final results presentation - afrimat · 2017. 5. 18. · final results presentation for the year...
TRANSCRIPT
FINAL RESULTS PRESENTATIONfor the year ended 28 February 2017
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Johannesburg – 18 May 2017Cape Town – 22 May 2017
1Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Group overview▪ A supplier of quality materials sourced from our open pit mines and quarries
▪ Strategically diversified through product range, target market and location
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Notes:
What we do
▪ Open pit mining▪ Industrial minerals▪ Aggregates▪ Iron ore
▪ Concrete based products▪ Bricks and blocks▪ Readymix concrete
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3Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Open pit mining: industrial minerals
▪ Lime
▪ Metallurgical dolomite
▪ Metallurgical quartzite
Products from industrial minerals
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Notes:
Quarrying: aggregates
▪ Concrete stone
▪ Road stone
Products from quarrying
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5Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Bulk commodities
▪ Iron ore
Products form bulk commodities
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Notes:
Concrete brick and block making
▪ Bricks and blocks
▪ Paving
Products from brick and block making
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7Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Readymix concrete
▪ Readymix concrete
▪ Readymix mortar
Products from readymix concrete
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Notes:
Afrimat’s portfolio… and footprint
CONCRETE BASED PRODUCTSConcrete brick & block factories (9)
Readymix batching sites (16)
MINING & AGGREGATESCommercial quarries (25)
Dolomite mines (3)
Clinker (4)
Limestone mines (2)
Silica mines (2)
Iron ore mine (1)
Sand and gravel mines (5)
Mobile crushing
Drilling & blasting
… which generates a balanced consistent income stream
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9Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
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
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Notes:
25,4% 11,7%32,5%
Contribution from operation’s margin
to 18,2% (2016: 16,3%)
HEPS to 196,4 cps
(2016:156,6 cps)
Net debt: equity ratio
Return on net operating assets
Final dividend to 50,0 cps
(2016: 41,0 cps)
NAV per share of 881 cents
(2016: 720 cents)
Highlights
Financial overview
21,9% 22,4%19,8%
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11Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Financial overviewRevenue and operating profit
Operating profit
margin18,2%
671,
349
931,
871
1,03
0,09
8
1,00
3,23
7
1,15
3,25
8666,
236 96
9,31
6
968,
502
966,
549
1,07
4,89
90
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2013 2014 2015 2016 2017
Revenue (R’000)
1st half 2nd half
75,6
23
108,
909
127,
349
160,
923
202,
109
76,8
60 119,
362
146,
400
160,
765 20
3,49
2
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2013 2014 2015 2016 2017
Contribution form operations (R’000)
1st half 2nd half
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Notes:
Breakdown of growth
Financial overview
Contribution from operations split (%) F2017 F2016
Mining & aggregates 92,5% 87.3%
Concrete based products 9,5% 12.7%
Contribution from operations margin (%) F2017 F2016Mining & aggregates 24,1% 20.0%Concrete based products 5,8% 7.3%Overall 18,2% 16.3%
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13Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
CAGR of 26,42%
2013-2017
HEPSYear on
year growth 25,4%
Cen
ts p
er s
hare
Financial overviewHeadline earnings per share – full year
76.9
109.0
135.6156.6
196.4
0
50
100
150
200
250
2013 2014 2015 2016 2017
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Notes:
Financial overviewNet cash from operating activities
CAGR 24,36%
2013-2017
Ran
ds(‘0
00’s
)
169,764
243,861261,646
320,339
406,046
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
2013 2014 2015 2016 2017
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15Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Financial overviewStatement of financial position - assets
R’000 Reviewed Feb 2017
Reviewed Feb 2016
Property, plant and equipment 1 058 240 763 156
Mining rights and goodwill 147 769 149 744
Inventories 162 960 132 702
Trade and other receivables 332 766 295 552
Cash 244 690 117 241
Other assets / BEE funding 319 900 189 311
2 266 325 1 647 706
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Notes:
Financial overviewStatement of financial position – equities & liabilities
R’000 Reviewed Feb 2017
Reviewed Feb 2016
Total equity 1 206 919 1 025 086
Borrowings 174 089 112 885
Provisions 96 190 75 565
Overdraft 271 543 39 878
Trade and other liabilities 352 150 277 832
Other liabilities / deferred tax 165 434 116 460
2 266 325 1 647 706
▪ Net debt less cash : equity 19,8%
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17Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Financial overviewCapital expenditure
H1: R 39 millionH2: R106,9 million
R145,9 million
H1: R 70 millionH2: R 70 million
R140 million
F2017Planned
for F2018
▪ Good balance between maintenance and expansion capex▪ Approximately 25% spent on expansion capex
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Notes:
Financial overviewDividends
Cen
ts p
er s
hare
CAGR of 25,74%
2013-2017
Cover of 2,75x
28
39
5057
70
0
10
20
30
40
50
60
70
80
2013 2014 2015 2016 2017
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19Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Well diversified contribution from operations
Operational overview
Traditional business, 44%
Mozambique, 0%Glen Douglas, 18%
Infrasors, 10%
Clinker Group, 23%
Cape Lime, 8%
February 2017 February 2016
Traditional business, 32%
Mozambique, 0%
Glen Douglas, 18%Infrasors, 12%
Clinker Group, 38%
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Notes:
Traditional business:
• Continued recovery
• 44% of Operating profit (32% in F2016)
• Exceptional performance in Western Cape
• More potential
Aggregates & Concrete based products
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21Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Glen Douglas
• 18% of Operation profit (18% in F2016)
• Very good operational performance
• Flagship business
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Notes:
Clinker Group
• 23% of Operation profit (38% in F2016)
• Competition Commission:• Referred to tribunal• Accusation: misuse of market dominance• Management believes there is no merit in it• Turnover of Clinker Supplies R150 – R160 million p.a.
• Witbank dump secured
• 2 Years life in Vaal dump
• Good progress on other alternatives
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23Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Infrasors
• 10% of Operation profit (12% in F2016)
• Lyttelton recovered after Highveld Steel closure
• Marble Hall growing
• Delf’s Cullinan plant commissioned in February 2017
• More potential
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Notes:
Cape Lime
• 8% of Operating profit
• Fully integrated since 1 April 2016
• Very good quality asset
• Long life
• Marketing drive
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25Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Diro
• Bought out of business rescue
• Expected production from mid-year
• 1 Million tons p.a. initial capacity
• Excellent potential
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Notes:
What makes Afrimat different
▪ Growth through diversification
▪ Core business principles
▪ Strategic management
▪ Our market70.4
40.5 51.3 53.3 62.6
76.9
109.0
135.6
156.6
196.4
-
50.0
100.0
150.0
200.0
250.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Headline earnings per share
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27Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
0
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
Growth through diversification
Glen Douglas
Clinker
Infrasors
Cape Lime
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Notes:
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
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29Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
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
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Notes:
Our market
• Bracing for economic slow down
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31Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Afrimat construction index
90
95
100
105
110
115
120
125
130
135
Q3'10 4Q1'11 2 3 4Q1'12 2 3 4Q1'13 2 3 4Q1'14 2 3 4Q1'15 2 3 4Q1'16 2 3 4Q1'17
Index; Q3 2010=100
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Notes:
Building plans passed
2017m2: 934469
0
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
Sq. m Seasonal adjusted BPP: Residential + non-residential 2001m1 to 2017m2Source: Stassa, P5041.1 and Eviews 8.
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33Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Leading indicator as a proxy for domestic cement sales
75.0
80.0
85.0
90.0
95.0
100.0
105.01/1/20
07
6/1/20
07
11/1/200
7
4/1/20
08
9/1/20
08
2/1/20
09
7/1/20
09
12/1/200
9
5/1/20
10
10/1/201
0
3/1/20
11
8/1/20
11
1/1/20
12
6/1/20
12
11/1/201
2
4/1/20
13
9/1/20
13
2/1/20
14
7/1/20
14
12/1/201
4
5/1/20
15
10/1/201
5
3/1/20
16
8/1/20
16
1/1/20
17
Index Seasonal adjusted Leading Indicator: January 2007 to February 2017Source: SARB, 25 April 2017.
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Notes:
Budget 2016/17: Water and sanitation
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 Source: National budget 2017, Individual chapters.
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35Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Budget 2016/17: Human settlements
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 Source: National budget 2017, Individual chapters.
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Notes:
Budget 2016/17: Transport & logistics
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
Source: National budget, Individual chapters.R billion
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37Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Prices of iron ore in $/dmt.
2017: 65 2019: 50 2025: 55.2
2017: 68.6 2019: 50.4 2025: 49.9
0
20
40
60
80
100
120
2014 2015 2016 2017 2018 2019 2020 2025 2030
$
Source: World Bank, Commodity Markets Outlook, April 2017.
Nominal
2010=100
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Notes:
Trends in Afrimat’s marketsLocal environment
• Sovereign downgrade
• Spending 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 opportunities
Macro environment
• Slight stabilisation in commodity markets
• Rand remains volatile – artificially high at times on back of US$ weakness
• Slower growth in China impacting South Africa
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39Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Short term outlook
• Further improvement in traditional business
• Infrasors reaping benefits of improvement initiatives
• Diro expected in H2 of F2018
• Cape Lime to benefit from 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
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Notes:
Risk mitigation
Country risk in South Africa
• Seeking opportunities outside of South Africa• Eyes wide open in South Africa• Credit terms strictly monitored• Diversify revenue currencies
Macro-economic threats
• Constant strategic management (avoiding threats, exploiting opportunities)• Entrepreneurial culture and creative innovative solutions• Strong but conservative balance sheet
Labour unrest
• Drive to create a unique and positive culture• Communication and upliftment• BEE share scheme• No labour action during the year
Volatility in commodity
markets
• Maintain diversified revenue streams• Low cost base• Creative marketing & logistics
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41Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Q & A
• Andries van Heerden (CEO) 021 917 8840• Vanessa Rech (Keyter Rech Investor Solutions) 087 351 3814
Thank you for your attendance and participation
www.afrimat.co.za
For any further Investor Relations questions please contact:
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Notes:
Appendix
Background information
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43Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
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
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Notes:
Afrimat’s products Continued
• Products from readymix batch plants:- Readymix concrete- Readymix mortar
• Services by the contracting team:- Contract crushing- Mobile screening- Drilling- Blasting
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45Afrimat Limited Final results presentation for the year ended 28 February 2017
Notes:
Afrimat’s products Continued
• 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
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Notes: