Afrimat Limited · JSE:AFT
Afrimat — HY2022 Earnings Presentation
56 slides from Afrimat's earnings presentation, October 2021
Slide 1: Interim results presentation for the period ended 31 August 2021
Interim results presentation for the period ended 31 August 2021
Slide 2: Core message
2 Core message Healthy financial Excellent strategic Strong focus on position positioning across more than just the Group financial results HY 31 August 2021
Slide 3: What we do
1 WHAT WE DO
Slide 4: Afrimat: who we are
4 Afrimat: who we are ▪ Track record of excellence in mid-tier mining and materials supply ▪ Well diversified across different industries to ensure consistent delivery Construction Materials Industrial Minerals Bulk commodities Aggregates Limestone Iron ore Contract crushing, drilling and blasting D
Slide 5: Our transition through conscious diversification
5 Our transition through conscious diversification Construction materials Where it all started Diversified mid-tier miner Industrial minerals Became more sophisticated Bulk commodities Iron ore Became even more sophisticated Anthracite Wider commodity diversity Manganese * Fulfils greater exposure i
Slide 6: What conscious diversification is delivering
6 What conscious diversification is delivering Profit history with and without acquisitions 450 400 Glen Douglas 350 Clinker 300 Infrasors 250 Cape Lime Cents 200 Demaneng 150 100 50 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Headline earnings per share Reality without strate
Slide 7: Balanced portfolio at work
7 Balanced portfolio at work Revenue 37% 43% 42% 49% HY2021 HY2020 14% 15% Construction Materials 1% Industrial Minerals Operating profit 7% 13% Bulk Commodities 9% HY2021 HY2020 78% 92% HY 31 August 2021
Slide 8: Financial review
FINANCIAL 2 REVIEW
Slide 9: Core financial discipline to support growth
9 Core financial discipline to support growth Entrenched Strong cash Surplus cash diversification generation supports and funds strategy acquisitions HY 31 August 2021
Slide 10: Financial scorecard
10 Financial scorecard 65,0% 24,1% 60,5% Operating profit increased HEPS increased to Operating profit margin to R582,8 million 295,1 cents 40,0 cents R806,5 million Net cash Interim dividend Net cash from operating position activities HY 31 August 2021
Slide 11: Revenue and operating profit
11 Revenue and operating profit Revenue (R’000) Operating profit (R’000) 1 000 000 4 000 000 900 000 800 000 3 500 000 700 000 533 183 3 000 000 2 135 130 1 584 574 600 000 2 500 000 1 531 549 282 959 500 000 1 196 402 2 000 000 400 000 268 483 1 500 000 194 244 157 294 300 000 1 000 000 200 000 1 1
Slide 12: Overall margin improvement
12 Overall margin improvement Operating profit margin (%) HY2021 HY2020 Construction Materials 9,0% 0,4% Industrial Minerals 15,2% 10,3% Bulk Commodities 37,9% 48,8% Overall 24,1% 22,7% HY 31 August 2021
Slide 13: Headline earnings per share - half year
13 Headline earnings per share - half year 350.0 300.0 CAGR – 30,20% (2017 – 2021) 250.0 200.0 Cents per share 150.0 295.1 100.0 181.9 183.9 50.0 102.2 93.6 0.0 2017 2018 2019 2020 2021 Effective tax rate 27,5% (2020: 28,4%) HY 31 August 2021
Slide 14: Net cash from operation activities - half year
14 Net cash from operation activities – half year 900 000 * 800 000 CAGR – 61,01% 700 000 (2017 – 2021) 600 000 500 000 R’000 400 000 806 492 300 000 200 000 425 000 333 703 100 000 120 000 145 505 - 2017 2018 2019 2020 2021 * If the iron ore pricing provision is taken into account, the cash convers
Slide 15: Statement of financial position - assets
15 Statement of financial position - assets Unaudited Unaudited Audited R’000 Aug 2021 Aug 2020 Feb 2021 * Property, plant and equipment 2 594 967 1 551 695 2 247 493 Mining rights and goodwill 212 110 209 632 216 085 Inventories 340 065 286 703 279 042 Trade and other receivables 493 570 526 506 69
Slide 16: Statement of financial position - equities & liabilities
16 Statement of financial position – equities & liabilities Unaudited Unaudited Audited R’000 Aug 2021 Aug 2020 Feb 2021 * Total equity 2 702 750 1 934 101 2 258 407 Borrowings 464 642 258 505 513 901 Provisions 246 465 157 794 239 142 Overdraft 49 903 2 120 433 807 Trade and other payables 774 061
Slide 17: Provision for iron ore pricing
17 Provision for iron ore pricing Note 10.1 Trade and other receivables Unaudited Unaudited Audited Aug 2021 Aug 2020 Feb 2021 Trade receivables – net 455 873 320 422 377 757 Trade receivables at fair value through 134 363 125 952 212 432 profit or loss Provision for final price adjustment (134 363)
Slide 18: Provision for iron ore pricing (continued)
18 Provision for iron ore pricing (continued) Extract of forward looking variables applicable on 31 Aug 2021 Explanation: Aug Jul Jun 2021 2021 2021 Initial invoice Three- Two- One- August 2021 month month month $208* 56 886 * = $11 832 288 spot spot spot Adjustment settled in November 2021 Average
Slide 19: Capital expenditure
19 Capital expenditure Capital Expenditure 2016 - Planned 2022 (R'000) 350 000 Capex by segment (HY 2021) 293 587 300 000 273 438 262 938 250 000 27% 207 543 202 220 200 000 6.4% 5.6% 8.2% 150 000 131 264 134 521 61% 12% 5.5% 100 000 6.1% 5.4% 4.6% 50 000 Construction Materials Industrial Minerals B
Slide 20: Operational overview
OPERATIONAL 3 OVERVIEW
Slide 21: Construction Materials
21 Construction Materials ▪ Aggregates ▪ Bricks & blocks ▪ Readymix concrete HY 31 August 2021
Slide 22: Construction Materials results
22 Construction Materials Results improved due to recovery in markets Revenue Operating profit and margin 1000 140 13,2% 120 800 100 9,0% R’million R’million 600 80 922.9 887.6 60 122 400 652.0 0,4% 40 79.5 200 20 2.8 0 0 Aug '19 Aug '20 Aug '21 Aug '19 Aug '20 Aug '21 ▪ Revenue recovered after Covi
Slide 23: Afrimat Construction Index - Q2 2021
23 Afrimat Construction Index – Q2 2021 140 130 Q4 average 120 Index: Q1 2011=100 110 100 90 80 70 60 Q1'17 2 3 4 Q1'18 2 3 4 Q1'19 2 3 4 Q1'20 2 3 4 Q1'21 2 HY 31 August 2021
Slide 24: Mozambique
24 Mozambique ▪ All Afrimat staff withdrawn ▪ Force Majeure declared ▪ Impairment of Property, Plant and Equipment amounting to R8,6 million ▪ Stock write-off of R20 million ▪ Negotiations with main contractor ongoing ▪ Moveable assets brought to safety ▪ Operating loss HY 31 August 2021
Slide 25: Industrial Minerals
25 Industrial Minerals ▪ Lime ▪ Metallurgical dolomite HY 31 August 2021
Slide 26: Industrial Minerals results
26 Industrial Minerals Delivered satisfactory results, with recovery across all regions Revenue Operating profit and margin 400.0 70.0 20,9% 350.0 60.0 15,2% 300.0 50.0 R’million 250.0 R’million 40.0 200.0 336.3 30.0 62.0 10,3% 150.0 299.0 51.1 238.7 20.0 100.0 10.0 24.6 50.0 0.0 0.0 Aug '19 Aug '20
Slide 27: Bulk commodities
27 Bulk commodities ▪ Iron ore ▪ Demaneng mine ▪ Jenkins mine ▪ Anthracite ▪ Nkomati mine HY 31 August 2021
Slide 28: Positioned for ongoing, sustainable life of mine and diversification
28 Positioned for ongoing, sustainable life of mine and diversification Greater value creation & Future diversification Driehoekspan & Doornpan to be brought on line as Demaneng production declines $R Gravenhage $ Jenkins R Nkomati R Manganese Demaneng $ Anthracite Iron ore Current estimated LoM: 5
Slide 29: Bulk Commodities results
29 Bulk Commodities Excellent results supported by favourable market conditions Revenue Operating profit and margin 1 400.0 500.0 37,9% 450.0 1 200.0 400.0 1 000.0 48,8% 350.0 R’million R’million 800.0 300.0 250.0 600.0 1 197.8 453.7 200.0 400.0 150.0 325.8 667.9 100.0 200.0 50.0 0.0 0.0 Aug '20 Aug
Slide 30: Composition of Bulk Commodities (HY2021)
30 Composition of Bulk Commodities (HY2021) Segment contributed 49% of revenue and 78% of operating profit Revenue Operating profit (R’000) 478 207 13% 5% 83 405 82% -107 876 Demaneng Mine Nkomati Anthracite Jenkins Mine Mine Demaneng Mine Nkomati Anthracite Mine Jenkins Mine HY 31 August 2021
Slide 31: Nkomati anthracite mine
31 Nkomati anthracite mine ▪ Massive turnaround effort in first half ▪ Tropical storm Eloise accelerated opening of Contributing to results? Yes adjacent mini-pit Targeted volumes: FY2022 – 225 000 t ▪ Now in full-production, with excellent results post- Steady state – 540 000 tpa interim period Vol
Slide 32: Gravenhage manganese mining right
32 Gravenhage manganese mining right ▪ Enhance ferrous value chain and deepen Rand-hedge Contributing to results?: No (expect revenue in FY2024) ▪ Possible synergies with Demaneng Targeted volumes: 750ktpa – 1.5mtpa ▪ First payment ($30 million) only due when all ±R1.1 – R1.4 billion approvals are i
Slide 33: Demaneng (iron ore)
33 Demaneng (iron ore) Contributing to results? Yes Targeted volumes: ±870,000 tpa * Volumes achieved: 479 971 Average price: Dependent on a number of variables (see slide 34) Capex: R15 million Life of mine (yrs): 3 ** Market: Export Location: N Cape Resources and reserves: Tbc (*) Current export r
Slide 34: Iron ore pricing influences
34 Iron ore pricing influences HY 31 August 2021
Slide 35: 62% FE Platts Index Price (USD)
35 62% FE Platts Index Price (USD) 250.00 200.00 150.00 100.00 50.00 Efficiencies in place to keep mining sustainable at this price range - HY 31 August 2021
Slide 36: Lump premium (USD)
36 Lump premium (USD) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 HY 31 August 2021
Slide 37: Freight rate China (USD)
37 Freight rate China (USD) Avg. Platts South Africa - China Capesize 35.00 30.00 25.00 20.00 15.00 10.00 5.00 - HY 31 August 2021
Slide 38: Sales Volumes (Tonnes)
Sales Volumes (Tonnes) 20 000 40 000 60 000 80 000 0 100 000 120 000 Aug-17 22 715 Sep-17 28 629 Oct-17 27 088 Nov-17 30 643 Dec-17 30 282 Jan-18 45 743 Feb-18 45 392 Mar-18 45 225 Apr-18 45 758 May-18 57 172 Jun-18 45 705 19 536 Iron ore sales by rail Jul-18 45 540 12 896 Aug-18 56 535 18 746 Sep-1
Slide 39: Jenkins (Iron ore)
39 Jenkins (Iron ore) ▪ Mining license approved Contributing to results? Yes ▪ Production started Targeted volumes: Y1 - 500,000 tpa Y2 -1,250,000 tpa ▪ Direct shipping ore (DSO) (no beneficiation losses) Volumes achieved: 74 750 Planned Capex: R110 million Capex spent: R31 million Life of mine (yrs
Slide 40: HR & Sustainability
HR & 4 SUSTAINABILITY
Slide 41: Human Resource Report
41 Human Resource Report Metrics Aug '21 YTD 2022 Total Afrimat Staff 2470 2429 LTO 6.7% 6.7% Resignations/ dismissals & retrenchments 12 85 Absenteeism % 2.6% 1.5% Absenteeism - Days Lost 1368 4721 Cost of Absenteeism (R m ) R 2.5 R 8.5 Overtime Rand value (R m ) R 2.6 R 14.6 People Appointed 60 25
Slide 42: Community development
42 Community development Categorisation spend (R’000) FY2021 (R'000) R15 R112 R28 R547 R873 Arts, Sports & Culture - 0.37% Basic Needs - 0.68% R4 million on LED projects Education projects - 21.37% during the period Infrastructure - 61.45% Uplifting community - 13.39% Skills development - 2.74% R2 5
Slide 43: Olifantshoek water project
43 Olifantshoek water project R3,5 million HY 31 August 2021
Slide 44: Other community projects
44 Other community projects ▪ Water infrastructure project in Olifantshoek (Kathu) in partnership with Khumani Mine ▪ Two boreholes installed at Cremin community (800 beneficiaries) at Ladysmith Quarry ▪ Building a school library at Maqiyana Primary school (554 learners) in Ulundi ▪ Maths Teacher Pr
Slide 45: LTIFR
LTIFR Historical LTIFR LTIFR - 12 Rolling Months 0.62 055 0.59 0.47 00 2021-07 2021-08 2021-09 2021-10 2021-11 2021-12 2022-01 2022-02 2022-03 2022-04 2022-05 2022-06 HY 31 August 2021 ]¥AFRIMAT
Slide 46: Carbon emissions
46 Carbon emissions Afrimat tCO2e 6 months (March to August) 30 000.00 Afrimat 2021 Afrimat 2022 25 000.00 tCO2e tCO2e 20 000.00 Process Emissions 16 847.48 28 017.73 15 000.00 Mobile Combustion 18 418.46 25 969.77 Stationary Combustion 12 075.69 15 312.83 10 000.00 47 341.63 69 300.33 5 000.00 0.00
Slide 47: Afrimat culture
47 Afrimat culture Caring environment Important relationships Results driven Teamwork Skills and competence Empowering Entrepreneurial drive Winning attitude Humility and belief HY 31 August 2021
Slide 48: The Future
5 THE FUTURE
Slide 49: Looking ahead
49 Looking ahead ▪ Execute diligently on new expansion projects ▪ Exciting growth opportunities ▪ Business model is still doing well ▪ Balance sheet and cash flows remain extremely strong ▪ Gravenhage, Driehoekspan and Doornpan ensure solid future for Bulk Commodities ▪ Maintain excellent results fr
Slide 50: Core message
50 Core message Healthy financial Excellent strategic Strong focus on position positioning across more than just the Group financial results HY 31 August 2021
Slide 51: Contact details
51 Contact details Thank you for your attendance and participation For any further investor relations questions please contact: Andries van Heerden | CEO 021 917 8853 Vanessa Rech | Keyter Rech Investor Solutions 087 351 3814 www.afrimat.co.za
Slide 52: Appendix
6 APPENDIX
Slide 53: Business development process
53 Business development process Phase Origination Strategic assessment Negotiation Phase Financial Due diligence Final decision Integration modelling Investment Committee and Board engagement Alternatives risk/return comparison Acquisition success = F (Acquisition price + Competitive advantage + Cap
Slide 54: Rationale for diversified structure
54 Rationale for diversified structure ▪ Good blend of locally and internationally priced commodities ▪ Exposure to different currencies ▪ Exposure to different economic cycles ▪ Similar operational skills ▪ Smooth growth for more than a decade CAGR of PAT at 22% (February 2009 – February 2021) ▪ Cr
Slide 55: Strategic rationale
55 Strategic rationale Iron ore Anthracite ▪ Management expertise ▪ Management expertise ▪ USD and inland market price exposure ▪ Attractive inland pricing ▪ Accessible opportunities ▪ Accessible opportunities ▪ Quality ▪ Quality ▪ Excellent operational fit ▪ Excellent operational fit ▪ Logistics ▪
Slide 56: Mine statistics
56 Mine statistics Iron ore Anthracite Manganese Mine: Demaneng Jenkins Nkomati Gravenhage Contributing to Yes Yes Yes FY2023 results? Y1 - 500,000 tpa Nkomati operations FY2022 – 225 000 t Not in production Targeted volumes: ±870,000 tpa Y2 1,250,000 tpa Steady state – 540 000 tpa Conditions preced