final results presentation - afrimat · 2017. 5. 18. · final results presentation for the year...

FINAL RESULTS PRESENTATIONfor the year ended 28 February 2017

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Johannesburg – 18 May 2017Cape Town – 22 May 2017

1Afrimat Limited Final results presentation for the year ended 28 February 2017

Notes:

Group overview▪ A supplier of quality materials sourced from our open pit mines and quarries

▪ Strategically diversified through product range, target market and location

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Notes:

What we do

▪ Open pit mining▪ Industrial minerals▪ Aggregates▪ Iron ore

▪ Concrete based products▪ Bricks and blocks▪ Readymix concrete

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Notes:

Open pit mining: industrial minerals

▪ Lime

▪ Metallurgical dolomite

▪ Metallurgical quartzite

Products from industrial minerals

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Notes:

Quarrying: aggregates

▪ Concrete stone

▪ Road stone

Products from quarrying

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Notes:

Bulk commodities

▪ Iron ore

Products form bulk commodities

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Notes:

Concrete brick and block making

▪ Bricks and blocks

▪ Paving

Products from brick and block making

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Notes:

Readymix concrete

▪ Readymix concrete

▪ Readymix mortar

Products from readymix concrete

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Notes:

Afrimat’s portfolio… and footprint

CONCRETE BASED PRODUCTSConcrete brick & block factories (9)

Readymix batching sites (16)

MINING & AGGREGATESCommercial quarries (25)

Dolomite mines (3)

Clinker (4)

Limestone mines (2)

Silica mines (2)

Iron ore mine (1)

Sand and gravel mines (5)

Mobile crushing

Drilling & blasting

… which generates a balanced consistent income stream

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Notes:

Company positioning

• Primarily focused on mid-tier open pit mining

• Unique competitive advantage• Geographic location

• Unique metallurgy

• Structural cost advantage

• Highly entrepreneurial culture

• Hedged against economic volatility through wide diversification

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Notes:

25,4% 11,7%32,5%

Contribution from operation’s margin

to 18,2% (2016: 16,3%)

HEPS to 196,4 cps

(2016:156,6 cps)

Net debt: equity ratio

Return on net operating assets

Final dividend to 50,0 cps

(2016: 41,0 cps)

NAV per share of 881 cents

(2016: 720 cents)

Highlights

Financial overview

21,9% 22,4%19,8%

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Notes:

Financial overviewRevenue and operating profit

Operating profit

margin18,2%

671,

349

931,

871

1,03

0,09

8

1,00

3,23

7

1,15

3,25

8666,

236 96

9,31

6

968,

502

966,

549

1,07

4,89

90

500,000

1,000,000

1,500,000

2,000,000

2,500,000

2013 2014 2015 2016 2017

Revenue (R’000)

1st half 2nd half

75,6

23

108,

909

127,

349

160,

923

202,

109

76,8

60 119,

362

146,

400

160,

765 20

3,49

2

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2013 2014 2015 2016 2017

Contribution form operations (R’000)

1st half 2nd half

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Notes:

Breakdown of growth

Financial overview

Contribution from operations split (%) F2017 F2016

Mining & aggregates 92,5% 87.3%

Concrete based products 9,5% 12.7%

Contribution from operations margin (%) F2017 F2016Mining & aggregates 24,1% 20.0%Concrete based products 5,8% 7.3%Overall 18,2% 16.3%

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Notes:

CAGR of 26,42%

2013-2017

HEPSYear on

year growth 25,4%

Cen

ts p

er s

hare

Financial overviewHeadline earnings per share – full year

76.9

109.0

135.6156.6

196.4

0

50

100

150

200

250

2013 2014 2015 2016 2017

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Notes:

Financial overviewNet cash from operating activities

CAGR 24,36%

2013-2017

Ran

ds(‘0

00’s

)

169,764

243,861261,646

320,339

406,046

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2013 2014 2015 2016 2017

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Notes:

Financial overviewStatement of financial position - assets

R’000 Reviewed Feb 2017

Reviewed Feb 2016

Property, plant and equipment 1 058 240 763 156

Mining rights and goodwill 147 769 149 744

Inventories 162 960 132 702

Trade and other receivables 332 766 295 552

Cash 244 690 117 241

Other assets / BEE funding 319 900 189 311

2 266 325 1 647 706

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Notes:

Financial overviewStatement of financial position – equities & liabilities

R’000 Reviewed Feb 2017

Reviewed Feb 2016

Total equity 1 206 919 1 025 086

Borrowings 174 089 112 885

Provisions 96 190 75 565

Overdraft 271 543 39 878

Trade and other liabilities 352 150 277 832

Other liabilities / deferred tax 165 434 116 460

2 266 325 1 647 706

▪ Net debt less cash : equity 19,8%

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Notes:

Financial overviewCapital expenditure

H1: R 39 millionH2: R106,9 million

R145,9 million

H1: R 70 millionH2: R 70 million

R140 million

F2017Planned

for F2018

▪ Good balance between maintenance and expansion capex▪ Approximately 25% spent on expansion capex

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Notes:

Financial overviewDividends

Cen

ts p

er s

hare

CAGR of 25,74%

2013-2017

Cover of 2,75x

28

39

5057

70

0

10

20

30

40

50

60

70

80

2013 2014 2015 2016 2017

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Notes:

Well diversified contribution from operations

Operational overview

Traditional business, 44%

Mozambique, 0%Glen Douglas, 18%

Infrasors, 10%

Clinker Group, 23%

Cape Lime, 8%

February 2017 February 2016

Traditional business, 32%

Mozambique, 0%

Glen Douglas, 18%Infrasors, 12%

Clinker Group, 38%

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Notes:

Traditional business:

• Continued recovery

• 44% of Operating profit (32% in F2016)

• Exceptional performance in Western Cape

• More potential

Aggregates & Concrete based products

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Notes:

Glen Douglas

• 18% of Operation profit (18% in F2016)

• Very good operational performance

• Flagship business

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Notes:

Clinker Group


• Competition Commission:• Referred to tribunal• Accusation: misuse of market dominance• Management believes there is no merit in it• Turnover of Clinker Supplies R150 – R160 million p.a.

• Witbank dump secured

• 2 Years life in Vaal dump

• Good progress on other alternatives

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Notes:

Infrasors


• Lyttelton recovered after Highveld Steel closure

• Marble Hall growing

• Delf’s Cullinan plant commissioned in February 2017

• More potential

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Notes:

Cape Lime

• 8% of Operating profit

• Fully integrated since 1 April 2016

• Very good quality asset

• Long life

• Marketing drive

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Notes:

Diro

• Bought out of business rescue

• Expected production from mid-year

• 1 Million tons p.a. initial capacity

• Excellent potential

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Notes:

What makes Afrimat different

▪ Growth through diversification

▪ Core business principles

▪ Strategic management

▪ Our market70.4

40.5 51.3 53.3 62.6

76.9

109.0

135.6

156.6

196.4

-

50.0

100.0

150.0

200.0

250.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Headline earnings per share

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Notes:

0

20

40

60

80

100

120

140

160

180

200

2009 2010 2011 2012 2013 2014 2015 2016 2017

Profit history with and without acquisitions

Headline earnings per share Reality without strategic acquisitions

Growth through diversification

Glen Douglas

Clinker

Infrasors

Cape Lime

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Notes:

Core business principles

• Strong operational efficiency

• Unique competitive advantages

• The right people in the right position

• Synergistic teamwork

• Customer advocacy through service, reliability and quality of supply

• Values based entrepreneurial culture

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Notes:

Strategic management

• Companywide understanding of desired future

• Fundamental understanding of market

• Good understanding of own abilities

• Continuous research of business environment

• Facing the brutal facts

• Meticulous strategy execution

• Financial discipline: making the returns

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Notes:

Our market

• Bracing for economic slow down

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Notes:

Afrimat construction index

90

95

100

105

110

115

120

125

130

135

Q3'10 4Q1'11 2 3 4Q1'12 2 3 4Q1'13 2 3 4Q1'14 2 3 4Q1'15 2 3 4Q1'16 2 3 4Q1'17

Index; Q3 2010=100

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Notes:

Building plans passed

2017m2: 934469

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

2000000

2007m1

2007m5

2007m9

2008m1

2008m5

2008m9

2009m1

2009m5

2009m9

2010m1

2010m5

2010m9

2011m1

2011m5

2011m9

2012m1

2012m5

2012m9

2013m1

2013m5

2013m9

2014m1

2014m5

2014m9

2015m1

2015m5

2015m9

2016m1

2016m5

2016m9

2017m1

Sq. m Seasonal adjusted BPP: Residential + non-residential 2001m1 to 2017m2Source: Stassa, P5041.1 and Eviews 8.

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Notes:

Leading indicator as a proxy for domestic cement sales

75.0

80.0

85.0

90.0

95.0

100.0

105.01/1/20

07

6/1/20

07

11/1/200

7

4/1/20

08

9/1/20

08

2/1/20

09

7/1/20

09

12/1/200

9

5/1/20

10

10/1/201

0

3/1/20

11

8/1/20

11

1/1/20

12

6/1/20

12

11/1/201

2

4/1/20

13

9/1/20

13

2/1/20

14

7/1/20

14

12/1/201

4

5/1/20

15

10/1/201

5

3/1/20

16

8/1/20

16

1/1/20

17

Index Seasonal adjusted Leading Indicator: January 2007 to February 2017Source: SARB, 25 April 2017.

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Notes:

Budget 2016/17: Water and sanitation

37.2

39.3

44.9

24

29

34

39

44

49

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

R billion Source: National budget 2017, Individual chapters.

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Notes:

Budget 2016/17: Human settlements

18.3

20

22.3

15

16

17

18

19

20

21

22

23

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

R billion Source: National budget 2017, Individual chapters.

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Notes:

Budget 2016/17: Transport & logistics

91.4

104.6

117.4

60

70

80

90

100

110

120

130

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

Source: National budget, Individual chapters.R billion

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Notes:

Prices of iron ore in $/dmt.

2017: 65 2019: 50 2025: 55.2

2017: 68.6 2019: 50.4 2025: 49.9

0

20

40

60

80

100

120

2014 2015 2016 2017 2018 2019 2020 2025 2030

$

Source: World Bank, Commodity Markets Outlook, April 2017.

Nominal

2010=100

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Notes:

Trends in Afrimat’s marketsLocal environment

• Sovereign downgrade

• Spending on smaller infrastructure and services projects remains in place

• Roads remain focus for Government and SANRAL

• Building still strong

• Steel industry stable

• Environmental focus: clean water and clean air

• Increased number of mining opportunities

Macro environment

• Slight stabilisation in commodity markets

• Rand remains volatile – artificially high at times on back of US$ weakness

• Slower growth in China impacting South Africa

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Notes:

Short term outlook

• Further improvement in traditional business

• Infrasors reaping benefits of improvement initiatives

• Diro expected in H2 of F2018

• Cape Lime to benefit from marketing efforts

• Glen Douglas and Clinker Supplies stable

• Mozambique on care and maintenance

Afrimat will pursue a conservative growth strategy preserving the integrity of the balance sheet

Remain driven by successful execution

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Notes:

Risk mitigation

Country risk in South Africa

• Seeking opportunities outside of South Africa• Eyes wide open in South Africa• Credit terms strictly monitored• Diversify revenue currencies

Macro-economic threats

• Constant strategic management (avoiding threats, exploiting opportunities)• Entrepreneurial culture and creative innovative solutions• Strong but conservative balance sheet

Labour unrest

• Drive to create a unique and positive culture• Communication and upliftment• BEE share scheme• No labour action during the year

Volatility in commodity

markets

• Maintain diversified revenue streams• Low cost base• Creative marketing & logistics

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Notes:

Q & A

• Andries van Heerden (CEO) 021 917 8840• Vanessa Rech (Keyter Rech Investor Solutions) 087 351 3814

Thank you for your attendance and participation

www.afrimat.co.za

For any further Investor Relations questions please contact:

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Notes:

Appendix

Background information

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Notes:

Afrimat’s products• Products from factories:

- Concrete blocks- Concrete bricks- Pavers

• Products from mines:- Aggregates (crushed stone)- Metallurgical dolomite- Metallurgical quartzite- Fire retardant powder- Lime products- Clinker

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Notes:

Afrimat’s products Continued

• Products from readymix batch plants:- Readymix concrete- Readymix mortar

• Services by the contracting team:- Contract crushing- Mobile screening- Drilling- Blasting

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Notes:

Afrimat’s products Continued

• Transport infrastructure:- Road and bridge building- Railroads

• Industrial minerals:- Steel makers- Coal mines- Foundries- Glass makers- Ceramics

• Energy infrastructure:- Power stations- Renewable energy projects- Power distribution network

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Notes:

final results presentation - afrimat · 2017. 5. 18. · final results presentation for the year...

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