In 2018 the group implemented IFRS15, Revenue from Contracts with Customers, and consequently certain prior year figures have been restated. Where applicable, prior year figures referred to in this report have been restated.

Financial performance

Revenue increased by 9,6% in 2018 to R7,5 billion. The group reported a stable profit after tax for the year of R276,4 million, compared with R272,1 million for 2017, but the result for 2018 was after a significant once off currency loss in Zimbabwe of R87,4 million. Without this currency loss, the result for 2018 would have been a significant improvement on 2017, especially in the second half when a weaker Rand increased margins on both export and local sales and higher production volumes at the Richards Bay facility led to greater overhead absorption. Headline earnings per share was 278 cents (2017: 270 cents). Total dividends of 45 cents per share were paid for the year, 20 cents per share at interim and a final dividend of 25 cents per share, the same as paid for the 2017 financial year.

Sales in the Rest of Africa segment increased by 8,6% and contributed 8,9% of group sales in 2018 compared with 9,0% in 2017. This segmentís result was negatively impacted by a currency loss in Zimbabwe following the introduction of the RTGS dollar and the separation of bank accounts between RTGS dollar accounts and USD accounts. All monetary assets and liabilities were revalued at year end using the Old Mutual Implied Rate. The majority of the foreign currency loss relates to the devaluation of significant RTGS dollar bank balances trapped in that country. This followed low currency allocations throughout 2018 and the investment of some cash in listed shares in Zimbabwe to try and protect the group from the currency devaluation. The group continues to service customers who own Bell machines in Zimbabwe, but under current circumstances will only be in a position to deliver parts and machines to that country after receipt of payment in advance in South Africa for the goods. Elsewhere in the Rest of Africa segment, there was some recovery in sales in the groupís operation in Zambia although management is concerned about the current economic and political conditions in Zambia. In 2018, the groupís operation in the DRC was sold to an independent dealer. This followed the sale of the groupís operation in Mozambique to an independent dealer in 2017.

Revenue from sales in South Africa increased by 10,2% compared with 2017 and contributed 43,4% of group sales in 2018, almost the same as 43,3% in 2017. 2018 was a very difficult year for the SA construction market with very few projects and low activity and this impacted on sales into this market and the profitability of this segment. Coal related demand however remains strong in South Africa.

Total group sales in Europe increased by 23,2%, with the contribution by the European market to total group sales increasing from 18,6% in 2017 to 20,9% in 2018. The contribution to operating profit from this segment reduced slightly in 2018 mainly due to below plan assembly volumes at the assembly plant in Germany, affected by supplier delivery constraints and a challenging SAP implementation in Germany. The SAP challenges have since been resolved.

Sales in the north American market decreased by 17,3% in 2018 following an increase of 80,0% in 2017 and contributed 13,2% to group sales, compared with 17,4% in 2017. Sales were affected by delivery constraints from the assembly plant in Germany, but it also needs to be understood that the group sells to an independent distributor in this region rather than directly to dealers, and as both the distributor and dealers carry inventory, the trend in the groupís sales into this region over time needs to be measured rather than the sales in any one financial year. The opening of the new ALC in 2018 with the aim of enhancing the supply of parts and after sales support to customers in this segment will have a positive impact on LTRS growth in this market, especially in time as machines in the field age.

Sales to independent dealers in Africa, South America and Australasia comprised 13,6% of group sales compared with 11,7% in 2017.

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