Interim results for the six months ended 31 August 2017 November - - PowerPoint PPT Presentation
Interim results for the six months ended 31 August 2017 November 2017 Core message 1. The business performed brilliantly after a difficult first quarter. 2. We invested during H1 to have the business ready for iron ore revenue early in H2.
November 2017
1. The business performed brilliantly after a difficult first quarter. 2. We invested during H1 to have the business ready for iron ore revenue early in H2. 3. Our strategy is working.
▪ A supplier of quality materials sourced from our open pit mines and quarries ▪ Strategically diversified through product range, target market and location
▪ Open pit mining ▪ Industrial minerals ▪ Aggregates ▪ Iron ore ▪ Concrete based products ▪ Bricks and blocks ▪ Readymix concrete
▪ Lime ▪ Metallurgical dolomite ▪ Metallurgical quartzite Products from industrial minerals
▪ Concrete stone ▪ Road stone Products from quarrying
▪ Iron ore Products from bulk commodities
▪ Bricks and blocks ▪ Paving Products from brick and block making
Products from readymix concrete ▪ Readymix concrete ▪ Readymix mortar
– Dolomite - 3 – Limestone – 2 – Silica – 2 – Iron ore – 1 – Sand and gravel - 5
Concrete Based Products Concrete brick & block factories … and footprint … which generates a balanced consistent income stream Mobile crushing Drilling and blasting Readymix batching sites
25 4 13 9 16
▪ Geographic location ▪ Unique metallurgy ▪ Structural cost advantage
7,4% Contribution from
HEPS to 102,2 cps (2016: 95,2 cps) Net debt: equity ratio Return on net
Interim dividend 20,0 cps (2016: 20,0 cps) NAV per share of 809 cents (2016: 777 cents) 4.1% 22,3% 42,4% Highlights = 16,4%
Revenue and operating profit
Contribution from operations margin 16.4%
931,871 1,030,098 1,003,237 1,153,258 1,184,592 969,316 968,502 966,549 1,074,899 500,000 1,000,000 1,500,000 2,000,000 2,500,000 2014 2015 2016 2017 2018
1st half 2nd half 108,909 127,349 160,923 202,109 194,504 119,362 146,400 160,765 203,492 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 2014 2015 2016 2017 2018
1st half 2nd half
Breakdown of growth Contribution from operations split (%) HY2017 HY2016 Aggregates & Industrial Minerals 103.1% 97.2% Commodities (2.8%)
1.0% 4.8% Other (1.3%) (2.0%) Contribution from operations margin (%) HY2017 HY2016 Aggregates & Industrial Minerals 24.5% 24.1% Commodities (18.9%)
0.6% 2.9% Overall 16.4% 17.5%
Headline earnings per share – interim
CAGR of 20.0% 2013-2017 HEPS Period on period growth 7.4%
Cents per share
49.3 61.1 76.0 95.2 102.2
0.0 20.0 40.0 60.0 80.0 100.0 120.0 2013 2014 2015 2016 2017
Net cash from operating activities - Interim
Cents per share
119,080 74,374 98,938 113,748 40,590
40,000 60,000 80,000 100,000 120,000 140,000 2013 2014 2015 2016 2017
Working capital investments
R54 million R18 million R72 million
Cash inflow from Diro & new Clinker dump from September 2017
Statement of financial position - equities & liabilities R’000 Unaudited Aug 2017 Unaudited Aug 2016 Audited Feb 2016 Total equity 1 108 826 1 111 835 1 206 919 Borrowings 486 158 332 020 174 089 Provisions 138 846 89 417 96 190 Overdraft 60 200 92 343 271 543 Trade and other liabilities 468 264 298 596 352 150 Other liabilities / deferred tax 190 852 130 123 165 434 2 453 146 2 054 334 2 266 325 ▪ Net debt less cash: equity 42.4%
H1: R 39,5 million H2: R 95,0 million R134,5 million H1: R 115,8 million H2: R 42,2 million R158,0 million F2017 Planned for F2018
Interim dividend – 2.7x cover
CAGR of 16.12% 2013-2017
Cents per share
11 13 16 20 20
10 15 20 25 2013 2014 2015 2016 2017
Record date: 1 Dec 2017 Dividend payable: 4 Dec 2017
819,563 335,992 29,037 1,184,592 Aggregates & Industrial Minerals Concrete Based Products Commodities Total
R’000
69.2% 28.3% 2.5% 100%
+ + =
Traditional business 44% Glen Douglas 18% Infrasors 10% Clinker Group 23% Cape Lime 8%
February 2017 August 2017* Well diversified contribution from operations
Traditional business 29% Glen Douglas 16% Infrasors 21% Clinker Group 23% Cape Lime 11%
* Excluding Diro loss of R5,5 million
▪ Satisfactory results ▪ 29% of Operating profit (44% in F2017) ▪ Exceptional performance in Western Cape ▪ More potential ▪ Concrete Based Products market contraction
▪ 16% of Operational profit (18% in F2017) ▪ Very good
performance ▪ Flagship business ▪ Impacted by very slow first quarter
▪ 23% of Operational profit (23% in F2017) ▪ Competition Commission: ▪ Management believes there is no merit in it ▪ Turnover of Clinker Supplies R150 – R160 million p.a. ▪ Emfuleni dump secured ▪ 3-4 year life ▪ Good progress on other alternatives
▪ 21% of Operational profit (10% in F2017) ▪ Lyttelton recovered after Highveld Steel closure ▪ Marble Hall growing ▪ Delf’s Cullinan plant commissioned in February 2017 ▪ More potential
▪ 11% of Operating profit (8% in F2018) ▪ Fully integrated since 1 April 2016 ▪ Very good quality asset ▪ Long life ▪ Marketing drive
▪ Included in results from 1 July 2017 ▪ Ramping up to 1 Mt pa by March 2018 ▪ Currently sells products via Sishen to the Saldanha iron ore export channel ▪ Delivery commenced in August 2017 ▪ Transnet agreement: Rail allocation and own load-out facility ▪ Cost structures: Margins similar or better than current mining and aggregates
Proved 10 Mt run-of-mine reserves
Proved 10 Mt run-of-mine reserves
11 October 2016 Announce agreement to purchase 60% of Diro 16 August 2017 Diro taken out of business rescue 16 August 2017 Conclude final product sale agreement and commence with iron ore delivery 15 August 2017 Afrimat acquires remaining 40% of Diro Future ▪ DMS plant in production since July 2017 ▪ Good progress made on market development ▪ Current production at 50% of target ▪ Full production by end March 2018 R276m R44m
▪ Growth through diversification ▪ Core business principles ▪ Strategic management ▪ Our market
24.5 29.6 29.6 29.8 35.0 49.3 61.1 76.0 95.2 102.2 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 110.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
HEPS
Cents per share
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
Glen Douglas Clinker Infrasors Cape Lime
Profit history with and without acquisitions
▪ 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
▪ 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
Purposeful exposure to sectors with economic fundamentals that suit the Afrimat business model, to counter economic slow down
90 95 100 105 110 115 120 125 130
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 2
2017m2: 934,469 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
Source: Stassa, P5041.1 and Eviews 8
75.0 80.0 85.0 90.0 95.0 100.0 105.0 1/1/2007 6/1/2007 11/1/2007 4/1/2008 9/1/2008 2/1/2009 7/1/2009 12/1/2009 5/1/2010 10/1/2010 3/1/2011 8/1/2011 1/1/2012 6/1/2012 11/1/2012 4/1/2013 9/1/2013 2/1/2014 7/1/2014 12/1/2014 5/1/2015 10/1/2015 3/1/2016 8/1/2016 1/1/2017 Index
Seasonal adjusted Leading Indicator: January 2007 to February 2017
Source: SARB, 25 April 2017
Budget 2016/17: Water and sanitation
Source: National budget 2017, Individual chapters
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
Budget 2016/17: Human settlements
Source: National budget 2017, Individual chapters
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
Budget 2016/17: Transport & logistics
Source: National budget 2017, Individual chapters
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
R billion
Prices of iron ore in $/dmt
Source: World Bank Commodity Prices: September 2017
35.00 40.00 45.00 50.00 55.00 60.00 65.00 70.00 75.00 80.00 85.00 90.00 95.00 100.00 $ per dmt
Local environment ▪ Further Sovereign downgrade expected ▪ Spend 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
Macro environment ▪ Stabilisation in commodity markets ▪ Rand remains volatile – artificially high at times on back
▪ Slower growth in China impacting South Africa and commodity demand ▪ Opportunities emerging on
▪ Markets remain challenging ▪ Afrimat well positioned relative to peer group ▪ Infrasors reaping benefits of improvement initiatives ▪ Diro expected in H2 of F2018 (included 2 months in this period) ▪ Cape Lime to benefit from continued 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
1. The business performed brilliantly after a difficult first quarter. 2. We invested during H1 to have the business ready for iron ore revenue early in H2. 3. Our strategy is working.
BEE Partners 26% Institutions 22% Brokers 20% Management 18% Trusts 8% International 5% Other 1%
Andries van Heerden (CEO) 021 917 8840 Vanessa Rech (Keyter Rech Investor Solutions) 087 351 3814 Thank you for your attendance and participation For any further Investor Relations questions please contact: www.afrimat.co.za