Afrimat : Integrated Annual Report 2024

Integrated annual report 2024

Consistently delivering

CONTENTS	OUR BUSINESS	BUSINESS STRATEGY	PERFORMANCE

CONTENTS

GOVERNANCE STRUCTURES	GOVERNANCE OVERVIEW	ANNUAL FINANCIAL STATEMENTS

		1	Performance for the year
		2	About this report
1	OUR	4	Business overview
7	Business model
	BUSINESS
	8	Value creation
		10	Stakeholders
		12	Chairman's Report
		14	CEO's Report
		17	CFO's Report
2	BUSINESS	22	Share performance
STRATEGY	23	Group strategy, material issues and key risks
3	PERFORMANCE	28	Five-year review
29	Operational reviews
4	GOVERNANCE	33	Corporate governance
34	Directorate
	STRUCTURES
	36	Board and Executive Committee structure

Afrimat's full suite of reports can be accessed from the links below:

Notice of Annual

General Meeting 2024

King IVTM application register

Commodities resource register

ESG report 2024

Some of the following United Nations Sustainable Development Goals ('SDGs') are addressed in this report:

		37	Risk management
		39	Assurance
5	GOVERNANCE	43	Social, Ethics & Sustainability Committee Report
46	Ethical leadership and compliance
	OVERVIEW
	47	Environmental responsibility
		49	Managing climate change
		52	Safe and reliable operations
		56	People management
		59	Transformation
		64	Mineral Resources Register
		72	Remuneration Report
		78	Technology and Systems

NAVIGATION TOOLKIT

Read more page reference

More info on website

Afrimat has taken significant steps to diversify its portfolio of resources to ensure a sustainable future. However,

				RC
			U	E
		O
	S					M
E
R								A
							C
								H
							g	I
						in
					k
				c
			o

6 ANNUAL FINANCIAL STATEMENTS

1. Directors' Responsibility Statement

1. Declaration by the Company Secretary
2. Audit & Risk Committee Report

1. Independent Auditor's Report

1. Directors' Report

1. Statements of Profit or Loss and Other Comprehensive Income
2. Statements of Financial Position
3. Statements of Changes in Equity
4. Statements of Cash Flows
5. Notes to the Annual Financial Statements

1. Analysis of Shareholders
2. Shareholders' diary

1. Contact details
2. Definitions

unlocking the full potential of these resources requires more than just the right machinery. It also involves the expertise and dedication of people, who ensure efficient operations. This combination of resources, machinery, and people makes all the difference in unlocking continual success. At Afrimat, we believe that this exponential result is made possible by the foundation of our culture.

Unl				s	N
			E
			S
				s
			e
		c
uc
s
P
E
O
	PLE

Cover artwork by Luan Serfontein

CONTENTS	OUR BUSINESS	BUSINESS STRATEGY	PERFORMANCE

PERFORMANCE

FOR THE YEAR

FINANCIAL PERFORMANCE

Balance sheet			HEPS up
remains	strong		24,0% to	567,3 cents
Net debt:			Return on net
equity ratio	1,4%		operating assets 25,6%

GOVERNANCE STRUCTURES	GOVERNANCE OVERVIEW	ANNUAL FINANCIAL STATEMENTS

SHARE PRICE GROWTH SINCE 2009 (CENTS)

7 000														6506	5 388	2646
6 000													430
5 000
								3 050	2 899	2 925	2 850	4
4 000							1 655	2 401
3 000						1 289
2 000	196	313	330	573	844
1 000
0

Operating profit margin 18,9%

60
50
40		28,7	23,7
30	18,2	19,6	18,9
20
10
0	'20	'21	'22	'23	'24

NAV per share 3 004 cents

CAGR 24,6%

6 000
5 000
4 000				2 591	3 004
3 000	246	1 761	2 170
2 000
1 000	1
0	'20	'21	'22	'23	'24

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

'21

'22

'23

'24

Since 2009, Afrimat's share price has risen 3 096% and over the past five years it is up 120% - during the time when most other companies felt the pain of economic deterioration.

Afrimat manages economic volatility by diversifying its portfolio across different areas, which generates a balanced and consistent income stream.

Afrimat has a superb track record in acquiring, integrating, and then growing businesses. During the year Afrimat announced that the Company will acquire the shares in Lafarge South Africa Holdings Proprietary Limited

HEPS 567,3 cents	Net cash from operating activities
R1,2 billion

('Lafarge'), the acquisition is effective from 23 April 2024.

				CAGR 13,0%				CAGR 16,3%
600		441,7	542,9	457,6	567,3	1 500 000				987 319	1 237 005
500	347,7	1 250 000	676 810	767 580	736 555
400	1 000 000
300	750 000
200						500 000
100						250 000
0	'20	'21	'22	'23	'24	0	'20	'21	'22	'23	'24

Safety is our top priority

LTIFR of 0,29

(Please refer to page 52 for safety initiatives)

Advancing sustainability

Afrimat is committed to Environmental, Social and Corporate Governance ('ESG') matters and regards sustainability as a mandatory strategic objective.

Total dividends per share 194 cents

CAGR 13,5%

300
250			186		194
200		148	150
150	117
100
50
0	'20	'21	'22	'23	'24

Share price at year-end6 264 cents

CAGR 21,8%

9 000			6 650		6 264
7 500		430	5 388
6 000	850
4 500	4
3 000	2
1 500
0	'20	'21	'22	'23	'24

Value creation in communities

• Consolidated Broad-Based Black Economic Empowerment status attained at a level 2 in 2023 (level 3 in 2022).
• Skills and socio-economic development spend R73,6 million (2023: R50,4 million).
• Preferential Procurement B-BBEE score of 2023: 75,1% (2022: 63,4%) as verified by South African National Accreditation System ('SANAS') Accredited B-BBEE Rating Agency.

AFRIMAT INTEGRATED ANNUAL REPORT 2024

1

CONTENTS

OUR BUSINESS

BUSINESS STRATEGY

PERFORMANCE

GOVERNANCE STRUCTURES

GOVERNANCE OVERVIEW

ANNUAL FINANCIAL STATEMENTS

ABOUT THIS REPORT

Afrimat is a leading black empowered group with its main business and core competence in mid-tier mining and materials supply company. The Group supplies industrial minerals and construction materials to a range of industries across southern Africa. In addition, Afrimat supplies bulk commodities to local and international markets. During the prior year, Afrimat started supplying phosphates to the agriculture sector. It is listed in the 'General mining' sector of the JSE Main Board.

CORPORATE INFORMATION

The Group's executive directors are Andries van Heerden (CEO), Pieter de Wit (CFO), Collin Ramukhubathi and Gerhard Odendaal. They can be contacted at the registered office of the Company. The Company Secretary is Catharine Burger. See contact details on the inside back cover of this integrated annual report.

The integrated annual report 2024 is available in hard copy, on request, from the Company Secretary and is also published on the Group's website www.afrimat.co.za.

Our integrated annual report 2024 contains information aimed at all our stakeholders with a specific focus on our shareholders. We are committed to providing shareholders with reliable, accurate, balanced and transparent reporting. Overall, the report is intended to give our stakeholders a better understanding of the material issues, risks and opportunities that we face in terms of business sustainability, value creation and growth over the short-term (less than 12 months), medium-term (one to three years) and long-term (beyond three years).

MATERIALITY

The legitimate interests of all our key stakeholders were taken into account in determining information that is considered to be material for inclusion in this report. Afrimat defines strategic matters as those which are most material to the formulation and execution of strategy and those that have the potential to significantly affect Afrimat's ability to create stakeholder value and contribute to the future sustainability of the Group.

RISK MANAGEMENT

Risk is inherent in all Afrimat's business activities. We are committed to identify, assess and prioritise risks in order to minimise, monitor and control the probability and impact of unfortunate events to support the achievement of our objectives.

Refer to page 37 for the risk management report.

FORWARD-LOOKING DISCLAIMER

This integrated annual report 2024 contains forward-looking statements that, unless otherwise indicated, reflect the Company's expectations as at 29 February 2024. Actual results may differ materially from the Company's expectations if known and unknown risks or uncertainties affect the business, or if estimates or assumptions realise differently. The Company cannot guarantee that any forward-looking statement will materialise and, accordingly, readers are cautioned not to place undue reliance on these forward-looking statements. The Company disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new information becomes available as a result of future events or for any other reason.

BOARD RESPONSIBILITY STATEMENT

The Board, assisted by the Audit & Risk and Social, Ethics & Sustainability Committees, acknowledges its responsibility for ensuring the integrity of the integrated annual report, and has applied its collective mind in the preparation thereof. The Board believes that the report has, in all material respects, been presented in accordance with the IIRC's Framework. The Afrimat Board approved this integrated annual report and authorised its release on 7 June 2024.

SCOPE AND REPORTING PARAMETERS

This integrated annual report 2024 covers the financial performance and non-financial performance of the Group. Afrimat reports on the strategy, the six capitals on which it relies and the opportunities, risks and outcomes attributable to or associated with its key stakeholders, who significantly influenced Afrimat's ability to create value for the year ended 29 February 2024. There has been no material change in the scope and boundary of the IAR compared to the prior year or to historical financial data.

For more information, see the annual financial statements on pages 80 to 152.

COMBINED ASSURANCE

A combined assurance model is used to provide Afrimat with assurance obtained from management, internal and external assurance providers. PricewaterhouseCoopers Inc. are the auditors of Afrimat and provided an unmodified opinion after auditing our consolidated annual financial statements 2024. The extracts from the annual financial statements in this integrated annual report are from audited information but not audited.

The Group's financial, operating, compliance and risk management controls are assessed by the Group's internal audit function, which is overseen by the Audit & Risk Committee.

FRAMEWORKS APPLIED

In compiling this report, Afrimat considered the legislative requirements for reporting and the International Integrated Reporting Framework, issued in January 2021. Our report conforms to the requirements of local and international integrated reporting frameworks, the South African Companies Act 2008, JSE Listings Requirements and the Mining Charter. We continue to use the GRI guidelines for our sustainable development reporting. The Company applies the majority of the principles in the King IV™ Report. An explanation and summary for each principle is provided and published on the Group's website www.afrimat.co.za. This is to allow stakeholders to make an informed decision as to whether Afrimat is achieving the four good governance outcomes required by King IV™.

Francois Louw

Chairman

7 June 2024

Andries van Heerden

CEO

2	AFRIMAT INTEGRATED ANNUAL REPORT 2024

CONTENTS

OUR BUSINESS

BUSINESS STRATEGY

PERFORMANCE

GOVERNANCE STRUCTURES

GOVERNANCE OVERVIEW

ANNUAL FINANCIAL STATEMENTS

						C
					R	E
		U
				S
	O
E	S							g
R
						kin
				oc
	Unl			s
						es
				cc
	su
M										E
A									L
	C
								P
	H
	I						O
		N	ES •	E
			P

Unlocking potential

through strategic resources

1

OUR

BUSINESS

1. Business overview

1. Business model
2. Value creation

10 Stakeholders

1. Chairman's Report

1. CEO's Report

1. CFO's Report

CONTENTS	OUR BUSINESS	BUSINESS STRATEGY

BUSINESS OVERVIEW

FOOTPRINT

PERFORMANCE	GOVERNANCE STRUCTURES

GOVERNANCE OVERVIEW	ANNUAL FINANCIAL STATEMENTS

Afrimat primarily engages in mid-tier mining, processing and the supply of a broad range of industrial minerals and construction materials to an assortment of industries across southern Africa. In addition, Afrimat supplies bulk commodities to local and international markets. During the prior year, Afrimat started supplying phosphates to the agriculture sector.

The Group prides itself on extensive in-house industry expertise and a stable workforce.

Western Cape

SOUTH AFRICA

5 Northern Cape

23

5 Limpopo

7 Gauteng

7 Mpumalanga

4 Free State

17 KwaZulu-Natal

2 Eastern Cape

Mauritius

4

AFRIMAT INTEGRATED ANNUAL REPORT 2024

CONTENTS

OUR BUSINESS

BUSINESS STRATEGY

PERFORMANCE

GOVERNANCE STRUCTURES

GOVERNANCE OVERVIEW

ANNUAL FINANCIAL STATEMENTS

BUSINESS OPERATIONS

CONSTRUCTION MATERIALS

INDUSTRIAL MINERALS

BULK COMMODITIES

FUTURE MATERIALS AND METALS

SERVICES

	Limpopo		Western Cape		Gauteng
1	Quarries	8	Quarries	3	Quarries
2	Readymix batching plant	8	Readymix batching plant	1	Readymix batching plant
1	Limestone source	5	Sand mines	2	Brick and block factories
1	Phosphate stockpiles	1	Limestone and dolomite source	1	Clinker
	Vermiculite mine	1	Dolomite mine
	Mpumalanga		KwaZulu-Natal		Eastern Cape
3	Quarries	7	Quarries	1	Quarries
3	Readymix batching plant	6	Readymix batching plant	1	Readymix batching plant
1	Anthracite mine	4	Brick and block factories
	Free State		Northern Cape
3	Quarries	3	Iron ore mines
1	Clinker source	1	Iron ore source
		1	Manganese mine

Leading specialists offering a comprehensive suite of solutions to the mining, construction and quarrying industries throughout southern Africa

ƒ	Mine planning	ƒ	Beneficiation of materials	ƒ	Pit-to-port solutions
ƒ	Mine rehabilitation	ƒ	Bulk drilling and blasting	ƒ	Rail loadout management and logistics
ƒ	Crushing and screening	ƒ	Load and haul
AFRIMAT INTEGRATED ANNUAL REPORT 2024				5

CONTENTS

OUR BUSINESS

BUSINESS STRATEGY

PERFORMANCE

GOVERNANCE STRUCTURES

GOVERNANCE OVERVIEW

ANNUAL FINANCIAL STATEMENTS

BUSINESS OVERVIEW (continued)

CORE ACTIVITIES

CONSTRUCTION MATERIALS

Aggregates Concrete-based products Readymix

Open pit mining and processing of aggregates products

Concrete brick and block manufacturing and readymix concrete batching

INDUSTRIAL MINERALS

Limestone Dolomite Silica

Open pit mining, processing and benefication of industrial minerals

BULK COMMODITIES

Iron ore Anthracite Manganese

Open pit iron ore and anthracite mining and benefication as well as underground anthracite mining and benefication

REVENUE CONTRIBUTION

37%			9%			48%

PRODUCTS/ SERVICES

MARKETS/ APPLICATIONS

QUALITY ASSURANCE

ƒ	Clinker ash	ƒ	Pavers
ƒ	Aggregates: roadstone,	ƒ	Lintels
	concrete stone, layer-works	ƒ	Readymix concrete batched
	materials, ballast		on demand and transported
ƒ	Manufactured and natural		to customers by concrete
	sand		mixer trucks
ƒ	Stone dust	ƒ	Readymix mortars
ƒ Building blocks and bricks	ƒ	Silica

• Dolomite

ƒ	Building and construction	ƒ	Mines
ƒ	Low-cost housing	ƒ Road and bridge building
ƒ	Residential and	ƒ	Railroads
	commercial property	ƒ	Concrete product
ƒ	Civil engineering and		manufacturers
	infrastructure projects	ƒ	Readymix producers

• Renewable energy projects ƒ Power stations
• Power distribution network

Quality-at-source processes by which quality control is ensured through constant monitoring and evaluation.

Blocks and bricks manufactured in accordance with SABS specification.

ƒ	Metallurgical dolomite	ƒ	Un-slaked lime - calcium
ƒ	Metallurgical quartzite		oxide
ƒ	Metallurgical limestone	ƒ	Slaked lime - calcium
ƒ	High calcium neutralisation		hydroxide
	limestone	ƒ	Silica sand
ƒ	Agricultural lime	ƒ	Ultra-fine limestone and
ƒ	Feedlime		dolomite
ƒ	Hydrated lime	ƒ	Dolomite fillers
		ƒ	Koalin
ƒ	Metallurgical	ƒ	Glass manufacturers
	manufacturers	ƒ	Tile adhesive
ƒ	Water and sewage		manufacturers
	treatment	ƒ	Agriculture
ƒ	Acid mine drainage	ƒ	Renewable energy projects
	treatment	ƒ	Power distribution network
ƒ	Paints and plastics	ƒ	Chemical
ƒ	Foundries	ƒ	Animal hygiene

Quality-at-source processes by which quality control is ensured through constant monitoring and evaluation.

ƒ	Top-end quality iron ore	ƒ	Siliceous manganese ore
	from Hematite ore up to	ƒ	Mixed metal manganese
	65% Fe		ore
ƒ	Lump and fine fraction	ƒ High quality nuts and duff
	product range		anthracite product

ƒ	International export	ƒ	Domestic ferrochrome
ƒ	Local consumption		smelting market
ƒ Mine to road to train	ƒ	Mine to port logistics
	logistics

Export iron ore products manufactured in accordance with customer specifications and sold in terms of the Platts iron ore 62% grade for export. Good quality anthracite due to its low sulphur and phosphorous content. All anthracite products manufactured in accordance with customer specifications. The utilisation of an in-house test laboratory for continuous process control. Quality and specification statements are generated by an outsourced accredited laboratory.

VERTICAL INTEGRATION

Supply the majority of the aggregates used by Afrimat's own Concrete Based Product ('CMP') divisions.

Mobile crushing, drilling, blasting, load and haul performed by the Group's contracting business. Furthermore, this business managed and operated a railway load out station with direct access to the Oryx Sishen-Saldanha rail link, during the year under review.

6	AFRIMAT INTEGRATED ANNUAL REPORT 2024

CONTENTS

OUR BUSINESS

BUSINESS STRATEGY

PERFORMANCE

GOVERNANCE STRUCTURES	GOVERNANCE OVERVIEW	ANNUAL FINANCIAL STATEMENTS

BUSINESS MODEL

FUTURE MATERIALS AND METALS

SERVICES

OUR VALUE CHAIN ACTIVITIES:

Phosphate Rare earths

Processing and beneficiation of phosphates

Contract crushing, drilling and blasting

Logistical services Group shared services

Group shared services including IT services, consulting services

Internal and external logistical and mining services such as contract crushing, drilling and blasting, load and haul

Exploration

Identify new

resources throughout

southern Africa

Outbound logistics,		Mining/
shipping, marketing
	Quarrying
and selling

1%

• Granulated rock phosphate
• Single superphosphate ('SSP')

5%

ƒ	Mobile crushing and	ƒ	Transportation of
	screening		materials
ƒ	Drilling and blasting	ƒ Mine to road to train
ƒ	Beneficiation of material		logistics
ƒ	Open cast mining	ƒ	Logistical services
	services

Servicing markets	Extract aggregates,
locally and globally	iron ore, industrial
			minerals and future
			materials and metals
			Promoting sustainability
		Sustainability	and addressing ESG
		and ESG:	impacts throughout all
			value chain activities

• Agricultural

Products manufactured are sold within the industry specifications of a P-concentrate level of subminimum 32% and Fe level of <5%. The utilisation of in-house test laboratory for quality specifications and continuous process control.

ƒ	Building and	ƒ	Mine to road to train
	construction		logistics
ƒ	Mines	ƒ	Mine to port logistics

Quality-at-source processes by which quality control is ensured through constant monitoring and evaluation.

Manufacturing

Producing SSP, ready-mix, CMP, unslaked lime (oxide), hydrated and chemical lime, white wash and biolim products

Beneficiation

Improving the final product quality by using a:

• DMS (dense medium separation) plant for iron ore; air, and magnetic separator for phosphate rock;
• DMP (dolomite mixing plant) and LMP (limestone mixing plant) for industrial industries washing, crushing and screening of aggregates; and
• In-houselaboratory testing regarding various products

In-house mining services provided: Mobile crushing, drilling and blasting. This segment was utilised to manage and operate a railway load out station with direct access to Oryx Sishen-Saldanha rail link, as well as logistical services to the other segments.

AFRIMAT INTEGRATED ANNUAL REPORT 2024

7

CONTENTS

OUR BUSINESS

BUSINESS STRATEGY

PERFORMANCE

GOVERNANCE STRUCTURES

GOVERNANCE OVERVIEW

ANNUAL FINANCIAL STATEMENTS

VALUE CREATION

CAPITAL

FC	FINANCIAL CAPITAL

The money obtained from providers of capital and the retained earnings generated by operations to support all business activities and invest in the strategy. Furthermore, creating and managing stakeholder value (including social development, dividends for shareholders and salaries for employees).

TRADE-OFF

Due to the volatile and uncertain market conditions, a decision was made to keep gearing low and to preserve additional cash resources.

OUTLOOK

Afrimat is investigating future business acquisitions to increase sustainable financial growth. A strong balance sheet and cash balance enables the Company to exploit possible investment opportunities and expansion.

INPUT

• Market capitalisation of R10,0 billion (2023: R8,6 billion).
• Net debt:equity of 1,4% (2023: 4,5%) to execute growth.
• Funding facilities of R1,8 billion (2023: R1,2 billion) of which
  R613,9 million is utilised (2023: R568,5 million) (refer note 7.3.4).

NC	NATURAL CAPITAL

We depend on natural resources to create value and returns for our stakeholders. Environmental management is a critical part of the management process.

MC	MANUFACTURED CAPITAL

The tangible and intangible infrastructure used to conduct our business activities. We leverage off our asset base (including plant and equipment), successful awarding of mining rights and information technology assets to service customers.

HC	HUMAN CAPITAL

How we select, develop and manage our people.

SRC	SOCIAL AND RELATIONSHIP CAPITAL

To operate as a responsible corporate citizen. Fostering a good relationship with stakeholders (including customers, capital providers, regulators and other stakeholders).

IC	INTELLECTUAL CAPITAL

Our strong brand, procedures and processes and the knowledge of our people constitutes our intellectual capital. The balance of new opportunities and core strengths ensures growth.

Using natural resources may sometimes negatively affect human and social capital. This is a key trade-off for generating value across the other capitals. We are, however, committed to minimising the environmental impacts of our operations and activities.

Mining and run-of-mine operations have a positive impact on manufactured capital, but negative for financial capital. This can be marginally offset by rising product value.

Investing in attracting, retaining and developing the best talent, thereby resulting in employee costs being a significant cost to our business and in turn, impacting financial capital.

Maintaining quality relationships across all stakeholders requires financial capital inputs, but generally generates positive return across most capitals over the longer term.

Our commitment to implementing reliable systems as well as determining the role of Artificial Intelligence ('Al') and Big Data, may result in pressure on some existing traditional job functions, but will harvest opportunities in new roles.

	Accelerate and expand our response in an	ƒ	Water used 1 590 000 cubic metre ('m³') (2023: 1 380 000		m³).
	effort to be resilient in a lower-carbon future
	ƒ	49 349,5 tCO2e (2023: 50 194 tCO2e) electricity.
	(refer to page 47).
	ƒ	21,9 million litres (2023: 15,8 million litres) fuel.
		ƒ 75 operations throughout southern Africa creating a
	Beneficiation leads to multiple product		distribution network and general infrastructure (including
		technology) which enable us to produce, deliver and sell		our
	development, sales and associated benefits.
		products and services.
		ƒ Property, plant and machinery R1,4 billion (2023: R1,2 billion).
	Attracting, retaining and developing our	ƒ	Strong leadership team, driving our entrepreneurial culture.
	employees in line with our culture, will increase	ƒ	A diverse Board and executive team.
	sustainable growth in the long term.	ƒ	2 755 (2023: 2 688) employees with relevant knowledge,
	Safety remains a top priority and a focus area.		skills and experience.
	Creating an effective shareholder engagement	ƒ	Good relationships with the communities surrounding our
	strategy.
		mining operations and production plants.
	Further improvements in our transformation
	ƒ	Confidence of shareholders by creating an effective and
	strategy and B-BBEE status as well as
		aligned shareholder engagement strategy.
	socio-economic development.
	Implementing of agile business processes	ƒ	Enabling growth through sound business principles and
	across all business units.		new opportunities.
	Maintain our reputation as a quality supplier with	ƒ	The intangibles that constitute our product and service
	an exceptional brand.		offering and provide our competitive advantage.

8	AFRIMAT INTEGRATED ANNUAL REPORT 2024