• A strong set of results from this diversified mid–tier mining company on the back of a successful history of earnings accretive acquisitions. This strategy has resulted in a sterling set of financial results, despite difficult operating conditions in the construction materials and industrial materials businesses. That was more than offset by robust earnings from the iron ore bulks operations.

  • Revenue was up 11.4% to R3.3 billion. Operating profit increased 27.5% to R601 million. HEPS increased 48.5% to 347.7 cents. The net debt/equity ratio improved from 23.8% to 8.2%, and a return on net operating assets of 30.9% was achieved. The dividend fell 55.6% to 36 cents a share.

  • Net cash from operations was up by 65% to R676m, and was principally due to a strong showing by iron ore, with volume exports increasing by 34% whilst prices for its premium lumpy iron ore increased by 14%.

  • The lumpy iron premium is a plus factor in the company’s export market, whilst the recent purchase of the Darmareg mine out of business rescue has shown their knowledge and expertise in opencast mining, which is also the core of two other business operations. 

  • These operations are stone and aggregates quarries for the building and construction industry, and supplying lime and metallurgical dolomite for water treatment, glass, agricultural and steel industries.

  • These two divisions, were impacted by the downturn in the economy, with the recently acquired iron ore business being a good Rand hedge investment.

  • The diversity of the operating model has proven to be robust and counter-cyclical, despite price volatility.

  • Afrimat, despite a strong balance sheet, with minimal gearing, has decided to pass the dividend payment, which they say is a function of potential acquisition activity, rather than an uncertain operating environment. They also believe that infrastructure spend, should pick up later this year, as it is an important driver of economic growth, and is an important aspect of the government's policy. The shares are tightly held, with only 143,2m shares in issue and a market cap of R3.78bn. The share price is down at a price R26.45, and could prove to be a hidden gem in due course.