Final results presentation for the year ended 29 February Johannesburg 19 May 2016 Cape Town 23 May 2016

Transcription

1 Final results presentation for the year ended 29 February 2016 Johannesburg 19 May 2016 Cape Town 23 May 2016

2 Presentation coverage Group overview Financial performance Operating review What differentiates us Our market Prospects 7 Appendix background information 2

3 Group overview... A supplier of quality materials and minerals sourced from our quarries and open pit mines Strategically diversified through product range, target market and location 3

4 What we do 4 Concrete brick and block making Quarrying : aggregates Readymix concrete Open pit mining : industrial minerals

5 Company positioning Open pit mining Locally priced commodities Unique competitive advantage - Geographic location - Unique metallurgy - Structural cost advantage Highly entrepreneurial Value added to certain products 5

6 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 st nt income stream 6

7 Financial performance.... Margin growth Consistent delivery Robust cash flow Strong balance sheet 7

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

9 Financial highlights (continued) Revenue (R 000) Contribution from operations (R 000) 2,500, ,000 2,000, ,000 61,906 62,334 75,623 76, , , , , , , , , , ,000 50, st half 2nd half 9 506, , , , , ,316 1,030, ,502 1,003, ,549 1,500,000 1,000, , st half 2nd half Operating profit margin 16,3%

10 Headline earnings per share full year Cents per share CAGR of 25.8% HEPS Year on year growth 15.5%

11 Net cash from operating activities CAGR 21.64% Rands ( 000 s)

12 Statement of financial position -assets R 000 Reviewed Feb 2016 Audited Feb 2015 Property, plant and equipment Mining rights and goodwill Inventories Trade and other receivables Cash Other assets / BEE funding

13 Statement of financial position - equities & liabilities R 000 Reviewed Feb 2016 Audited Feb 2015 Total equity Borrowings Provisions Overdraft Trade and other liabilities Other liabilities / deferred tax Net debt less cash : equity 3.5% 13

14 Capital expenditures F2016 Planned for F2017 H1: R 64 million H2: R 67 million R131 million H1: R 74 million H2: R 50 million R124 million Good balance between maintenance and expansion capex Approximately 25% spent on expansion capex 14

15 Dividends Final dividend CAGR of 31.6% Cents per share Cover of 2.75x

16 Share repurchase update 14,000,000 13,000,000 12,000,000 11,000,000 10,000,000 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, ,227,718 2,542,451 2,808,578 2,482,093 1,751, ,664 1,108, , ,500 F2009 F2010 F2011 F2012 F2013 F2014 F2015 F2016 Cumulative 16

17 Operating review All-round good results 17

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

19 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% 19

20 Infrasors Improved contribution Marble Hall the star performer Delf: All permission obtained for move to Cullinan Lyttelton impacted by Highveld closure 20

21 Clinker Witbank - Agreement signed - Environmental impact assessment in progress SA Block had a good year 21

22 Mozambique Investment recovered Profitable 22

23 Cape Lime Effective date 1 April 2016 Largest acquisition made to date Unique product offering Opens additional markets F2016 pro-forma PAT: R29.5 million Background information R276 million paid for 100% of shares Operations at Vredendal and Robertson Lime and associated products used for: Water purification Soil treatment Effluent treatment Building and construction 23

24 Challenges Re-engineering Lyttelton Dolomite mine - Lost Highveld Steel - Returned to profitability Macro-economic climate in South Africa - Tougher market, e.g. Gauteng - Even stricter debtor management Labour relations - No incident in F Remains a key focus Steel industry 24

25 What differentiates us Growth through diversification

26 Competitive advantage Derived from one or more of these factors: - Good geographic location - Unique and scarce metallurgy - Structural cost advantage In an environment where we strive to: - Pre-empt market changes - Remain agile - Nurture the ability to adapt 26

27 Afrimat strategic management Market dynamics Afrimat counter Downward pressure Economic challenges Volume pressure Changing environment Markets are different to pre-2008 Company behaviour Good understanding of own abilities Dedicated business development team Focus on value enhancing acquisitions Financial discipline Company wide understanding of desired future Market understanding Fundamental understanding of market Continuous research of business environment Understand market dynamic and adapt to them Successful execution 27

28 Investment case Afrimat Limited Construction & Materials Source: inetbfa data Market cap R3,2 bn Listed on JSE main board: Construction & Materials sector 28 Relative share price (base = 100)

29 Growth through diversification 180 Profit history with and without acquisitions Glen Douglas Clinker Infrasors Headline earnings per share Reality without strategic acquisitions 29

30 Our market.. Indicators are more positive than in the past 30

31 Water and sanitation R million 12,000 10,224 10,000 10,867 8,000 6,000 5,164 4,000 2, Source: Budget 2015, Vote 36, p. 15,17 31

32 Human settlements grant 32

33 Provincial and SANRAL s expenditures on roads trend Source: SABITA 33

34 Industry domestic cementitious volumes Source: 34

35 Industry domestic cementitious volumes Source:

36 Trends in Afrimat s markets Local environment Macro environment Pipeline smaller infrastructure projects remain strong Roads remain focus for Government and SANRAL Good pipeline of renewable energy projects Industrial and niche markets remain lucrative Competitive cement pricing Low world growth rates Emerging markets appeal waning Cautious approach to Africa 36

37 Prospects. Diversification provides solid foundation to business 37

38 Outlook and drivers Short term outlook: - Internal efficiency drive continue to deliver - Cape Lime offering growth opportunities - Infrasors set to grow further Momentum drivers: - Roads and provinces SANRAL - Energy infrastructure - Infrastructure and service delivery projects - Rest of Africa expansion - Diversification of industrial minerals - Urbanisation Afrimat will pursue a conservative growth strategy preserving the integrity of the balance sheet Current subdued climate to continue but Afrimat remains driven by successful execution 38

39 Q & A Thank you for your attendance and participation For any further Investor Relations questions please contact: Andries van Heerden (CEO) Vanessa Rech (Keyter Rech Investor Solutions)

40 Appendix... Background information 40

41 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 41

42 Afrimat s products (continued) Products from readymix batch plants: - Readymix concrete - Readymix mortar Services by the contracting team: - Contract crushing - Mobile screening - Drilling - Blasting 42

43 Supply market segments 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 43

44 Supply market segments (continued) Building and Civils: - Government funded Low cost housing Schools, healthcare facilities Water reticulation - Private funded Commercial, industrial and mining Residential Agriculture: - Agricultural lime - Drainage stone - Paving 44

45 What differentiates Afrimat Strong financial position: - Healthy cash flow - Strong balance sheet - Industry leading margins throughout economic cycle Active innovative strategic positioning: - Good market intelligence and expertise - Continuously identifying and evaluating opportunities - Track record of successful acquisitions - Successful greenfield projects Operational competence: - Flexible - Reliable quality supplier - Superior reaction time 45

46 The Afrimat way Manpower: - Tangible leadership - Shared values - Competent employees - Great teamwork Marketing: - Engaged customer relationships - Identifying marketing trends and opportunities - Turning prospects into actual orders of maximized prices and optimized product mixes Operations: - Optimised planning and budgeting - Efficient processing plant design and process flow - Excellent maintenance and care 46

47 The Afrimat way (continued) Finance: - Effective planning and budgeting - Efficient execution of financial management and administration - Effective systems and controls - Focusing on cash generation Compliance: - In depth knowledge of legislation and requirements - Maintaining a feasible compliance strategy - Ensuring company-wide adherence 47

48 Acquisitions the underlying strategy Afrimat s approach to acquisitions includes: Goal - Enhance sustainability, diversity, profitability and robustness Targets - Acquisition purchase consideration below 15% of Afrimat market cap - In Afrimat s space of expertise - Must have high upside - Must strengthen Afrimat Must fit strategically into our master plan 48