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Annual General Meeting 5 August 2016, 14h00 Feathers Lodge Boutique - PowerPoint PPT Presentation

Annual General Meeting 5 August 2016, 14h00 Feathers Lodge Boutique Hotel 24 Melina Street, Rosendal, Durbanville Group overview A supplier of quality materials sourced from our quarries and open pit mines Strategically diversified


  1. Annual General Meeting 5 August 2016, 14h00 Feathers Lodge Boutique Hotel 24 Melina Street, Rosendal, Durbanville

  2. Group overview  A supplier of quality materials sourced from our quarries and open pit mines  Strategically diversified through product range, target market and location

  3. What we do  Quarrying : aggregates  Open pit mining : industrial minerals  Concrete brick and block making  Readymix concrete

  4. Quarrying: aggregates Products from quarrying  Concrete stone  Road stone

  5. Open pit mining: industrial minerals Products from industrial minerals  Lime  Metallurgical dolomite  Metallurgical quartzite

  6. Lime Product categories  Agricultural lime  Quicklime  Hydrated lime - Mineral processing pH control - Iron and steel desulphurisation - Whitewash / limewash - Building and plaster lime  Mineral fillers - Water treatment - pH - Vinyl floor tiles - Soil stabilisation - PVC and plastics - Chemical products - Tile cement - Asphalt - Paint - Tanneries - Rubber extrusions - Flue gas desulphurisation  Flux minerals – glass industry - High grade limestone - High grade dolomite

  7. Concrete brick and block making Products from brick and block making  Bricks and blocks  Paving

  8. Readymix concrete Products from readymix concrete  Readymix concrete  Readymix mortar

  9. Afrimat’s portfolio … and footprint MINING & AGGREGATES Commercial quarries (23) Sand and gravel mines (5) Dolomite mines (3) Clinker (3) Limestone mine (2) Silica mine (1) Mobile crushing Drilling & blasting CONCRETE BASED PRODUCTS Concrete brick & block factories (9) Readymix batching sites (16) … which generates a balanced consistent income stream

  10. Company positioning • Open pit mining • Locally priced commodities • Unique competitive advantage • Geographic location • Unique metallurgy • Structural cost advantage • Highly entrepreneurial

  11. Financial overview Highlights 16,3% contribution HEPS up 15,5% to Final dividend up from operations 156,6 cents 10,8% to 41,0cps margin 32,5% 720 cents Net debt: Return on net NAV per share equity ratio operating assets 3,5%

  12. Revenue and operating profit Operating profit margin 16,3%

  13. Breakdown of growth Contribution from operations split (%) F2016 F2015 Mining & aggregates 87.6% 80.5% Concrete based products 12.7% 20.1% Contribution from operations margin (%) F2016 F2015 Mining & aggregates 20.0% 15.5% Concrete based products 7.3% 9.6% Overall 16.3% 13.7%

  14. Well diversified contribution from operations Clinker Group 38% Traditional business 32% Mozambique 0% Glen douglas Infrasors 18% 12%

  15. Headline earnings per share – full year 180.0 CAGR of 156.6 25.8% 160.0 2012-2016 135.6 140.0 Cents per share 120.0 109.0 HEPS Year on 100.0 year 76.9 80.0 growth 62.6 15.5% 60.0 40.0 20.0 - 2012 2013 2014 2015 2016

  16. Net cash from operating activities 350 000 CAGR 320 339 21.64% 300 000 2012-2016 261 646 243 861 250 000 Rands (‘000’s) 200 000 169 764 146 343 150 000 100 000 50 000 0 2012 2013 2014 2015 2016

  17. Statement of financial position - assets Reviewed Audited R’000 Feb 2016 Feb 2015 Property, plant and equipment 763 156 724 856 Mining rights and goodwill 149 744 153 339 Inventories 132 702 126 804 Trade and other receivables 295 552 287 976 Cash 117 241 78 124 Other assets / BEE funding 189 311 196 572 1 647 706 1 567 671

  18. Statement of financial position – equities & liabilities Reviewed Audited R’000 Feb 2016 Feb 2015 Total equity 1 025 086 949 437 Borrowings 112 885 122 421 Provisions 75 565 67 323 Overdraft 39 878 52 874 Trade and other liabilities 277 832 262 983 Other liabilities / deferred tax 116 460 112 633 1 647 706 1 567 671  Net debt less cash : equity 3.5%

  19. Statement of financial position – equities & liabilities Planned F2016 for F2017 H1: R 64 million H1: R 74 million H2: R 67 million H2: R 50 million R131 million R124 million  Good balance between maintenance and expansion capex  Approximately 25% spent on expansion capex

  20. Dividends CAGR of 31.6% Final dividend 2012-2016 60 Cover of 50 Cents per share 2.75x 40 30 57 50 20 39 28 10 19 0 2012 2013 2014 2015 2016

  21. What makes Afrimat different  Growth through diversification  Core business principles  Strategic management  Our market

  22. Growth through diversification Profit history with and without acquisitions 180 160 140 Glen Douglas 120 Clinker 100 Infrasors 80 60 40 20 0 2009 2010 2011 2012 2013 2014 2015 2016 Headline earnings per share Reality without strategic acquisitions

  23. Core business principles • Sticking to the core of the business and leveraging the core • Strong operational efficiency • Operating resources that have unique competitive advantages • The right people in the right position • Leveraging Afrimat’s “combined intellect” through synergistic teamwork • Customer advocacy through service, reliability and quality of supply • Values based entrepreneurial culture

  24. Strategic management • Fundamental understanding of market • Good understanding of own abilities • Continuous research of business environment • Facing the brutal facts • Companywide understanding of desired future • Financial discipline: making the returns Focussed value enhancing acquisitions • • Dedicated business development team

  25. Our market • Indicators are more positive than in the past

  26. Index of construction sector activity (in real terms) Rands (‘000’s) Source: Ekonostrat

  27. Value of recorded building plans passed in South Africa (constant 2010 prices)

  28. Domestic cement sales: 1892 - 2020 Source: Lewellyn Lewis www.strategicforum.co.za

  29. Budget 2016/17: Human Settlements

  30. Budget 2016/17: Water and Sanitation

  31. Provincial and SANRAL’s expenditures on roads trend

  32. Trends in Afrimat’s markets • Environmental focus: clean water and clean air • Spending on smaller infrastructure and services projects stronger • Roads a focus for Government and SANRAL • Steel industry remain under pressure • Volume growth in construction materials

  33. Outlook and drivers Afrimat will pursue a conservative growth strategy preserving the integrity of the balance sheet • Short term outlook: ‒ Improved volumes ‒ Glen Douglas, Clinker Group and traditional business will continue to perform ‒ Growth to come from Infrasors and Cape Lime • Momentum drivers: ‒ Roads: SANRAL and provinces ‒ Infrastructure and service delivery projects ‒ Natural gas projects in Mozambique ‒ Diversification of industrial minerals ‒ Building Remain driven by successful execution

  34. Risk mitigation • Finding alternative markets for our products Steel industry • No single dominant debtor under pressure • Strict efficient credit control • Seeking opportunities outside of South Africa • Eyes wide open in South Africa Country risk in South Africa • Credit terms strictly monitored • Commenced Mozambique operations • Constant strategic management (avoiding threats, exploiting opportunities) Macro-economic • Entrepreneurial culture and creative innovative solutions threats • Strong but conservative balance sheet • Drive to create a unique and positive culture • Communication and upliftment Labour unrest • BEE share scheme • No labour action during the year

  35. Q & A Andries van Heerden | 082 804 7514 | andries.vanheerden@afrimat.co.za

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