Final results presentation for the year ended 29 February 2016 Johannesburg 19 May 2016 Cape Town 23 May 2016
Presentation coverage 1 2 3 4 5 6 Group overview Financial performance Operating review What differentiates us Our market Prospects 7 Appendix background information 2
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
What we do 4 Concrete brick and block making Quarrying : aggregates Readymix concrete Open pit mining : industrial minerals
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
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
Financial performance.... Margin growth Consistent delivery Robust cash flow Strong balance sheet 7
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
Financial highlights (continued) Revenue (R 000) Contribution from operations (R 000) 2,500,000 350,000 2,000,000 300,000 61,906 62,334 75,623 76,860 108,909 119,362 127,349 146,400 160,923 160,765 250,000 200,000 150,000 100,000 50,000 0 2012 2013 2014 2015 2016 1st half 2nd half 9 506,717 489,420 671,349 666,236 931,871 969,316 1,030,098 968,502 1,003,237 966,549 1,500,000 1,000,000 500,000 0 2012 2013 2014 2015 2016 1st half 2nd half Operating profit margin 16,3%
Headline earnings per share full year 180.0 Cents per share 160.0 140.0 120.0 100.0 80.0 60.0 62.6 76.9 109.0 135.6 156.6 CAGR of 25.8% 2012-2016 HEPS Year on year growth 15.5% 40.0 20.0-2012 2013 2014 2015 2016 10
Net cash from operating activities 350 000 320 339 300 000 250 000 243 861 261 646 CAGR 21.64% 2012-2016 Rands ( 000 s) 200 000 150 000 100 000 146 343 169 764 50 000 0 2012 2013 2014 2015 2016 11
Statement of financial position -assets R 000 Reviewed Feb 2016 Audited 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 12
Statement of financial position - equities & liabilities R 000 Reviewed Feb 2016 Audited 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% 13
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
Dividends Final dividend 60 50 CAGR of 31.6% 2012-2016 Cents per share 40 30 20 10 19 28 39 50 57 Cover of 2.75x 0 2012 2013 2014 2015 2016 15
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 1,000,000 0 13,227,718 2,542,451 2,808,578 2,482,093 1,751,230 995,664 1,108,337 911,865 627,500 F2009 F2010 F2011 F2012 F2013 F2014 F2015 F2016 Cumulative 16
Operating review All-round good results 17
Well diversified contribution from operations Clinker Group 38% Traditional business 32% Infrasors 12% Glen douglas 18% Mozambique 0% 18
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
Infrasors Improved contribution Marble Hall the star performer Delf: All permission obtained for move to Cullinan Lyttelton impacted by Highveld closure 20
Clinker Witbank - Agreement signed - Environmental impact assessment in progress SA Block had a good year 21
Mozambique Investment recovered Profitable 22
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
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 F2016 - Remains a key focus Steel industry 24
What differentiates us Growth through diversification
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
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
800 700 600 500 400 300 200 100-29-02-2012 30-04-2012 30-06-2012 31-08-2012 31-10-2012 31-12-2012 28-02-2013 30-04-2013 30-06-2013 31-08-2013 31-10-2013 31-12-2013 28-02-2014 30-04-2014 30-06-2014 31-08-2014 31-10-2014 31-12-2014 28-02-2015 30-04-2015 30-06-2015 31-08-2015 31-10-2015 31-12-2015 29-02-2016 30-04-2016 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)
Growth through diversification 180 Profit history with and without acquisitions 160 140 120 100 80 Glen Douglas Clinker Infrasors 60 40 20 0 2009 2010 2011 2012 2013 2014 2015 2016 Headline earnings per share Reality without strategic acquisitions 29
Our market.. Indicators are more positive than in the past 30
Water and sanitation R million 12,000 10,224 10,000 10,867 8,000 6,000 5,164 4,000 2,000 0 2012 2013 2014 2015 2016 2017 Source: Budget 2015, Vote 36, p. 15,17 31
Human settlements grant 32
Provincial and SANRAL s expenditures on roads trend Source: SABITA 33
Industry domestic cementitious volumes Source: www.strategicforum.co.za 34
Industry domestic cementitious volumes Source: www.strategicforum.co.za
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
Prospects. Diversification provides solid foundation to business 37
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
Q & A Thank you for your attendance and participation www.afrimat.co.za For any further Investor Relations questions please contact: Andries van Heerden (CEO) 021 917 8840 Vanessa Rech (Keyter Rech Investor Solutions) 087 351 3814 39
Appendix... Background information 40
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
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
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
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
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
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
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
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