AFRIMAT Annual Report 2010 ANNUAL REPORT 2010 ?· Growth through unity Annual Report 2010 AFRIMAT ANNUAL…

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  • www.afrimat.co.za

    Growth through unity

    Annual Report 2010

    AFR

    IMA

    T AN

    NU

    AL R

    EPO

    RT 2010

  • Administration

    Afrimat Limited(Registration number 2006/022534/06)

    Registered office

    Tyger Valley Office Park No. 2

    Corner Willie van Schoor Avenue and Old Oak Road

    Tyger Valley, 7530

    (PO Box 5278, Tyger Valley, 7536)

    Telephone: +27 21 917 8840

    Facsimile: +27 21 914 1174

    Email: info@afrimat.co.za

    Website: www.afrimat.co.za

    Company secretary

    Routledge Modise Incorporated practising as Eversheds

    22 Fredman Drive

    Sandton, 2146

    (PO Box 78333, Sandton City, 2146)

    Telephone: +27 11 523 6110

    Facsimile: +27 86 674 8658

    Attorneys

    Webber Wentzel

    10 Fricker Road,

    Illovo, 2196

    (PO Box 61771, Marshalltown, 2107)

    Telephone: +27 11 530 5000

    Facsimile: + 27 11 530 5111

    Transfer secretaries

    Computershare 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 5000

    Facsimile: +27 11 688 5200

    Sponsor

    Bridge Capital Advisors (Pty) Limited

    2nd Floor, 27 Fricker Road, Illovo, 2196

    (PO Box 651010, Benmore, 2010)

    Telephone: +27 11 268 6231

    Facsimile: +27 11 268 6538

    Auditors

    Mazars

    Mazars House, Rialto Road, Grand Moorings

    Precinct, Century City, 7441

    (PO Box 2817, Cape Town, 8000)

    Telephone: +27 21 818 5000

    Facsimile: +27 21 818 5001

    Commercial bankers

    The Standard Bank of South Africa Limited

    Business Banking

    12th Floor, East Towers, Bedford Centre

    Corner Bradford and Smith Streets

    Bedfordview, 2047

    (Private Bag X23, Garden View, 2047)

    Telephone: +27 11 601 4536/5

    Facsimile: +27 11 631 8132

    Maxx Corporate Communications

    Page

    Financial Highlights .................................................................... 1

    Company Profile .......................................................................... 2

    Directorate .................................................................................. 4

    Chairmans Report ...................................................................... 6

    CEOs Report ............................................................................... 8

    Sustainability Report ................................................................ 10

    Corporate Governance Report .................................................. 13

    Audit Committee Report ........................................................... 20

    Value Added Statement ............................................................ 21

    Annual Financial Statements ................................................... 22

    Directors Statement of Responsibility .............................. 22

    Declaration by Company Secretary .................................... 22

    Report of the Independent Auditors .................................. 23

    Directors Report ................................................................ 24

    ASPASA Aggregate and Sand Producers

    Association of South Africa

    B-BBEE Broad-based black economic

    empowerment

    the board The board of directors of

    Afrimat Limited

    CSDP Central Securities

    Depository Participant

    CEO Chief Executive Officer

    the Codes Department of Trade and Industrys

    B-BBEE Codes of Good Practice

    the company or Afrimat Afrimat Limited

    DIFR Disabling Injury Frequency Rate

    EMP Environmental Management

    Programme

    EXCO Executive Committee

    FD Financial Director

    Glen Douglas Glen Douglas Dolomite (Pty) Limited

    the group Afrimat Limited and its subsidiaries

    HDI Historically Disadvantaged Individual

    HEPS Headline earnings per share

    HIRA Hazard Identification Risk Assessment

    Contents

    Definitions

    Page

    Statement of Financial Position ......................................... 28

    Income Statement .............................................................. 29

    Statement of Comprehensive Income................................ 30

    Statement of Changes in Equity ......................................... 31

    Statement of Cash Flows ................................................... 33

    Notes to the Annual Financial Statements ........................ 34

    Segmental Report .............................................................. 70

    Analysis of Shareholders ................................................... 72

    Share Performance ................................................................... 73

    Shareholders Diary .................................................................. 73

    Notice of Annual General Meeting ........................................... 74

    Form of Proxy ............................................................................ 79

    Administration ........................................................................ IBC

    IFRS International Financial

    Reporting Standards

    IT Information Technology

    JSE JSE Limited

    King II Report King Report on Corporate

    Governance for South Africa 2002

    King III Report King Report on Corporate

    Governance for South Africa 2009

    Prima Afrimat Aggregates (Operations)

    (formerly Prima Klipbrekers)

    (Pty) Limited

    the previous/prior year The year ended 28 February 2009

    SA South Africa

    SENS Stock Exchange News Service

    SARMA South African Readymix Association

    SHE Committee Safety, Health and

    Environmental Committee

    SWP Safe Working Procedure

    the year or

    the year under review The year ended 28 February 2010

    Editorial:

  • 1Afrimat Annual Report 2010

    Financial Highlights

    n HEPS up 26,7%

    n Net asset value of 394

    cents per share

    n Net debt:equity ratio 10,6%

    n Operating margin 14,0%

    n Strong performance from aggregates division

    n Total dividends 16 cents per share

    HEPS

    Net cash from operating activities

    Revenue

    Net asset value per share

    0

    100 000 000

    200 000 000

    300 000 000

    400 000 000

    500 000 000

    600 000 000

    700 000 000

    800 000 000

    900 000 000

    Rands

    2010200920082007

    REVENUE

    778 015 852687 090 781

    611 659 677

    349 032 479

    090

    180270360450540630720810900

    2010200920082007

    0

    10

    20

    30

    40

    50

    60

    70

    80

    Cents

    2010200920082007

    HEPS

    40,5

    51,3

    70,4

    58,5

    0

    50

    100

    150

    200

    250

    300

    350

    400

    2010200920082007

    240

    394

    369348

    Cents

    0

    20 000 000

    40 000 000

    60 000 000

    80 000 000

    100 000 000

    120 000 000

    140 000 000

    160 000 000

    Rands

    2010200920082007

    NET CASH

    134 757 595

    72 587 13465 745 236 71 422 658

  • 2 Afrimat Annual Report 2010

    Company Profile

    Vision

    Afrimats vision is to be the most admired construction materials and industrial minerals supply

    company in Southern Africa.

    Being the most admired company means to successfully build a core foundation that earns admiration

    from all of Afrimats stakeholders through:

    nEfficient and well-managed operationsn Responsible, honest and highly motivated personnelnEffective and reliable systemsnStrong financial structuren Innovative focused sustainable growth and transformation initiativesnSatisfied stakeholdersnCaring for the people and the planet

    Values

    Afrimat strives to integrate values of accountability, integrity, trust, mutual respect, teamwork and

    customer satisfaction into every aspect of our culture, every division of Afrimat and our overall

    performance.

    Operations

    Afrimat is a black empowered materials supplier to the construction and industrial minerals

    industries, and is listed in the Construction & Building Materials sector of the JSE Main Board.

    Backed by more than 45 years experience Afrimat has traditionally supplied a broad range of

    construction materials comprising aggregates, readymix concrete and concrete manufactured

    products. The post year-end acquisition of the Glen Douglas dolomite mine from Exxaro has seen

    the group diversify and expand into the industrial minerals industry.

    Operations are supported by a fleet of mobile crushers offering flexibility even beyond historical

    geographical areas of operation. Today the groups integrated product offering is distributed across

    a wide geographical area covering rural and urban regions in the Western Cape, Eastern Cape,

    KwaZulu-Natal, Free State, Gauteng, Limpopo, Mpumalanga and Namibia.

    Afrimats flexibility extends further to project scale with the group servicing major infrastructure

    and construction projects from the public sector and parastatals to small private sector contracts.

    The diverse client base acts as an effective risk and revenue hedge.

    The groups consistently low staff turnover has resulted in a deep skills pool. Real transformation,

    starting with staff and management and extending to community upliftment, is integral to the groups

    sustainability. In addition environmental conservation is an imperative part of the groups growth

    strategy.

  • 3Afrimat Annual Report 2010

    The division operates primarily in

    KwaZulu-Natal, the Free State and in

    Worcester in the Western Cape,

    manufacturing concrete blocks and

    bricks largely for low-cost housing.

    Precast factories specifically

    manufacture concrete bricks, building

    blocks, brick paving, walling and

    moulded concrete products, of which

    the bulk carry the SABS seal of

    approval.

    n Concrete brick and block factories (8)

    t

    The division produces aggregates

    of a wide variety of sizes and technical

    specifications primarily for

    large-scale civil engineering and

    infrastructure projects.

    Afrimat continually ensures that stone

    reserves are adequate and sustainable

    for the long-term needs of the group.

    Reflecting cohesive vertical integration

    Afrimats proprietary commercial

    quarries located in seven of South

    Africas provinces and in Namibia also

    supply the majority of raw materials for

    the Readymix Concrete and Concrete

    Manufactured Products divisions.

    n Commercial quarries (25)

    n Sand mines (7)

    n Contract crushing services

    n Drilling and blasting services

    t

    The division supplies concrete primarily

    to large-scale civil engineering and

    infrastructure projects through fixed

    and mobile readymix plants, where

    concrete is batched on demand and

    then transported to site by concrete

    mixer trucks. Products meet the

    standards set by SARMA.

    n Batching sites (21)

    t

    Unallocated 1%

    Aggregates 77%

    Readymix Concrete 11%

    Concrete Manufactured Products 11%

    Operating profit by segment

    Aggregates Readymix Concrete Concrete ManufacturedProducts

  • 4 Afrimat Annual Report 2010

    directorate

    Andries J van Heerden (44)CEOB.Eng (Mech) MBA (University of Stellenbosch)

    Government Certificate of CompetenceAndries has extensive experience in strategic positioning, marketing and finance. During 2001 he joined the Prima group as a 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. He was instrumental in 2006 in the formation and listing of Afrimat from the merger of Prima and Lancaster. Andries was a finalist in the 2008 Ernst & Young World Entrepreneur awards in the category Emerging Entrepreneur.

    Hendrik P Verreynne (53)Financial directorB.Compt Hons CA(SA)Prior to joining Afrimat Hendrik, a chartered accountant, was Financial Director of Oceana Brands Limited. Previously he was a senior executive in finance for Woolworths and Borden Foods and Financial Director of Sea Harvest.

    Peter G Corbin (61)B.Sc B.Eng (University of Stellenbosch)Peter has extensive experience in the engineering sector and particularly in roads 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 of Concor Construction (Pty) Limited prior to joining Prima in 1985, where he was promoted to Managing Director in 2005. He is now responsible for New Business Development in the Afrimat group.

    Executive directors Non-executive directors

    Loyiso dotwana (46)B.Sc Civil Engineering (University of Cape Town)Loyiso has worked as a civil engineer in design and project management for more than 20 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 Africas largest black-owned consulting engineering companies, of which he is currently a director and the major shareholder.

    Francois du Toit (63)Francois joined Prima Klipbrekers (Pty) Limited as Managing Director in 1967 and helped establish the Prima group 12 years later, where he remained as Managing Director until 2003 and as Chairman until his retirement in 2009.

    dr Laurie P Korsten (68)CA(SA) Phd (Honoris Causa) (Potchefstroom University) Laurie, a chartered accountant, began his professional career at the Industrial Development Corporation (IDC) where he later headed up the Financial Investigations and Small Business Divisions. Laurie was one of the founding shareholders and executive directors of Finansbank Limited. He is also a past chairman of the SA Merchant Bankers Association and a past executive chairman of Volkskas Merchant Bank and Volkskas International Bank. In 1991 Laurie was appointed by the South African Cabinet as Chairman of the Korsten Committee to investigate government pension funds. He also served as chairman of Rusfurn Limited and as a Trustee of CANSA. Currently he serves as chairman and controlling shareholder of the investment holding companies Korfonds (Pty) Limited and Forecast Investments (Pty) Limited.

    directorate

    Top row left to right: Andries van Heerden, Hendrik Verreynne, Peter Corbin Bottom row left to right: Loyiso Dotwana, Francois du Toit

  • 5Afrimat Annual Report 2010

    Phuti RE Tsukudu (56)MEd, University of Bristol Postgraduate diploma in Adult

    Education B.A. (SW) Phuti is an Organisational Development and Management Consultant and is currently Managing Director/Senior Consultant at Tsukudu Associates and a Partner/Senior Consultant at CRG PPS. She has extensive experience in Organisational Development, Human Resources Management and Human Resources Development in the public, private and non-governmental sectors over 15 years experience as an independent consultant and over 10 years as a community development practitioner working in the development and education arena. She continues to hold a number of board positions.

    Hendrik (Hennie) JE van Wyk (66)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. Western Cape, a position that he held until his retirement.

    Marthinus (Matie) W von Wielligh (58)ChairmanB.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 2...

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