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. 3. Our strategy is working.

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

What we do ▪ Open pit mining ▪ Industrial minerals ▪ Aggregates ▪ Iron ore ▪ Concrete based products ▪ Bricks and blocks ▪ Readymix concrete

Open pit mining: industrial minerals Products from industrial minerals ▪ Lime ▪ Metallurgical dolomite ▪ Metallurgical quartzite

Quarrying: aggregates Products from quarrying ▪ Concrete stone ▪ Road stone

Bulk commodities Products from bulk commodities ▪ Iron ore

Concrete brick and block making Products from brick and block making ▪ Bricks and blocks ▪ Paving

Readymix concrete Products from readymix concrete ▪ Readymix concrete ▪ Readymix mortar

Diversified portfolio Mining and Aggregates … and footprint Commercial Mobile crushing 25 quarries Drilling and blasting Clinker 4 dumps Mines 13 – Dolomite - 3 – Limestone – 2 – Silica – 2 – Iron ore – 1 – Sand and gravel - 5 Concrete Based Products Concrete brick & Readymix 9 16 block factories batching sites … which generates a balanced consistent income stream

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

Financial overview Highlights 16,4% 22,3% 7,4% HEPS Contribution from Return on net to 102,2 cps operations’ margin operating assets (2016: 95,2 cps) = 42,4% 4.1% Interim dividend NAV per share of Net debt: 20,0 cps 809 cents equity ratio (2016: 777 cents) (2016: 20,0 cps)

Financial overview Revenue and operating profit Contribution from operations Revenue (R’000) margin 16.4% Contributions from operations (R’000) 2,500,000 450,000 2,000,000 400,000 1,074,899 350,000 203,492 968,502 966,549 969,316 1,500,000 300,000 160,765 250,000 146,400 1,000,000 200,000 119,362 1,184,592 1,153,258 150,000 1,030,098 1,003,237 202,109 194,504 931,871 160,923 500,000 100,000 127,349 108,909 50,000 0 0 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 1st half 2nd half 1st half 2nd half

Financial overview Breakdown of growth Contribution from operations split (%) HY2017 HY2016 Aggregates & Industrial Minerals 103.1% 97.2% Commodities (2.8%) - Concrete Based Products 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%) - Concrete Based Products 0.6% 2.9% Overall 16.4% 17.5%

Financial overview Headline earnings per share – interim 120.0 100.0 CAGR of 20.0% Cents per share 2013-2017 80.0 60.0 HEPS Period on period 102.2 95.2 growth 7.4% 40.0 76.0 61.1 49.3 20.0 0.0 2013 2014 2015 2016 2017

Financial overview Net cash from operating activities - Interim 140,000 Working capital investments R54 million - Diro: 119,080 R18 million - New clinker dump: 120,000 113,748 R72 million 98,938 100,000 Cents per share 80,000 74,374 60,000 40,590 40,000 20,000 - 2013 2014 2015 2016 2017 Cash inflow from Diro & new Clinker dump from September 2017

Financial overview Statement of financial position - assets Unaudited Unaudited Audited R’000 Aug 2017 Aug 2016 Feb 2016 Property, plant and equipment 1 422 590 996 717 1 058 240 Mining rights and goodwill 146 817 148 770 147 769 Inventories 229 760 168 392 162 960 Trade and other receivables 405 559 368 886 332 766 Cash 135 594 157 192 244 690 Other assets / BEE funding 112 826 214 377 319 900 2 453 146 2 054 334 2 266 325

Financial overview Statement of financial position - equities & liabilities Unaudited Unaudited Audited R’000 Aug 2017 Aug 2016 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%

Capital expenditure Planned F2017 for F2018 H1: R 39,5 million H1: R 115,8 million H2: R 95,0 million H2: R 42,2 million R134,5 million R158,0 million

Financial overview Interim dividend – 2.7x cover 25 20 20 20 Cents per share CAGR of 16.12% 16 2013-2017 15 13 11 10 Record date: 1 Dec 2017 5 Dividend payable: 4 Dec 2017 - 2013 2014 2015 2016 2017

Segmental revenue 69.2% 28.3% + 2.5% = 100% + 1,184,592 R’000 819,563 335,992 29,037 Aggregates & Concrete Based Commodities Total Industrial Products Minerals

Operational overview Well diversified contribution from operations August 2017* February 2017 Cape Lime 8% Cape Lime 11% Traditional business 29% Traditional business 44% Clinker Group 23% Clinker Group 23% Infrasors 10% Glen Douglas 16% Infrasors 21% Glen Douglas 18% * Excluding Diro loss of R5,5 million

Traditional business ▪ Satisfactory results ▪ 29% of Operating profit (44% in F2017) ▪ Exceptional performance in Western Cape ▪ More potential ▪ Concrete Based Products market contraction

Glen Douglas ▪ 16% of Operational profit (18% in F2017) ▪ Very good operational performance ▪ Flagship business ▪ Impacted by very slow first quarter

Clinker Group ▪ 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

Infrasors ▪ 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

Cape Lime ▪ 11% of Operating profit (8% in F2018) ▪ Fully integrated since 1 April 2016 ▪ Very good quality asset ▪ Long life ▪ Marketing drive

Diro ▪ 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

Diro: rationale for the purchase ▪ Proven turn-around track-record ▪ Diversification and growth strategy ▪ High margins ▪ Leverage marketing and other strengths ▪ New revenue and currency opportunities Proved 10 Mt run-of-mine reserves

Diro 11 October 2016 16 August 2017 16 August 2017 Announce Diro taken out of Conclude final agreement to business rescue product sale purchase 60% of agreement and Diro commence with iron ore delivery R276m 15 August 2017 Future ▪ DMS plant in production since July 2017 Afrimat acquires ▪ Good progress made on market development remaining 40% of ▪ Current production at 50% of target Diro ▪ Full production by end March 2018 R44m

What makes Afrimat different HEPS 110.0 102.2 ▪ Growth through 100.0 95.2 diversification 90.0 76.0 80.0 Cents per share ▪ Core business 70.0 61.1 principles 60.0 49.3 50.0 ▪ Strategic 40.0 35.0 management 29.6 29.6 29.8 30.0 24.5 20.0 ▪ Our market 10.0 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Growth through diversification Profit history with and without acquisitions Profit history with and without acquisitions 200 Glen Douglas 180 Clinker 160 140 Infrasors 120 Cape Lime 100 80 60 40 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Headline earnings per share Reality without strategic acquisitions

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

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 market Purposeful exposure to sectors with economic fundamentals that suit the Afrimat business model, to counter economic slow down

Afrimat Construction Index – 2 nd Quarter 130 125 120 115 110 105 100 95 90 Q3'10 Q1'11 Q1'12 Q1'13 Q1'14 Q1'15 Q1'16 Q1'17 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 2 3 4 2