100,0 24 933 683 26 897 178 7 204 186 3 136 444Malans Quarries (Pty) Limited Quarry 100 100,0 100,0 33 771 554 33 771 554 – –Olympic Sand (Pty) Limited Quarry 1 000 100,0 100,0 1 204 580 1 204 580 – –Malric Properties (Pty) Limited Property 100 100,0 100,0 13 053 322 13 053 322 – –Propateez 66 (Pty) Limited Property 100 100,0 100,0 831 872 831 872 – –Melani Materials (Pty) Limited Quarry 900 100,0 100,0 – – – –Labonte 3 (Pty) Limited Property 1 000 50,0 50,0 149 494 149 494 – –Jeffreys Bay Crushers (Pty) Limited dormant 100 100,0 100,0 384 727 384 727 – –Sunshine Crushers (Pty) Limited Quarry 1 179 960 100,0 – 8 081 014 – (2 872 565) –Intshinga Mining (Pty) Limited dormant 120 50,0 – 60 – (60) –Bechini Investments 73 (Pty) Limited dormant 120 100,0 – 120 – (120) –
374 312 182 293 828 319 (19 310 200) 45 588 414
current assetsLoans to subsidiaries 20 701 280 45 588 414
current liabilitiesLoans from subsidiaries (40 011 480) –
(19 310 200) 45 588 414The carrying amounts of subsidiaries are shown net of impairment losses which approximate fair value. The loans have no fixed terms of repayment and bear interest at prime less 3,5%.
41AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
6. otHER finAnciAl AssEtsAvailable-for-saleListed shares at fair value
Old Mutual PLC shares 21 245 68 215 – –
Stanlib Wealthbuilder unit trust 178 269 316 275 – –
Old Mutual funds unit trust 142 561 214 482 – –
342 075 598 972 – –
Environmental funds at fair value
Green horizons Environmental Rehabilitation Trust fund 973 375 1 024 963 – –
Sanlam Endowment Policy 1 865 291 1 844 893 – –
Liberty Life Endowment Policy 547 124 509 506 – –
3 385 790 3 379 362 – –
total financial assets 3 727 865 3 978 334 – –
non-current assetsAvailable-for-sale 3 727 865 3 978 334 – –
current assetsOther financial assets – – – –
3 727 865 3 978 334 – –
The fair values of the financial assets were determined as follows:• The fair values of available-for-sale financial assets are based on the quoted market price.
fair values are determined annually at balance sheet date.
None of these financial assets is either past due or impaired.
The environmental funds were originally established to fund the cost of rehabilitation on closure of certain of the group’s quarries, but were since replaced by guarantees as per note 30.
42 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Group Company
2009R
2008R
2009R
2008R
7A. finAnciAl instRuMEnts by cAtEgoRyAssets as per balance sheetloans and receivables at amortised cost
Trade and other receivables 121 723 748 110 959 705 16 704 113 –
Cash and cash equivalents 21 688 808 38 819 885 3 896 621 2 916 906
Loans to subsidiaries – – 20 701 280 45 588 414
143 412 556 149 779 590 41 302 014 48 505 320
Available-for-sale
Other financial assets 3 727 865 3 978 334 – –
3 727 865 3 978 334 – –
total 147 140 421 153 757 924 41 302 014 48 505 320
The maximum exposure to credit risk at the reporting date is the fair value of each class of loans and receivables mentioned above.
liabilities as per balance sheetfinancial liabilities at amortised cost
Borrowings 101 121 700 64 464 862 – –
Loans from subsidiaries – – 40 011 480 –
Trade and other payables 73 264 323 58 609 794 3 200 183 3 534 168
Bank overdraft 13 397 492 1 254 491 – –
total 187 783 515 124 329 147 43 211 663 3 534 168
Trade and other payables include accruals and are payable within normal trade terms.
7b. cREDit quAlity of fully PERfoRMing finAnciAl AssEtstrade receivablesCustomers without external ratings
Group 1 (New customers) 8 278 022 14 013 363 – –
Group 2 (Existing customers – with no defaults in the past) 35 672 357 39 261 759 – –
Group 3 (Existing customers – Some defaults, but fully recovered) 27 386 233 28 783 644 – –
71 336 612 82 058 766 – –
None of the financial assets that are fully performing has been renegotiated in the last year.
43AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
8. REtiREMEnt bEnEfitsDefined contribution planIt is the policy of the group to provide retirement benefits to all its employees. A number of defined contribution provident funds, all of which are subject to the Pensions fund Act, exist for this purpose.
The group is under no obligation to cover any unfunded benefits.
The total group contributions to such schemes 5 272 136 3 758 687 344 896 53 865
Defined benefit planThe defined benefit plan, consists of the Lancaster Pension fund governed by the Pension fund Act of 1956.
The actuarial valuation determined that the retirement plan was in a sound financial position.
carrying valuePresent value of the defined benefit obligation 42 187 213 39 371 407 – –
fair value of plan assets (49 616 880) (43 485 656) – –
Net actuarial gains or losses not recognised (4 362 687) (6 944 714) – –
(11 792 354) (11 058 963) – –
Historical figures are as follows:2007Present value of the defined benefit obligation of R33 427 173, fair value of plan assets of R31 690 996 and net actuarial losses not recognised of R13 330 431.
Movements for the yearOpening balance (11 058 963) (11 594 255) – –
Contributions by members (2 264 493) (2 158 820) – –
Net expense recognised in the income statement 1 531 102 2 694 112 – –
closing balance (11 792 354) (11 058 963) – –
net expense recognised in the income statementCurrent service cost 2 308 851 2 291 976 – –
Interest cost 3 544 531 2 522 549 – –
Actuarial (gains)/losses 208 296 698 441 – –
Expected return on plan assets (4 530 576) (2 818 854) – –
1 531 102 2 694 112 – –
Reconciliation of present value of the defined benefit obligationOpening balance 39 371 407 33 427 173 – –
Current service costs 2 308 851 2 291 976 – –
Interest cost 3 544 531 2 522 549 – –
Actuarial gains and losses (2 045 595) 1 914 118 – –
Benefits paid (991 981) (784 409) – –
closing balance 42 187 213 39 371 407 – –
44 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Group Company
2009R
2008R
2009R
2008R
8. REtiREMEnt bEnEfits continued
Reconciliation of fair value of plan assetsOpening balance 43 485 656 31 690 996 – –
Expected return on plan assets 4 530 576 2 818 854 – –
Actuarial gains and losses 328 136 7 601 394 – –
Contributions by employer 1 492 507 1 422 783 – –
Contributions by plan participants 771 986 736 037 – –
Benefits paid (991 981) (784 408) – –
closing balance 49 616 880 43 485 656 – –
net actuarial gains or losses not recognised in the balance sheet (4 362 687) (6 944 714) – –
The plan assets are invested in an Old Mutual guaranteed fund.
future contributionsExpected contributions to be paid to plan during the next financial year 2 457 425 2 486 484 – –
Key assumptions usedAssumptions used on last valuation on 28 february 2009.
Actual return on plan assets 4 858 712 10 420 248 – –
discount rates used (%) 8,69 8,99 – –
Expected rate of return on assets (%) 9,29 10,27 – –
Expected returns were based on the assumption that it will exceed general inflation by 4% after allowing for investment related expenses.
Expected increase in salaries (%) 6,29 7,27 – –
9. inVEntoRiEsThe amounts attributable to the different categories are as follows:
Raw materials, components 7 989 757 4 944 235 – –
finished goods 54 822 730 44 627 399 – –
Production supplies 15 089 824 10 119 130 – –
77 902 311 59 690 764 – –
Provision for stock obsolescence (2 500 000) – – –
75 402 311 59 690 764 – –
The carrying value of finished goods, identified as obsolete, after allowing for the provision of stock obsolescence is R1 585 795.
45AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
10. tRADE AnD otHER REcEiVAblEsTrade receivables 105 806 228 105 803 741 – –Less: Provision for impairment of receivables (5 794 623) (4 219 003) – –Trade receivables – net 100 011 605 101 584 738 – –Pre-payments 9 723 852 9 040 228 44 305 58 384deposits 912 140 2 625 202 – –Value added tax 919 925 474 408 – –Other receivables 20 800 003 6 749 765 16 704 113 –
132 367 525 120 474 341 16 748 418 58 384The fair values of trade and other receivables, as well as trade and other payables, are considered to be equal to the carrying value.The carrying values of the trade and other receivables, as well as trade and other payables, are all denominated in South African Rand.Included in the other receivables are loans to Joe Kalo Investments (Pty) Limited of R4 087 504 and forecast Investments (Pty) Limited of R11 956 200. These loans were made with respect to the group’s BEE shareholding.As at 28 february 2009, the group had trade and other receivables of R28 674 993 (2008: R19 525 972) which were past due but not impaired. These relate to a number of reputable customers for whom there is no history of default, settlement agreements are in place or that management believes will in all probability pay.The age analysis of these trade and other receivables is as follows:neither impaired nor past due 71 336 612 82 058 766 – –not impaired but past due in– between 30 and 60 days 12 172 481 9 615 841 – –– between 60 and 90 days 5 254 066 4 226 361 – –– more than 90 days 11 248 446 5 683 770 – –
100 011 605 101 584 738 – –An impairment provision of R5 794 623 (2008: R4 219 003) was recognised against receivables. The ageing of the impairment portion of receivables, which is past due, is as follows:Between 30 and 60 days 65 241 7 964 – –Between 60 and 90 days 532 306 10 958 – –More than 90 days 5 197 076 4 200 081 – –
5 794 623 4 219 003 – –Movements in the provision for impairment of trade receivables are as follows:Opening balance 4 219 003 2 181 677 – –Additional provision charged to income statement 4 334 956 2 645 581 – –Provisions reversed to income statement (1 481 151) (602 145) – –Acquisition of subsidiaries – 3 255 – –disposal of subsidiaries – (9 365) – –Receivables written off during the year as uncollectible (1 278 185) – – –closing balance 5 794 623 4 219 003 – –The creation and release of provision for impaired receivables have been included in operating expenses in the income statement. Amounts charged to the allowance account are generally written off, when there is no expectation of recovering additional cash.The other classes within trade and other receivables do not contain impaired assets.The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable mentioned above.
46 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Group Company
2009R
2008R
2009R
2008R
11. cAsH AnD cAsH EquiVAlEntsCash and cash equivalents consist of:
Cash on hand 166 037 149 166 138 –
Bank balances 13 893 831 24 625 704 3 896 483 2 916 906
Short term deposits 7 628 940 14 045 015 – –
Bank overdraft (13 397 492) (1 254 491) – –
8 291 316 37 565 394 3 896 621 2 916 906
Current assets 21 688 808 38 819 885 3 896 621 2 916 906
Current liabilities (13 397 492) (1 254 491) – –
8 291 316 37 565 394 3 896 621 2 916 906
12. sHARE cAPitAlAuthorised1 000 000 000 Ordinary shares of 1 cent each 10 000 000 10 000 000 10 000 000 10 000 000
issued133 762 412 (2008: 133 762 738) Ordinary shares of 1 cent each 1 339 624 1 339 627 1 337 624 1 337 627
Opening balance 1 339 627 1 244 995 1 337 627 1 242 995
Issued
2 941 176 Ordinary shares of 1 cent – 29 412 – 29 412
6 522 065 Ordinary shares of 1 cent – 65 220 – 65 220
Cancelled
326 Ordinary shares of 1 cent (3) – (3) –
closing balance 1 339 624 1 339 627 1 337 624 1 337 627
All the unissued shares are under the control of the company’s directors until the next annual general meeting.
Refer to explanation of capital structure included with note 13 on share premium.
13. sHARE PREMiuMOpening balance 326 115 905 245 425 754 326 115 905 245 425 754
106 299 397 Ordinary shares of 1 cents issued at a premium of 151,5 cents – (152) – (152)
2 941 176 Ordinary shares of 1 cents issued at a premium of 764 cents – 22 470 585 – 22 470 585
6 522 065 Ordinary shares of 1 cents issued at a premium of 919 cents – 59 937 777 – 59 937 777
Share issue expenses written off (946 132) (1 718 059) (946 132) (1 718 059)
closing balance 325 169 773 326 115 905 325 169 773 326 115 905
business combination adjustment (105 788 129) (105 788 129) – –
The group financial statements are issued in the name of Afrimat Limited but are, in fact, prepared as a continuation of the group financial statements of Prima. for purposes of these group consolidated results, Prima has been identified as the acquirer in terms of IfRS 3. In arriving at the issued share capital of the group under this method, the amount of the issued share capital of Prima immediately before the business combination is added to the cost of the business combination in accordance with IfRS 3. This has resulted in an adjustment against the issued share capital of the group of R105 788 129. This amount has been reflected separately on the balance sheet. The issue and authorised equity structure in note 12 is that of Afrimat.
47AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
14. tREAsuRy sHAREs627 500 (2008: Nil) shares held by Prima Klipbrekers (Pty) Limited – a subsidiary (2 718 990) – – –228 329 (2008: 119 583) shares held by the AfrimatShare Incentive Trust (1 400 611) (886 648) – –
(4 119 601) (886 648) – –The company acquired 108 746 (2008: 119 583) of its own shares through purchases on the JSE in the Afrimat Share Incentive Trust and 627 500 (2008: Nil) in Prima Klipbrekers (Pty) Limited. The total amount paid to acquire the shares was R3 232 953 (2008: R886 648) and has been deducted from shareholder’s equity. The shares are held as ‘treasury shares’. The company has the right to reissue these shares at a later date. All shares issued by the company were fully paid.
15. sHARE oPtionsShare options are granted to directors and to selected employees. The exercise price of the granted options is equal to the previous business day’s volume weighted average price for the Afrimat share on the date when the option is exercised. Options are conditional on the employee completing three year’s service (the vesting period). The options are exercisable starting three years from the grant date, subject to the group achieving its target growth in headline earnings per share over the period; the options have a contractual option term of four years. The group has no legal or constructive obligation to repurchase or settle the options in cash.Movements in the number of share options outstanding and their related weighted average exercise prices are as follows:
Average exercise
price in cents per share
28 february2009
number ofoptions
28 february2009
Average exercise
price in cents per share
29 february2008
Number ofoptions
29 february2008
Opening balance 850 960 000 – –Granted 668 1 560 000 850 960 000closing balance 737 2 520 000 850 960 000None of the options outstanding are exercisable at 28 february 2009 (2008: Nil).Share options outstanding at the end of the year have the following expiry date and exercise prices:
Exercise priceCents
number ofoptions
28 february2009
Number ofoptions
29 february2008
2014 850 1 100 000 960 0002015 650 1 420 000 –
2 520 000 960 000The number of shares that may be utilised for the purpose of this scheme are:
Number of shares2009 2008
Opening balance 25 792 547 24 859 899Increase/(decrease) in authority (65) 1 892 648Utilised (1 560 000) (960 000)closing balance 24 232 482 25 792 547
Number of share options held by directors:
openingbalance granted
Averageexerciseprice in
centsper share
Expirydates
closing balance
2009AJ van heerden 150 000 300 000 650 2015 450 000hP Verreynne 110 000 160 000 650 2015 270 000PG Corbin 110 000 160 000 650 2015 270 000
370 000 620 000 990 000
48 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Openingbalance Granted
Averageexerciseprice in
centsper share
Expirydates
Closing balance
15. sHARE oPtions continued
2008AJ van heerden – 150 000 850 2014 150 000hP Verreynne – 110 000 850 2014 110 000PG Corbin – 110 000 850 2014 110 000
– 370 000 370 000None of the options outstanding are exercisable at 28 february 2009 (2008: Nil).
The fair value of options granted during the year; using the Black Scholes valuation model, was R3 567 000 (2008: R2 880 000). The option expense for the year was R1 574 462 (2008: R240 000). The fair value calculated by the Black Scholes model did not materially differ from the fair value calculated by the model used in the prior year.
The significant inputs into the valuation models were the current share prices, risk free rates of 8,41% to 9,46% (2008: 8,41%), options grant prices and option life shown above, dividend yields of 2,71% to 3,54% (2008: 2,71%), share price volatility and the likelihood that the market condition will be satisfied. The share price volatility is measured at the standard deviation of expected share price returns based on the statistical analysis of monthly share prices over the current year.
Group Company2009
R2008
R2009
R2008
R
16. otHER REsERVEsAnalysisAvailable-for-sale reserve 445 239 694 981 – –Share-based payment reserve (IfRS 2) 1 814 462 240 000 925 644 92 500
2 259 701 934 981 925 644 92 500ReconciliationsAvailable-for-sale reserveOpening balance 694 981 335 846 – –fair value adjustment (247 370) 359 135 – –disposal to minorities (2 372) – – –closing balance 445 239 694 981 – –share-based payment reserve (ifRs 2)Opening balance 240 000 – 92 500 –Share option expense for the year 1 574 462 240 000 833 144 92 500closing balance 1 814 462 240 000 925 644 92 500
17. boRRoWingsnon-current liabilitiesMortgage bonds 1 984 294 2 002 612 – –Instalment purchase agreements 56 218 173 25 416 994 – –
58 202 467 27 419 606 – –current liabilitiesMortgage bonds 30 659 26 889 – –Instalment purchase agreements 42 888 574 37 018 367 – –
42 919 233 37 045 256 – –Mortgage loansAt amortised cost 2 014 953 2 029 501 – –The loans are repayable in 220 monthly instalments of R24 048, and bear interest at a rates of 12% per annum.
2 014 953 2 029 501 – –non-current liabilitiesAt amortised cost 1 984 294 2 002 612 – –current liabilitiesAt amortised cost 30 659 26 889 – –
2 014 953 2 029 501 – –The mortgage bonds are secured by property of the group, with a net book value of R2 434 295, as per note 2.
49AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
17. boRRoWings continued
instalment purchase agreementsMinimum payments due
– within one year 51 054 665 40 627 928 – –
– in second to fifth year inclusive 65 621 829 29 544 181 – –
116 676 494 70 172 109 – –
Less: future finance charges (17 569 747) (7 736 748) – –
Present value of minimum payments 99 106 747 62 435 361 – –
Present value of minimum payments due– within one year 42 888 574 37 018 367 – –
– in second to fifth year inclusive 56 218 173 25 416 994 – –
99 106 747 62 435 361 – –
non-current liabilitiesAt amortised cost 56 218 173 25 416 994 – –
current liabilitiesAt amortised cost 42 888 574 37 018 367 – –
99 106 747 62 435 361 – –
It is group policy to purchase certain property, plant and equipment under instalment purchase agreements.
The average repayment term was one to three years and the average effective borrowing rate was 12% to 13,5%.
The group’s obligations under instalment purchase agreements are secured by the lessor’s charge over the financed assets (Refer note 2).
The exposure of the group’s borrowings to interest rate changes and the contractual repricing dates at the balance sheet dates are as follows:
At fixed rates – – – –
At floating rates 101 121 700 64 464 862 – –
Interest free – – – –
101 121 700 64 464 862 – –
The fair value of borrowings equals their carrying amount, as the impact of discounting is not significant.
The carrying amounts of the group’s borrowings are all denominated in South African Rand.
The group has the following undrawn borrowing facilities:
floating rate:
– Expiring within one year 83 486 014 98 133 400 260 000 260 000
– Expiring beyond one year – – – –
fixed:
– Expiring within one year – – – –
83 486 014 98 133 400 260 000 260 000
The group’s non-current borrowings (excluding instalment purchase agreements) mature as follows:
– less than one year 30 659 26 689 – –
– between one and five years 166 771 147 095 – –
– later than five years 1 817 523 1 855 717 – –
2 014 953 2 029 501 – –
50 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Group Company
2009R
2008R
2009R
2008R
18. PRoVisionsEnvironmental rehabilitation 5 615 088 2 941 476 – –
dismantling 6 394 168 5 580 696 – –
12 009 256 8 522 172 – –
Non-current liabilities 12 009 256 8 522 172 – –
Current liabilities – – – –
12 009 256 8 522 172 – –
Reconciliation of provisionsEnvironmental rehabilitation
Opening balance 2 941 476 – – –
Additions and discount unwinding 2 673 612 3 468 050 – –
Reversed during year – (526 574) – –
closing balance 5 615 088 2 941 476 – –
Dismantling
Opening balance 5 580 696 5 949 922 – –
Additions and discount unwinding 813 472 1 131 399 – –
Reversed during year – (1 500 625) – –
closing balance 6 394 168 5 580 696 – –
Group policy is that environmental rehabilitation and dismantling estimates will be reviewed annually and be re-assessed by independent consultants every three years. Management has reviewed all environmental rehabilitation and dismantling provisions at year-end.
19. DEfERRED tAxAccelerated capital allowances for tax purposes (53 711 731) (45 417 332) – –
Provision (129 472) (709 344) 75 508 –
Tax losses available for set off against future taxable income 3 859 536 1 414 477 – –
Other deferred tax (3 731 306) (4 384 351) (209 099) –
(53 712 973) (49 096 550) (133 591) –
Reconciliation of deferred tax asset/(liability)Opening balance (49 096 550) (38 243 493) – –
Rate change – 1 209 862 – –
Acquired through business combinations (1 350 251) (10 941 434) – –
Accelerated capital allowances for tax purposes (6 215 424) (1 879 276) – –
Provisions 612 340 (7 424) 75 508 –
Increase in tax losses available for set off against future taxable income 2 445 059 508 689 – –
Other (108 147) 296 808 (209 099) –
fair value of investments – (40 282) – –
closing balance (53 712 973) (49 096 550) (133 591) –
tax consequences of undistributed reservesSTC on remaining reserves if all reserves are distributed 24 734 295 22 044 067 4 208 635 983 580
51AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
20. REVEnuESale of goods and services 671 004 760 602 252 062 16 937 381 11 107 279
Interest received (Trading) 16 086 021 9 407 615 – –
687 090 781 611 659 677 16 937 381 11 107 279
21. oPERAting PRofitincome from subsidiariesdividends – – 64 966 740 9 363 392
Administration and management fees – – 16 937 381 11 107 279
– – 81 904 121 20 470 671
operating lease chargesPremises
– Contractual amounts 6 107 726 4 368 873 183 665 59 368
Equipment
– Contractual amounts 6 240 773 6 641 229 15 691 7 004
Lease rentals on operating lease – other
– Contractual amounts 602 333 143 459 – –
12 950 832 11 153 561 199 356 66 372
otherProfit/(loss) on sale of property, plant and equipment 3 681 899 3 268 118 – –
Impairment of other financial assets – 18 935 – –
Amortisation of intangible assets 543 840 543 839 – –
depreciation of property, plant and equipment 37 612 796 33 305 777 156 475 26 302
Impairment of mining rights – 1 368 000 – –
Impairment of goodwill 109 633 861 886 – –
Inventory written off during the year 1 534 011 – – –
Inventory provision for obsolescence 2 500 000 – – –
Net foreign exchange gains/(losses) (96 784) – – –
Audit fees
Current year 1 832 912 1 268 445 685 610 572 082
Other services – – – –
1 832 912 1 268 445 685 610 572 082
Employee costs
defined contribution plan contributions 5 272 136 3 758 687 344 896 53 865
defined benefit plan contributions 1 531 102 2 694 112 – –
Share-based payment expense 1 574 462 240 000 833 144 92 500
Other employee expenses 127 526 370 105 477 570 8 030 930 3 867 123
135 904 070 112 170 369 9 208 970 4 013 488
52 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Group Company
2009R
2008R
2009R
2008R
22. inVEstMEnt REVEnuEDividend revenueListed financial assets – Local 26 117 19 752 – –
Inter company – – 64 966 740 9 363 392
26 117 19 752 64 966 740 9 363 392
interest revenueBank 2 769 449 4 412 380 305 611 304 471
Group companies – – 2 643 858 4 976 031
Other interest 1 725 986 1 598 652 218 103 1 033 390
4 495 435 6 011 032 3 167 572 6 313 892
4 521 552 6 030 784 68 134 312 15 677 284
23. finAncE costsInstalment purchase agreements 10 967 849 7 293 454 – –
Bank 1 301 581 188 397 97 15
South African Revenue Services 249 265 293 203 9 323 –
Group companies – – 2 011 970 244 055
Other interest paid 703 959 1 401 347 37 048 1 089 434
13 222 654 9 176 401 2 058 438 1 333 504
24. tAxAtionMajor components of the tax expense/incomecurrent
Local income tax – current period 22 122 597 36 909 126 1 012 496 2 607 982
– recognised in current period for prior periods 13 471 835 422 26 825 –
Secondary tax on companies 2 814 454 945 824 2 809 011 –
24 950 522 38 690 372 3 848 332 2 607 982
Deferred
deferred income tax – current period 3 298 795 1 081 203 (75 507) –
Rate change – (1 209 862) – –
3 298 795 (128 659) (75 507) –
28 249 317 38 561 713 3 772 825 2 607 982
tax rate reconciliation
Standard tax rate (%) 28,0 29,0 28,0 29,0
Permanent differences (%) 1,5 – (26,6) (13,8)
Effect of higher Namibia tax rate (%) (0,1) 0,1 – –
Rate change (%) – (1,0) – –
Secondary tax on companies (%) 3,3 0,7 4,2 –
Effective rate (%) 32,7 28,8 5,6 15,2
53AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
25. notEs to tHE cAsH floW stAtEMEnts25.1 cash generated from/(used in) operations
Profit/(loss) before taxation 86 346 629 133 971 363 67 338 465 17 193 789
Adjustments for:
depreciation and amortisation 38 156 636 33 849 616 156 475 26 302
Impairment of mining rights – 1 368 000 – –
Impairment of goodwill 109 633 861 886 – –
Goodwill adjustment (129 535) – – –
(Profit)/loss on sale of assets (3 681 899) (3 268 118) – –
(Profit)/loss on sale of business (1 371 938) (2 386 290) (2 038 503) –
Investment revenue (26 117) (19 752) (64 966 740) (9 363 392)
Interest received (4 495 435) (6 011 032) (3 167 572) (6 313 892)
finance costs 13 222 654 9 176 401 2 058 438 1 333 504
fair value adjustments/impairment loss – 18 935 – –
Retirement fund expense 1 531 102 2 694 110 – –
Contributions to retirement fund (2 264 493) (2 158 820) – –
Movements in provisions 2 972 183 (47 393) – –
Share-based payment reserve 1 574 462 240 000 833 144 92 500
Movement in minority interest – 97 497 – –
changes in working capital:
Inventories (15 467 824) (20 883 053) – –
Trade and other receivables (11 368 365) (976 646) (16 690 034) 630 054
Trade and other payables 14 371 070 (32 021 173) (333 985) 3 382 066
119 478 763 114 505 531 (16 810 312) 6 980 931
25.2 tax (paid)/refundedOpening balance (9 013 960) (8 497 163) (703 522) (2 294 277)
Current tax for the year recognised in income statement (24 950 522) (38 690 372) (3 848 332) (2 607 982)
Adjustment in respect of businesses sold and acquired during the year (939 755) (1 763 681) – –
Closing balance (3 286 290) 9 013 960 (252 907) 703 522
(38 190 527) (39 937 256) (4 804 761) (4 198 737)
25.3 share capitalTotal proceeds/(Shares cancelled) (3) 94 632 (3) 94 632
Less: Shares issued to acquire business combination – (29 411) – (29 411)
(3) 65 221 (3) 65 221
25.4 share premiumTotal proceeds – 82 408 211 – 82 408 211
Less: Shares issued to acquire business combination – (22 470 584) – (22 470 584)
Less: Expenses written off (946 132) (1 718 060) (946 132) (1 718 060)
(946 132) 58 219 567 (946 132) 58 219 567
54 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
Group Company
2009R
2008R
2009R
2008R
26. DiViDEnDs PAiDdividends 28 112 815 9 363 369 28 090 031 9 363 369
27. Acquisition of businEssEsThe group acquired Sunshine Crushers (Pty) Limited with effect from 1 August 2008.
Prior year acquisitions include the Malans Group and denver Quarries with effect from 1 June 2007 as well as the Scottburgh/Maritzburg quarries with effect from 1 July 2007.
fair value of assets acquiredInvestment in subsidiaries – – (8 081 014) (139 136 479)
Mining rights – (11 434 056) – –
Property, plant and equipment (6 268 408) (100 198 094) – –
deferred tax assets/liabilities 1 350 251 10 941 435 – –
Other non-current assets – (115 500) – –
Inventories (243 563) (2 898 237) – –
Trade and other receivables (524 819) (57 038 135) – –
Trade and other payables 283 459 42 550 809 – –
Tax assets/liabilities 939 755 2 058 390 – –
Borrowings 1 868 780 36 092 269 – –
Cash (278 019) (11 665 323) – –
Rehabilitation reserve 514 901 1 897 175 – –
Minorities – 149 121 – –
fair value of assets acquired 2 357 663 89 660 146 8 081 014 139 136 479
Goodwill on acquisitions 5 723 351 58 076 333 – –
8 081 014 147 736 479 8 081 014 139 136 479
Shares issued – (22 499 996) – (22 499 996)
net cash outflow on acquisitionCash acquired 278 019 11 665 323 – –
Cash paid on acquisition (8 081 014) (125 236 483) (8 081 014) (116 636 483)
(7 802 995) (113 571 160) (8 081 014) (116 636 483)
Sunshine Crushers (Pty) Limited operated for five months prior to acquisition. After due consideration of the fair values of the assets and liabilities acquired, these were determined to be their carrying values at date of acquisition. A reconciliation of fair values to carrying values of the net assets is presented in the directors’ report.
The acquired business contributed after tax profits of R1 092 756 to the group for the period since acquisition.
55AFRIMAT ANNUAL REPORT ’09
Group Company
2009R
2008R
2009R
2008R
28. DisPosAl of businEssEsduring the year the group disposed of 7,3% of Brickrush (Pty) Limited with effect from 1 March 2008 and 15% of AfT Aggregates (Pty) Limited from 1 May 2008.
Prior year disposals include Prima Quarries 1987 (Pty) Limited, from 30 November 2007, and 12,5% of Capmat (Pty) Limited, from 6 January 2008.
fair value of assets disposed ofInvestment in subsidiaries – – (1 963 497) –
Goodwill (806 294) – – –
Mining rights (88 888) (791 145) – –
Property, plant and equipment (323 578) (455 207) – –
deferred tax assets/liabilities 22 976 (4 981) – –
Other non-current assets (1 301 783) – – –
Inventories (201 801) – – –
Trade and other receivables (1 861 694) (4 018 660) – –
Trade and other payables 645 312 1 018 024 – –
Tax assets/liabilities (176 392) 294 709 – –
Borrowings 1 345 269 – – –
Rehabilitation provision 33 134 – – –
Cash 83 677 (501 944) – –
fair value of assets disposed of 2 630 062 4 459 204 1 963 497 –
Proceeds (4 002 000) (6 845 494) (4 002 000) –
Profit with sale of business (1 371 938) (2 386 290) (2 038 503) –
Net cash inflow on disposal 4 002 000 6 343 550 4 002 000 –
Businesses disposed of contributed after tax profits of R2 633 to the group for the period up to the disposal date.
29. coMMitMEntsAuthorised capital expenditurecontracted after year-end, but not provided for
– Property, plant and equipment 5 294 986 43 167 417 – 4 299
Not yet contracted for
– Property, plant and equipment 38 031 664 29 318 783 1 379 374 111 001
operating leases – as lessee (expense)Minimum lease payments due
– within one year 3 687 624 10 714 351 218 803 197 353
– in second to fifth year inclusive 6 299 654 9 714 858 563 688 720 309
9 987 278 20 429 209 782 491 917 662
Operating lease payments represent rentals payable by the group for quarries, other premises, motor vehicles and equipment. Certain leases carry standard escalation clauses in line with inflation.
Approved capital expenditure to be funded from surplus cash and bank financing.
56 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
30. contingEnciEsguaranteesGuarantees to the value of R10 331 731 (2008: R14 644 000) were supplied by Standard Bank to various parties, including the department of Minerals and Energy Affairs and Eskom.
Guarantees to the value of R6 115 164 (2008: R1 199 730) were supplied by first National Bank to various parties, including the department of Minerals and Energy Affairs and Eskom.
These guarantees are in respect of environmental rehabilitation costs and will only be payable in the event of default by the group.
31. RElAtED PARtiEsduring the year under review, the company and its subsidiaries, in the ordinary course of business, entered into various sale and purchase transactions with related parties. Those transactions occurred under terms that are no less favourable than those arranged with third parties.
Company
2009R
2008R
Loan balances owing (to)/by Subsidiaries (19 310 200) 42 738 412
Sales of goods to – gross values Subsidiaries 16 937 381 8 257 279
Rent paid to Subsidiaries – (32 500)
Interest paid to Subsidiaries (2 011 970) (244 055)
Interest received from Subsidiaries 2 643 858 4 976 031
32. PRioR PERioD ERRoRsgroupAdjustments to the split of cost of sales/operating expenses in the amount of R19 516 110 were made to be consistent with current disclosure. As disclosed in note 2 certain property, plant and equipment were incorrectly disclosed as plant and machinery and has now been reclassified. The adjustments had no effect on the group’s profits.
companyLoans to subsidiaries were reclassified from non-current assets to current assets based on the nature of the loans. Administration and management fees of R11 107 279 were reclassified from other income to revenue to be consistent with current disclosure. The adjustments had no effect on the company’s profit.
33. HEADlinE EARnings PER sHARE Group
2009R
2008R
Reconciliation of headline earningsProfit attributable to ordinary shareholders 57 702 852 94 949 832
Profit on disposal of property, plant and equipment (3 681 899) (3 268 117)
Tax effect of profit on disposal of property, plant and equipment 1 030 932 947 754
Profit on disposal of subsidiaries (1 371 938) (2 386 291)
Tax effect of profit on disposal of subsidiaries 285 391 74 826
Impairment of goodwill 109 633 861 886
Impairment of mining rights – 1 368 000
headline earnings 54 074 971 92 547 890
headline earnings per share (“hEPS”) (cents) 40,5 70,4
57AFRIMAT ANNUAL REPORT ’09
Basicsalary
R
Incentivebonus
R
Travelallowance
R
Otherallowances
RPension
R
Medicalaid
RTotal
R
34. DiREctoRs’ EMoluMEnts2009Paid by companyExecutive
AJ van heerden 1 433 535 – 197 633 – – 9 000 1 640 168
PG Corbin 1 092 484 86 230 196 550 – – 10 800 1 386 064
hP Verreynne 994 179 100 000 99 554 – 109 356 – 1 303 089
3 520 198 186 230 493 737 – 109 356 19 800 4 329 321
fees
non-executive
MW von Wielligh 397 000 – – – – – 397 000
f du Toit 89 000 – – – – – 89 000
M Kaplan 152 000 – – – – – 152 000
L dotwana 165 000 – – – – – 165 000
GN Chili 102 375 – – – – – 102 375
hJE van Wyk 105 333 – – – – – 105 333
1 010 708 – – – – – 1 010 708
total 4 530 906 186 230 493 737 – 109 356 19 800 5 340 029
Paid by subsidiariesnon-executive
f du Toit 1 049 652 84 724 188 196 3 965 – 10 800 1 337 337
total 1 049 652 84 724 188 196 3 965 – 10 800 1 337 337
2008Paid by companyExecutive
AJ van heerden 939 301 170 615 156 374 45 962 – 3 300 1 315 552
PG Corbin 987 551 165 259 165 083 – – 10 200 1 328 093
hJE van Wyk (7 months to 30 September 2007) 352 000 – 87 592 – – – 439 592
hP Verreynne (5 months to 29 february 2008) 320 384 115 801 40 133 330 000 35 242 – 841 560
2 599 236 451 675 449 182 375 962 35 242 13 500 3 924 797
fees
non-executive
MW von Wielligh 225 000 – – – – – 225 000
f du Toit 65 000 – – – – – 65 000
M Kaplan 115 000 – – – – – 115 000
L dotwana 134 000 – – – – – 134 000
GN Chili 90 000 – – – – – 90 000
hJE van Wyk (5 months to 29 february 2008) 27 083 – – – – – 27 083
656 083 – – – – – 656 083
total 3 255 319 451 675 449 182 375 962 35 242 13 500 4 580 880
Paid by subsidiariesnon-executive (12 months to 28 february 2008)
f du Toit 987 641 51 480 169 170 – – 10 200 1 218 491
total 987 641 51 480 169 170 – – 10 200 1 218 491
58 AFRIMAT ANNUAL REPORT ’09
noTes To The AnnuAl FInAncIAl sTATeMenTs CONTINUEd
fOR ThE yEAR ENdEd 28 FeBRuARY 2009
35. finAnciAl RisK MAnAgEMEnt The group’s financial instruments consist mainly of cash and cash equivalents, trade and other receivables, financial assets,
trade and other payables and borrowings.
The group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the group’s financial performance.
Risk management is carried out by a central treasury department (group treasury) under policies approved by the board of directors. Group treasury identifies, evaluates and hedges financial risks in close cooperation with the group’s operating units. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
(a) Market risk(i) foreign exchange risk The group is not exposed to currency risks as the group executes its operating activities in its functional currency.
At reporting date the group had no exposure to currency risks for unhedged payables denominated in foreign currencies (2008: R Nil).
(ii) Price risk The group is exposed to equity securities price risk because of investments held by the group and classified on the balance
sheet as available-for-sale investments. The group is not exposed to commodity price risk.
The group’s investments in equity securities are publicly traded on the JSE Limited.
As part of the presentation of market risks, IfRS 7 also requires disclosures on how hypothetical changes in risk variables affect the price of financial instruments. Important risk variables are stock exchange prices or indices.
As all the group’s investments are classified as available-for-sale investments, any change in market prices of investments will have no effect on the group’s profits. Movements in market prices will be charged directly to equity.
(iii) interest rate risk The group’s interest rate risk arises from cash and cash equivalents and financial liabilities as set out in notes 11 and 17.
Cash and cash equivalents invested and financial liabilities obtained at variable interest rates expose the group to cash flow interest rate risk. Cash and cash equivalents invested and financial liabilities obtained at fixed rates expose the group to fair value interest rate risk.
The group’s policy is to invest cash and cash equivalents and to obtain financial liabilities at variable interest rates and not to make use of any interest rate derivatives, which expose the group to cash flow interest rate risk in South Africa.
sensitivity analysis Interest rate risks are presented by way of sensitivity analyses in accordance with IfRS 7. These show the effects of changes
in market interest rates on interest payments, interest income and expense, other income components and, if appropriate, shareholders’ equity.
during 2009, if interest rates on Rand-denominated borrowings and cash had been 2% higher/lower with all other variables held constant, the group’s net profit after tax would have been R864 324 (2008: R540 973 at 2%) lower/higher; mainly as a result of higher/lower interest rate expense/income on floating rate borrowings and investments.
(b) credit risk financial assets which potentially subject the group to concentrations of credit risk consist of cash and cash equivalents and
receivables. The group’s cash is placed with recognised financial institutions.
Trade receivables are disclosed net of provision for impairment. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal ratings. The utilisation of credit limits and adherence to payment terms are regularly monitored. Credit risk is limited due to the large number of customers comprising the group’s customer base and their dispersion across geographical areas, accordingly the group has limited concentrations of credit risk. Provision for impairment is considered adequate as most of the balance relates to customers that have a good track record with the company and limited bad debt write-offs have been experienced in the past.
The group’s concentration of credit risk is limited to South Africa and Namibia.
(c) liquidity risk Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach
to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities, when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the group’s reputation.
59AFRIMAT ANNUAL REPORT ’09
The group monitors its cash flow requirements through monthly cash forecasts which includes the servicing of financial obligations, but excludes the potential impact of extreme circumstances that cannot reasonably be predicted.
The following are the group’s financial liabilities analysed into relevant maturity groupings based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances as the impact of discounting is not significant.
Carryingvalues
Totalcash flows
Less than1 year
Between 1 and 5 years
Over 5 years
groupAt 28 february 2009
Mortgage loans 2 014 953 4 966 376 270 893 1 083 573 3 611 910
Instalment purchase agreements 99 106 747 116 676 494 51 054 665 65 621 829 –
Trade and other payables 73 264 323 73 264 323 73 264 323 – –
Bank overdraft 13 397 492 13 397 492 13 397 492 – –
187 783 515 208 304 685 137 987 373 66 705 402 3 611 910
At 29 february 2008
Mortgage loans 2 029 501 5 390 995 278 844 1 115 378 3 996 773
Instalment purchase agreements 62 435 361 70 172 109 40 627 928 29 544 181 –
Trade and other payables 58 609 794 58 609 794 58 609 794 – –
Bank overdraft 1 254 491 1 254 491 1 254 491 – –
124 329 147 135 427 389 100 771 057 30 659 559 3 996 773
companyAt 28 february 2009
Trade and other payables 3 200 183 3 200 183 3 200 183 – –
3 200 183 3 200 183 3 200 183 – –
At 29 february 2008
Trade and other payables 3 534 168 3 534 168 3 534 168 – –
3 534 168 3 534 168 3 534 168 – –
(d) capital risk management The group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in order to
provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid to shareholders or sell assets to reduce debt.
The group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings less cash and cash equivalents as shown in the balance sheet. Total debt and equity is calculated as equity, as shown in the balance sheet, plus net debt.
The group’s strategy is to maintain the gearing ratio to below 25%. The gearing ratios at 28 february 2009 and 29 february 2008 were as follows:
Group Company
2009R
2008R
2009R
2008R
Total borrowings 101 121 700 64 464 862 – –
Less: Cash and cash equivalents (8 291 316) (37 565 394) (3 896 621) (2 916 906)
Net debt 92 830 384 26 899 468 (3 896 621) (2 916 906)
Total equity 493 768 961 464 901 420 373 728 030 338 365 412
total capital 586 599 345 491 800 888 369 831 409 335 448 506
Gearing ratio (%) 15,83 5,47 (1,05) (0,87)
60 AFRIMAT ANNUAL REPORT ’09
seGMenTAl RePoRTfOR ThE yEAR ENdEd 28 FeBRuARY 2009
2009R %
2008R %
REVEnuEExternal sales Aggregates 392 946 343 57,19 364 726 075 59,63 Readymix Concrete 194 369 835 28,29 157 499 857 25,75 Concrete Manufactured Products 99 774 603 14,52 89 433 745 14,62
687 090 781 100,00 611 659 677 100,00Inter-segment sales Aggregates 46 725 409 84,90 37 359 233 88,17 Readymix Concrete 688 221 1,25 4 573 832 10,79 Concrete Manufactured Products 7 622 944 13,85 439 096 1,04
55 036 574 100,00 42 372 161 100,00Total revenue Aggregates 439 671 752 59,24 402 085 308 61,48 Readymix Concrete 195 058 056 26,28 162 073 689 24,78 Concrete Manufactured Products 107 397 547 14,48 89 872 841 13,74
742 127 355 100,00 654 031 838 100,00
REsultOperating profit before tax Aggregates 57 062 479 60,04 102 082 562 74,45 Readymix Concrete 17 097 776 17,99 15 329 692 11,18 Concrete Manufactured Products 20 401 771 21,46 13 559 903 9,89 Unsegmental profit 485 705 0,51 6 144 823 4,48
95 047 731 100,00 137 116 980 100,00Operating profit margins on external revenue (%) Aggregates 14,52 27,99 Readymix Concrete 8,80 9,73 Concrete Manufactured Products 20,45 15,16
13,83 22,42depreciation and amortisation Aggregates 30 412 970 79,71 27 419 118 81,00 Readymix Concrete 5 435 892 14,25 4 425 853 13,08 Concrete Manufactured Products 2 151 299 5,64 1 978 343 5,84 Unsegmental 156 475 0,40 26 302 0,08
38 156 636 100,00 33 849 616 100,00
otHER infoRMAtionAssets Aggregates 464 477 517 61,55 411 980 304 62,38 Readymix Concrete 64 759 732 8,58 53 196 106 8,06 Concrete Manufactured Products 58 299 946 7,73 39 303 368 5,95 Unsegmental 167 044 288 22,14 155 934 766 23,61Consolidated total assets 754 581 483 100,00 660 414 544 100,00liabilities Aggregates 129 013 276 49,47 85 738 228 43,85 Readymix Concrete 28 239 702 10,83 26 332 237 13,47 Concrete Manufactured Products 13 932 862 5,34 5 444 941 2,79 Unsegmental 89 626 682 34,36 77 997 718 39,89Consolidated total liabilities 260 812 522 100,00 195 513 124 100,00capital expenditure (excluding acquisitions through business combinations) Aggregates 99 149 660 81,09 45 295 681 74,89 Readymix Concrete 12 827 371 10,49 6 735 978 11,14 Concrete Manufactured Products 9 184 997 7,51 8 238 001 13,62 Unsegmental 1 107 272 0,91 214 940 0,35
122 269 300 100,00 60 484 600 100,00The group has elected that the entire South African region represents a single geographical area.
61AFRIMAT ANNUAL REPORT ’09
Number ofshareholders %
Numberof shares %
sHAREHolDing1 – 1 000 shares 1 409 51,3 659 105 0,5
1 001 – 10 000 shares 1 073 39,0 3 732 203 2,8
10 001 – 100 000 shares 178 6,5 5 398 323 4,0
100 001 – 1 000 000 shares 63 2,3 23 406 944 17,5
1 000 000 shares and over 26 0,9 100 565 837 75,2
2 749 100,0 133 762 412 100,0
AnAlysis of HolDingsnon-public shareholding directors 9 0,3 37 392 642 27,9
Treasury shares:
Afrimat Share Incentive Trust 1 0,0 228 329 0,2
Prima Klipbrekers (Pty) Limited 1 0,0 627 500 0,5
11 0,3 38 248 471 28,6
Public shareholding 2 738 99,7 95 513 941 71,4
2 749 100,0 133 762 412 100,0
MAJoR, founDER AnD bEE sHAREHolDERsNumber of
shares %Number of
BEE shares
f du Toit 19 748 502 14,8
Mega Oils (Pty) Limited 12 239 529 9,1 12 239 529
Mega Oils SPV (Pty) Limited 6 392 575 4,8 6 392 575
Korum Trust (TCB Jordaan) 9 811 524 7,3
Kwezi Mining (Pty) Limited/WWC Securities (Pty) Limited/forecast Investments (Pty) Limited 7 200 000 5,4 7 200 000
AJ van heerden 5 475 026 4,1
ME van heerden 1 064 293 0,8
PG Corbin 4 586 413 3,4
LP Korsten – Korsten family Trust 5 293 740 4,0
forecast Investments (Pty) Limited 6 529 630 4,9
The JC Trust 1 564 293 1,2
Korbou (Pty) Limited 655 000 0,5
JhM Korsten 3 472 995 2,6
Investec Bank Limited 1 407 865 1,0
Joe Kalo Investments (Pty) Limited 738 234 0,5 738 234
86 179 619 64,4
Other 47 582 793 35,6
133 762 412 100,0 26 570 338
AnAlYsIs oF shAReholDeRsAS AT 28 FeBRuARY 2009
62 AFRIMAT ANNUAL REPORT ’09
shARe PeRFoRMAnce
shAReholDeRs’ DIARY
2009 2008
Market price per share at year-end (cents) 196 745
headline earnings per share (cents) 40,5 70,4
Price: earnings ratio 4,8 10,6
Number of issued shares 133 762 412 133 762 738
Number of treasury shares 855 829 119 583
Market capitalisation based on issued shares (Rands) 262 174 328 996 532 398
Market capitalisation based on issued shares less treasury shares (Rands) 260 496 903 995 641 505
Listing date 7 November 2006
financial year-end 28 february
Annual general meeting 29 July 2009
Announcement of annual results May 2009
Annual report posted July 2009
Announcement of interim results November 2009
63AFRIMAT ANNUAL REPORT ’09
AfRiMAt liMitED(Registration number 2006/022534/06)Share Code: AfTISIN: ZAE000086302(“Afrimat” or “the company”)
Notice is hereby given that the annual general meeting of Afrimat will be held at The Cedar Conference Room, Poplars Restaurant, Racecourse Road, durbanville on Wednesday, 29 July 2009 at 14:00 for the purposes of:• considering and adopting the annual financial statements of the company for the year ended 28 february 2009;• re-electing directors;• appointing auditors;• considering and, if deemed fit, adopting, with or without modification, the special and ordinary resolutions set out below;
and• transacting any other business as may be transacted at an annual general meeting.
sPEciAl REsolutionsspecial Resolution 1: general authority to repurchase company shares“RESOLVEd ThAT the company and/or its subsidiaries be and is hereby authorised, by way of general authority, to acquire ordinary shares issued by the company, in terms of sections 85(2), 85(3) and 89 of the Companies Act and in terms of the Listings Requirements of the JSE Limited (“JSE”), being that:• any such acquisition of ordinary shares shall be implemented on the open market of the JSE;• any such acquisition is authorised by the company’s articles of association;• this general authority shall only be valid until the company’s next annual general meeting, provided that it shall not extend
beyond 15 months from the date of the passing of this special resolution;• an announcement will be published on SENS as soon as the company has acquired ordinary shares constituting, on a
cumulative basis, 3% of the number of ordinary shares in issue prior to the acquisition, pursuant to which the aforesaid 3% threshold is reached, containing full details of such repurchases;
• acquisitions in the aggregate in any one financial year may not exceed 10% of the company’s ordinary issued share capital nor may acquisitions in the aggregate, from the date of passing of this special resolution, exceed 10% of the company’s ordinary issued share capital at the date of passing of this special resolution;
• in determining the price at which ordinary shares issued by the company are acquired by it in terms of this general authority, the maximum premium at which such ordinary shares may be acquired will be 10% of the volume weighted average price at which such ordinary shares are traded on the JSE, as determined over the five trading days immediately preceding the date of repurchase of such ordinary shares by the company;
• at any point in time, the company will only appoint one agent to effect any repurchase(s) on the company’s behalf;• the company may only undertake a repurchase of securities if, after such repurchase, it still complies with minimum
shareholder spread requirements in accordance with the JSE Listings Requirements; and• the company or its subsidiaries will not repurchase securities during a prohibited period in accordance with the JSE Listings
Requirements.”
Reason and effect of special resolution number 1The reason for the special resolution number 1 is to grant the company a general authority in terms of the Companies Act for the acquisition by the company, or any of its subsidiaries, of shares issued by the company, or its holding company, which authority shall be valid until the earlier of the next annual general meeting of the company or the variation or revocation of such general authority by special resolution by any subsequent general meeting of the company, provided that the general authority shall not extend beyond fifteen (15) months from the date of this annual general meeting. The passing and registration of this special resolution will have the effect of authorising the company or any of its subsidiaries to acquire shares issued by the company or its holding company.
The following additional information, some of which may appear elsewhere in the annual report of which this notice forms part, is provided in terms of the JSE Listings Requirements for purposes of this general authority:• directors and management – see pages 2 and 3 of the annual report;• major beneficial shareholders – see page 61 of the annual report;• directors’ interests in ordinary shares –see page 20 of the annual report; and• share capital of the company – see page 19 of the annual report.
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litigation statementThe directors, whose names appear under board of directors on pages 2 and 3 of the annual report of which this notice forms part, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past, being at least the previous twelve (12) months, a material effect of the financial position of the company or its subsidiaries.
Directors’ responsibility statementThe directors, whose names appear under the board of directors on pages 2 and 3 of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all necessary information.
Material changesOther than the facts and developments reported on in this annual report, there have been no material changes in the affairs or financial position of the company and its subsidiaries since the date of signature of the audit report and up to the date of this notice.
statement by the board of directors of the companyPursuant to, and in terms of, the JSE Listings Requirements, the board of directors of the company hereby state that:(a) the intention of the directors of the company is to utilise the general authority to repurchase shares in the capital of the
company if, at some future date, the cash resources of the company are in excess of its requirements or there are other good reasons for doing so. In this regard, the directors will take account of, inter alia, an appropriate capitalisation structure for the company, the long-term cash needs of the company, and the interests of the company; and
(b) in determining the method by which the company intends to repurchase its securities, the maximum number of securities to be repurchased and the date on which such repurchase will take place, the directors of the company will ensure that:
• the company and its subsidiaries will, after the repurchase, be able to pay their debts as they become due in the ordinary course of business for the next twelve (12) months after the date of notice of this annual general meeting;
• the consolidated assets of the company and its subsidiaries fairly valued and recognised and measured in accordance with the accounting policies used in the latest audited financial statements, will, after the repurchase, be in excess of the consolidated liabilities of the company and its subsidiaries for the next twelve (12) months after the date of this notice of the annual general meeting;
• the issued share capital and reserves of the company and its subsidiaries will, after the repurchase, be adequate for the ordinary business purposes of the company and its subsidiaries for the next twelve (12) months after the date of notice of this annual general meeting; and
• the working capital available to the company and its subsidiaries will, after the repurchase, be sufficient for the ordinary business requirements of the company and its subsidiaries for the next twelve (12) months after the date of this notice of annual general meeting.
oRDinARy REsolutionsordinary Resolution 1: adoption of annual financial statements“Resolved that the annual financial statements of the company for the year ended 28 february 2009 be and are hereby received and adopted.”
ordinary Resolution 2: issue of shares or other equity securities for cash“Resolved that the directors be authorised pursuant inter alia to the company’s articles of association, until this authority lapses at the next annual general meeting of the company, unless it is then renewed at the next annual general meeting of the company provided that it shall not extend beyond 15 months, to allot and issue any equity securities (which shall include for the purpose of this ordinary resolution 2, the grant or issue of options or convertible securities that are convertible into an existing class of equity securities) for cash subject to the JSE Listings Requirements on the following bases:(a) the allotment and issue of the equity securities must be made to persons qualifying as public shareholders as defined in the
JSE Listings Requirements and not to related parties;(b) the equity securities which are the subject of the issue for cash must be of a class already in issue, or where this is not the
case, must be limited to such shares or rights that are convertible into a class already in issue;(c) the number of equity securities issued for cash shall not in the aggregate in any one financial year exceed 15% (fifteen
percent) of the company’s issued share capital of ordinary shares. The number of ordinary shares which may be issued shall be based on the number of ordinary shares in issue at the date of such application less any ordinary shares issued during the
65AFRIMAT ANNUAL REPORT ’09
current financial year, provided that any ordinary shares to be issued pursuant to a rights issue (announced, irrevocable and fully underwritten) or acquisition (concluded up to the date of application including announcement of the final terms) may be included as though they were shares in issue at the date of application;
(d) the maximum discount at which equity securities may be issued is 10% (ten percent) of the weighted average traded price on the JSE of those equity securities over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors of the company;
(e) after the company has issued equity securities for cash which represent, on a cumulative basis within a financial year, 5% (five percent) or more of the number of equity securities in issue prior to that issue, the company shall publish on SENS an announcement containing full details of the issue (including the number of equity securities issued, the average discount to the weighted average traded price of the equity securities over the 30 business days prior to the date that the price of the issue is determined or agreed to by the directors and the effect of the issue on net asset value and earnings per share), or any other announcements that may be required in such regard in terms of the JSE Listings Requirements which may be applicable from time to time.”
In terms of the JSE Listings Requirements a 75% (seventy-five percent) majority of the votes cast by shareholders present or represented by proxy at the annual general meeting must be cast in favour of ordinary resolution number 2 for it to be approved.
ordinary Resolution 3: unissued ordinary shares“Resolved that all the authorised but unissued ordinary shares in the capital of the company, be and are hereby placed at the disposal and under the control of the directors, and that the directors be and are hereby authorised to allot, issue and otherwise to dispose of all or any of such shares at their discretion, in terms of and subject to the provisions of the Companies Act, 1973 (Act No. 61 of 1973), as amended and the Listings Requirements of the JSE Limited and subject to the proviso that the aggregate number of ordinary shares which may be allotted and issued in terms of this ordinary resolution number 3, shall be limited to 10% (ten percent) of the number of ordinary shares in issue from time to time.”
A majority of the votes cast by all shareholders present, or represented by proxy at the annual general meeting, will be required to approve this resolution.
ordinary Resolution 4: re-election of director“Resolved that MW von Wielligh be re-elected as a director of the company.”
A brief curriculum vitae in respect of MW von Wielligh is set out on page 3 of the annual report of which this notice forms part.
ordinary Resolution 5: resignation of directors“Resolved that the vacancy resulting from the resignation of M Kaplan as director not be filled.”
ordinary Resolution 6: future directors’ remuneration“Resolved that the non-executive directors be paid the following fixed fee amount per annum with effect from 1 March 2009:Chairman of the board R363 000Non-executive director R97 000Audit Committee Chairman R45 000Audit Committee Member R30 000Remuneration and Nominations Committee Chairman R36 000Remuneration and Nominations Committee Member R24 000ShE Committee Chairman R28 000ShE Committee Member R18 000
As well as a daily rate of R10 000 for non-executive directors utilised on extraordinary duties.”
ordinary Resolution 7: appointment of auditors“Resolved that the directors be and are hereby authorised to re-appoint the auditors, Mazars Moores Rowland, for the ensuing financial year and are authorised to fix the remuneration of the auditors.”
ordinary Resolution 8: signature of documentation“Resolved that a director of the company or the company secretary be and is hereby authorised to sign all such documentation and do all such things as may be necessary for or incidental to the implementation of ordinary resolutions numbers 1, 2, 3, 4, 5, 6 and 7 and special resolution number 1 which are passed by the shareholders.”
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Voting AnD PRoxiEsA shareholder of the company entitled to attend and vote at the general meeting is entitled to appoint one or more proxies (who need not be a shareholder of the company) to attend, vote and speak in his/her stead. On a show of hands, every shareholder of the company present in person or represented by proxy shall have one vote only. On a poll, every shareholder of the company present in person or represented by proxy shall have one vote for every share held in the company by such shareholder.
dematerialised shareholders who have elected own-name registration in the sub-register through a Central Securities depository Participant (CSdP) and who are unable to attend but wish to vote at the annual general meeting, should complete and return the attached form of proxy and lodge it with the transfer secretaries of the company.
Shareholders who have dematerialised their shares through a CSdP or broker rather than through own-name registration and who wish to attend the annual general meeting must instruct their CSdP or broker to issue them with the necessary authority to attend. If such shareholders are unable to attend, but wish to vote at the annual general meeting, they should timeously provide their CSdP or broker with their voting instructions in terms of the custody agreement entered into between that shareholder and his/her CSdP or broker.
forms of proxy may also be obtained on request from the company’s registered office. The completed forms of proxy must be deposited at, posted or faxed to the transfer secretaries at the address below, to be received by no later than 14:00 on Monday, 27 July 2009. Any member who completes and lodges a form of proxy will nevertheless be entitled to attend and vote in person at the general meeting should the member subsequently decide to do so.
By order of the board
Routledge Modise in association with Evershedscompany secretary
12 June 2009
Registered office transfer secretariesTyger Valley Office Park No. 2 Computershare Investor Services (Pty) LimitedCnr. Willie van Schoor Avenue and Old Oak Road (Registration number 2004/00364/07)Tyger Valley Ground floor7530 70 Marshall Street(PO Box 5278, Tyger Valley, 7536) Johannesburg, 2001Telephone: +27 21 917 8840 (PO Box 61051, Marshalltown, 2107)facsimile: +27 21 914 1174 Telephone: +27 11 370 5000 facsimile: +27 11 688 5200
67AFRIMAT ANNUAL REPORT ’09
AfRiMAt liMitED(Registration number 2006/022534/06)(“Afrimat Limited” or “the company”)Share Code: AfTISIN: ZAE000086302
for use at the annual general meeting of the company to be held at The Cedar Conference Room, Poplars Restaurant, Race Course Road, durbanville on Wednesday, 29 July 2009 at 14:00 and at any adjournment thereof.
for use by the holders of the company’s certificated ordinary shares (“certified shareholder”) and/or dematerialised ordinary shares held through a Central Securities depository Participant (“CSdP”) or broker who have selected own-name registration (“own-name dematerialised shareholders”). Additional forms of proxy are available from the transfer secretaries of the company.
Not for the use by holders of the company’s dematerialised ordinary shares who are not own-name dematerialised shareholders. Such shareholders must contact their CSdP or broker timeously if they wish to attend and vote at the annual general meeting and request that they be issued with the necessary authorisation to do so, or provide the CSdP or broker timeously with their voting instructions should they not wish to attend the annual general meeting in order for the CSdP or broker to vote thereat in accordance with their instructions.
I/We(full name in block letters)
of(Address)
being a member/members of Afrimat Limited and holding ordinary shares in the company, hereby appoint
1. of or failing him/her2. of or failing him/her3. the chairman of the annual general meeting,
as my/our proxy to act for me/us and on my/our behalf at the annual general meeting which will be held for the purpose of considering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat and at any adjournment thereof; and to vote for and/or against the ordinary resolutions and/or abstain from voting in respect of the Afrimat Limited ordinary shares registered in my/our name(s), in accordance with the following instructions:
Number of votes
for* Against* Abstain*
special resolutions:
1. To give directors general authority to repurchase company shares
ordinary resolutions:
1. To adopt the 2009 annual financial statements
2. To issue unissued shares for cash
3. To place unissued shares under directors’ control
4. To re-elect MW von Wielligh as a director of the company
5. To approve that the vacancy resulting from the resignation of M Kaplan as director not be filled
6. To approve the non-executive directors’ future remuneration
7. To authorise the directors to re-appoint the auditors and to fix their remuneration
8. To authorise the directors or the company secretary to sign documentation
* Please indicate with an “X” in the appropriate spaces above how you wish your votes to be cast. Unless otherwise instructed, my/our proxy may vote as he/she thinks fit.
Signed at (place) on (date) 2009
Member’s signature Assisted by (if applicable)
Please read the notes on the reverse side.
FoRM oF PRoxY
68 AFRIMAT ANNUAL REPORT ’09
noTes
1. This form proxy is to be completed only by those members who are: a. holding shares in a certificated form; or b. recorded in the sub-register in electronic form in their “own name”.
2. Members who have dematerialised their shares, other than “own-name” dematerialised shareholders, and who wish to attend the annual general meeting must contact their Central Securities depository Participant (“CSdP”) or broker who will furnish them with the necessary authority to attend the annual general meeting, or they must instruct their CSdP or broker as to how they wish to vote in this regard. This must be done in terms of the agreement entered into between the members and their CSdP or broker.
3. Each member is entitled to appoint one or more proxies (who need not be a member(s) of the company) to attend, speak and, on a poll, vote in place of that member at the annual general meeting.
4. A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space provided, with or without deleting “the chairman of the annual general meeting”. The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names follow.
5. A member’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that member in the appropriate box(es) provided. failure to comply with the above will be deemed to authorise the chairman of the annual general meeting, if the chairman is the authorised proxy, to vote in favour of the ordinary resolutions at the annual general meeting, or any other proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit, in respect of all the member’s votes exercisable thereat.
6. A member or his/her proxy is not obliged to vote in respect of all the ordinary shares held by such member or represented by such proxy, but the total number of votes for or against the ordinary resolutions and in respect of which any abstention is recorded may not exceed the total number of votes to which the member or his/her proxy is entitled.
7. documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the company’s transfer office or waived by the chairman of the annual general meeting.
8. The chairman of the annual general meeting may reject or accept any form of proxy which is completed and/or received other than in accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to vote.
9. Any alterations or corrections to this form of proxy must be initialled by the signatory(ies).
10. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such member wish to do so.
11. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the company’s transfer secretaries.
12. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this form of proxy.
13. forms of proxy must be lodged with the transfer secretaries at the address given below by no later than 14:00 on Monday, 27 July 2009:
computershare investor services (Pty) limitedGround floor70 Marshall StreetJohannesburg, 2001PO Box 61051 Marshalltown, 2107Telephone: +27 11 370 5000facsimile: +27 11 688 5200
AFRIMAT LIMITed(Registration number 2006/022534/06)
Registered officeTyger Valley Office Park No. 2Corner Willie van Schoor Avenue and Old Oak RoadTyger Valley, 7530(PO Box 5278, Tyger Valley, 7536)Telephone: +27 21 917 8840Facsimile: +27 21 914 1174Email: [email protected]: www.afrimat.co.za
Company secretaryRoutledge Modise in association with Eversheds2nd Floor, Wanderers Building, The Campus57 Sloane StreetBryanston, 2021(PO Box 78333, Sandton City, 2146)Telephone: +27 11 523 6110Facsimile: +27 86 674 8658
AttorneysWebber Wentzel10 Fricker Road,Illovo, 2196(PO Box 61771, Marshalltown, 2107)Telephone: +27 11 530 5000Facsimile: + 27 11 530 5111
Transfer secretariesComputershare Investor Services (Pty) Limited(Registration number 2004/003647/07)Ground Floor, 70 Marshall Street,Johannesburg, 2001(PO Box 61051, Marshalltown, 2107)Telephone: +27 11 370 5000Facsimile: +27 11 688 5200
SponsorBridge Capital Advisors (Pty) Limited2nd Floor, 27 Fricker Road, Illovo, 2196(PO Box 651010, Benmore, 2010)Telephone: +27 11 268 6231Facsimile: +27 11 268 6538
AuditorsMazars Moores Rowland27th Floor, 1 Thibault SquareCape Town, 8001(PO Box 2817, Cape Town, 8000)Telephone: +27 21 405 4000Facsimile: +27 21 405 4140
Commercial bankersThe Standard Bank of South Africa LimitedBusiness Banking12th Floor, East Towers, Bedford CentreCorner Bradford and Smith StreetsBedfordview, 2047(Private Bag X23, Garden View, 2047)Telephone: +27 11 601 4536/5Facsimile: +27 11 631 8132
ADmINISTRATION
Maxx Corporate Communications©
CONTENTS
PAGE
Financial Highlights 1
Company Profile 1
Directorate 2
Chairman’s Report 4
CEO’s Report 6
Corporate Governance 8
Sustainability Report 13
Value Added Statement 15
Annual Financial Statements 16
Analysis of Shareholders 61
Share Performance 62
Shareholders’ Diary 62
Notice of Annual General Meeting 63
Form of Proxy 67
Administration IBC
DEFINITIONS“ASPASA” Aggregate and Sand Producers Association of South Africa
“BEE” Black economic empowerment
“the board” The board of directors of Afrimat Limited
“CEO” Chief Executive Officer
“the company” or “Afrimat” Afrimat Limited
“the group” Afrimat Limited and its subsidiaries
“IFRS” International Financial Reporting Standards
“JSE” JSE Limited
“King II Report” King Report on Corporate Governance for South Africa 2002
“the previous/prior year” The year ended 29 February 2008
“SA” South Africa
“SENS” Stock Exchange News Service
“SARMA” South African Readymix Association
“the year” or “the year under review” The year ended 28 February 2009
ANNUAL REPORT
FOCUSED ON INFRASTRUCTURE’09
www.afrimat.co.za
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