Annual General Meeting 2 August 2017, 14h00 Century City Conference - - PowerPoint PPT Presentation

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Annual General Meeting 2 August 2017, 14h00 Century City Conference - - PowerPoint PPT Presentation

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Annual General Meeting 2 August 2017, 14h00 Century City Conference Centre No. 4 Energy Lane Century City, Cape Tow n Core message 1. Our strategy is working Consistently delivering Over 10 years 2. Current market conditions

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SLIDE 1

2 August 2017, 14h00

Century City Conference Centre

  • No. 4 Energy Lane

Century City, Cape Town

Annual General Meeting

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SLIDE 2

Core message

  • 1. Our strategy is working

▪ Consistently delivering ▪ Over 10 years

  • 2. Current market conditions

▪ Difficult

  • 3. Prospects

▪ Diro in production ▪ Leading indicators

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SLIDE 3

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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SLIDE 4

What we do

▪ Open pit mining

▪ Industrial minerals ▪ Aggregates ▪ Iron ore

▪ Concrete based products

▪ Bricks and blocks ▪ Readymix concrete

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SLIDE 5

Open pit mining: industrial minerals

▪ Lime ▪ Metallurgical dolomite ▪ Metallurgical quartzite Products

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SLIDE 6

Quarrying: aggregates

▪ Concrete stone ▪ Road stone Products

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SLIDE 7

Bulk commodities

▪ Iron ore Products

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SLIDE 8

Concrete brick and block making

▪ Bricks and blocks ▪ Paving Products

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SLIDE 9

Readymix concrete

▪ Readymix concrete ▪ Readymix mortar Products

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SLIDE 10

Afrimat’s portfolio

… and footprint CONCRETE BASED PRODUCTS

Concrete brick & block factories (9) Readymix batching sites (16)

MINING & AGGREGATES

Commercial 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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SLIDE 11

Core message

  • 1. Our strategy is working

▪ Consistently delivering ▪ Over 10 years

  • 2. Current market conditions

▪ Difficult

  • 3. Prospects

▪ Diro in production ▪ Leading indicators

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SLIDE 12

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

Our strategy is working

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SLIDE 13

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

  • peration’s margin

to 18,2% (2016: 16,3%) HEPS to 196,4 cps (2016:156,6 cps) Net debt: equity ratio Return on net

  • perating 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% Our strategy is working

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SLIDE 14

Financial overview

Revenue and operating profit

Operating profit margin 18,2%

671,349 931,871 1,030,098 1,003,237 1,153,258 666,236 969,316 968,502 966,549 1,074,899 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2013 2014 2015 2016 2017

Revenue (R’000)

1st half 2nd half 75,623 108,909 127,349 160,923 202,109 76,860 119,362 146,400 160,765 203,492 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

  • perations (R’000)

1st half 2nd half

Our strategy is working

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SLIDE 15

CAGR of 26,42% 2013-2017 HEPS Year on year growth 25,4%

Cents per share

Financial overview

Headline earnings per share – full year

76.9 109.0 135.6 156.6 196.4 50 100 150 200 250 2013 2014 2015 2016 2017

Our strategy is working

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SLIDE 16

Financial overview

Net cash from operating activities

CAGR 24,36% 2013-2017

Rands (‘000’s)

169,764 243,861 261,646 320,339 406,046 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2013 2014 2015 2016 2017

Our strategy is working

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SLIDE 17

Well diversified contribution from operations

Operational overview

Traditional busi business, , 44% 44% Mozambique, , 0% 0% Gle len Dou Dougla las, , 18% 18% Infrasors, , 10% 10% Cli linker Group, , 23% 23% Cap ape Lim Lime, , 8% 8%

February 2017 February 2016

Traditional busi business, , 32% 32% Mozambique, , 0% 0% Gle len Dou Dougla las, , 18% 18% Infrasors, , 12% 12% Cli linker Group, , 38% 38%

Our strategy is working

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SLIDE 18

What makes Afrimat different

▪ Growth through diversification ▪ Core business principles ▪ Strategic management ▪ Our market

70.4 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

Our strategy is working

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SLIDE 19

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

Our strategy is working

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SLIDE 20

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 Our strategy is working

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SLIDE 21

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 Our strategy is working

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SLIDE 22

Our market

  • Bracing for economic

slow down

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SLIDE 23

Core message

  • 1. Our strategy is working

▪ Consistently delivering ▪ Over 10 years

  • 2. Current market conditions

▪ Difficult

  • 3. Prospects

▪ Diro in production ▪ Leading indicators

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SLIDE 24

Afrimat construction index

90 95 100 105 110 115 120 125 130 135

Q3'10 4 Q1'11 2 3 4 Q1'12 2 3 4 Q1'13 2 3 4 Q1'14 2 3 4 Q1'15 2 3 4 Q1'16 2 3 4 Q1'17 Index; Q3 2010=100

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SLIDE 25

Building plans passed

2017m 5828931.7

200000 400000 600000 800000 1000000 1200000 1400000 1600000 1800000 2000000 2007m1 2007m4 2007m7 2007m10 2008m1 2008m4 2008m7 2008m10 2009m1 2009m4 2009m7 2009m10 2010m1 2010m4 2010m7 2010m10 2011m1 2011m4 2011m7 2011m10 2012m1 2012m4 2012m7 2012m10 2013m1 2013m4 2013m7 2013m10 2014m1 2014m4 2014m7 2014m10 2015m1 2015m4 2015m7 2015m10 2016m1 2016m4 2016m7 2016m10 2017m1 2017m4

  • Sq. m

Seasonal adjusted BPP: Residential+Non Residential 2001m1 to 2017m5. Source: StatsSA, P5041.1 and Eviews 8.

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SLIDE 26

Leading indicator as a proxy for domestic cement sales

98.6 92 95.8

90 92 94 96 98 100 102 104 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15 Aug-15 Nov-15 Feb-16 May-16 Aug-16 Nov-16 Feb-17 May-17 Index

Leading indicator: May 2010 to May 2017

Source: SARB, 20 July 2017.

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SLIDE 27

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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SLIDE 28

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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SLIDE 29

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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SLIDE 30

Prices of iron ore in $/dmt.

2017: 65 2019: 50 2025: 55.2 2017: 68.6 2019: 50.4 2025: 49.9 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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SLIDE 31

Core message

  • 1. Our strategy is working

▪ Consistently delivering ▪ Over 10 years

  • 2. Current market conditions

▪ Difficult

  • 3. Prospects

▪ Diro in production ▪ Leading indicators

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SLIDE 32

Trends in Afrimat’s markets

Local environment

  • Sovereign downgrade
  • Spending on smaller infrastructure

and services projects remains in place

  • Roads remain focus for Government

and SANRAL

  • Steel industry stable
  • Environmental focus: clean water and

clean air

  • Increased number of mining
  • pportunities

Macro environment

  • Slight stabilisation in commodity

markets

  • Rand remains volatile
  • Slower growth in China impacting

South Africa

  • Brexit and Trump creating

uncertainty

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SLIDE 33

Short term outlook

▪ 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 ▪ Traditional business cyclical

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

Remain driven by successful execution

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SLIDE 34

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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SLIDE 35

Core message

  • 1. Our strategy is working

▪ Consistently delivering ▪ Over 10 years

  • 2. Current market conditions

▪ Difficult

  • 3. Prospects

▪ Diro in production ▪ Leading indicators

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SLIDE 36

Q & A

For any further Investor Relations questions please contact:

  • 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