Afrimat Limited · JSE:AFT
Afrimat — FY2023 Earnings Presentation
55 slides from Afrimat's earnings presentation, May 2023
Slide 1: Audited summary consolidated financial statements for the year ended 28 February 2023
Audited summary consolidated financial statements for the year ended 28 February 2023
Slide 2: Core message
Core message Strategy is working and providing a Substantial progress trajectory for made on strategic sustained long-term projects growth Company culture and high standard of execution supports Group moats 2
Slide 3: Why we exist
1 WHY WE EXIST Consciously making a difference through excellence with integrity
Slide 4: Vision, values and way
Vision, values and way Everything in an atmosphere of joy and positivity THE AFRIMAT WAY VISION VALUES CARING ENVIRONMENT IMPORTANT RELATIONSHIPS To be globally ▪ Trust respected for excellence in ▪ Accountability RESULTS DRIVEN TEAMWORK unlocking and ▪ Integrity enhancing the earth’s ▪ Teamwork SKI
Slide 5: What we do
2 WHAT WE DO A leading, empowered mid-tier mining and materials supply company
Slide 6: What we do
What we do PAT CAGR of 18,9% (Feb 2009 – Feb 2023) ▪ Track record of excellence and core competence in mid-tier mining and materials supply ▪ Listed in the general mining sector ▪ Well diversified across different industries, commodities and processes to ensure consistent delivery ▪ Superb track rec
Slide 7: Our portfolio
Our portfolio Structured for diversification CONSTRUCTION INDUSTRIAL BULK FUTURE MATERIALS MINERALS COMMODITIES MATERIALS & METALS Aggregates | concrete Limestone | dolomite | Iron ore | anthracite Phosphate | vermiculite | products | readymix industrial sands rare earth elements ▪ 30 commercial qua
Slide 8: Rationale for and result of diversified structure
Rationale for and result of diversified structure ▪ Good blend of locally and internationally Profit history with and without acquisitions 600 priced commodities 500 ▪ Exposure to different currencies ▪ Exposure to different economic cycles 400 ▪ Similar operational skills Cents 300 Glen Douglas Cli
Slide 9: Deeper segmental diversification
Deeper segmental diversification A more sustainable mix in Bulk commodities 2023 revenue contribution 2023 Operating profit contribution Nkomati - Nkomati - anthracite anthracite 12% 2% (2022: 8%) (2022: -4%) CM 13 % IM (2022: (2022: 14%) 5% 8%) CM Jenkins - 37% iron ore (local) (2022: 37%) Jenkins
Slide 10: Afrimat's moats
Afrimat’s moats 1▪ UNIQUE COMPETITIVE ADVANTAGE 3 EXECUTION ▪ Geographic location ▪ Multi-discipline approach to project execution ▪ Unique metallurgy • Business development ▪ Structural cost advantage ▪ Culture ▪ All teams provide input and back-up in their respective areas of expertise • Finance,
Slide 11: Strategic focus F2023
Strategic focus F2023 1. Continuously improve performance from existing assets – operational efficiency 2. Ensure sustainable value from Nkomati anthracite mine • Implement a well-designed life-of-mine plan 3. Further increase the value from the Coza transaction • Increase volumes from Jenkins • Ere
Slide 12: How we do it
3 HOW WE DO IT Culture of care in all that we do and a thriving entrepreneurial spirit
Slide 13: Sustainability and ESG
Sustainability and ESG Active community Focus on job relations with creation, training investment in staff and ensuring a education, youth high standard of employment and health and safety infrastructure ESG focus across 44 mining licenses, rehabilitation and carbon neutrality strategy 13
Slide 14: Meet an Afrimatter
Meet an Afrimatter Family background ▪ Umlazi KZN, from a big family of 12 siblings ▪ Mangosuthu University of Technology in Umlazi, studied Mechanical Engineering ▪ Kim is a proud mother of two boys Afrimat journey ▪ Kim joined Afrimat in 2017 as a Mechanical Engineering Intern ▪ In 2019 she was ap
Slide 15: People management
People management 2,668 11,836 training 486 new 81 bursaries Staff wellness employees days employees hired awarded to staff programme Absenteeism Attrition Staff composition 5.0% 4.3% 12.0% 11.2% 80% 71% 4.0% 10.0% 70% 10.0% 8.1% 60% 7.8% 3.0% 8.0% 50% 2.3% 6.0% 40% 2.0% 6.0% 1.3% 1.4% 1.3% 30% 4.0%
Slide 16: Learning and development
Learning and development ▪ Financial information Learning and development F2023 Skills development 3.37% 15.90% 13% Bursary/ Study assistance Skills Development cost Core SD department cost 15.05% 22% Statutory Learnerships Strategic Internship remuneration 65% 4.65% 61.03% Description F2023 F2022 ▪
Slide 17: Health and safety
Health and safety LTFR Progress ASPASA ISHE Audits 0.9 0.8 0.77 95.0% 0.7 0.66 93.8% 0.6 0.58 94.0% 0.55 0.5 93.0% 92.4% 0.44 92.2% 0.4 92.0% 91.7% 0.34 0.3 91.0% 90.5% 0.2 90.0% 0.1 89.0% 0 88.0% FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 2019 2020 2021 2022 HY2023 • The mines at Langvlei and Vreden
Slide 18: Community relations and value creation
Community relations and value creation Social license to operate Access to market for local small medium micro enterprises Job readiness program 18
Slide 19: Community relations (continued)
Community relations (continued) Renovation and extension of Steenbok clinic 75 sites across South Africa CSI spend in F2023 R12,3 m 19
Slide 20: Community relations (continued)
Community relations (continued) Madadeni community hall Early childhood development programme 20
Slide 21: Community relations - Risk matrix
21 Community relations - Risk matrix Excellent relationships with the communities surrounding our mining operations and production plants 21
Slide 22: Environmental audits
Environmental audits ASPASA Environmental compliance audits 93.0% 92.9% 92.8% 92.7% 92.6% 92.4% 92.2% 92.0% 92.0% 91.8% 91.6% 2019 2020 2023 22
Slide 23: Carbon neutral strategy
Carbon neutral strategy Reduce carbon emissions by 32% by 2030 179 285 114 428 ▪ Reduction in line with UN (44 570) (15 048) (208) (2 724) (2 307) SDG’s ▪ 2050 target carbon neutrality across operations Opening total 2022 10% from coal replacement 100% renewable energy 5% hemp farming offset 30% mor
Slide 24: Financial outcomes
4 FINANCIAL OUTCOMES The financial scorecard supports and encompasses the way we diligently and methodically do things
Slide 25: Core financial discipline to support growth
Core financial discipline to support growth Entrenched diversification strategy Strong cash supported by generation prudent capital allocation Surplus cash supports acquisitions, capex and consistent dividends Continuous measurement against decisions taken 25
Slide 26: Financial highlights
Financial highlights Up 4,9% to R4,9 billion 457,6 cents Group revenue HEPS 110,0 cents per share 19,6% Final dividend Operating profit margin 19,4% up to 2 591 cents 24,0% Return on net Net asset value operating assets 4,4% R1,0 billion Net cash from Net debt:equity ratio operating activities 26
Slide 27: Revenue and operating profit
Revenue and operating profit Revenue (R’000) Operating profit (R’000) 1 200 000 5 000 000 1 000 000 4 500 000 526 111 2 312 980 4 000 000 2 258 468 449 357 800 000 3 500 000 533 183 2 135 130 3 000 000 1 584 574 600 000 1 531 549 282 959 2 500 000 2 000 000 202 669 268 483 400 000 1 500 000 2 595 25
Slide 28: Operating profit margin
Operating profit margin Operating profit margin FY2023 FY2022 FY2021* Construction Materials 7,2% 9,0% 6,6% Bulk Commodities 31,8% 35,7% 46,4% Industrial Minerals 8,9% 18,0% 10,8% Overall 19,6% 23,7% 24,0% * As previously reported 28
Slide 29: Solid metrics
Solid metrics HEPS (full year) Net cash from operating activities (full year) 600.0 CAGR – 18.24% 1 200 000 CAGR – 24,54% (2019 – 2023) (2019 – 2023) 500.0 987 319 1 000 000 951 655 215 100 400.0 767 580 800 000 Cents per share 676 810 R’000 300.0 542.9 600 000 457.6 441.7 410 484 200.0 347.7 400 00
Slide 30: Statement of financial position
Statement of financial position Assets R’000 Audited Feb 2023 Audited Feb 2022 Property, plant and equipment 3 326 059 2 696 448 Intangible assets 260 252 213 335 Inventories 673 339 568 266 Trade and other receivables 742 060 793 343 Cash 281 037 290 633 Other assets / deferred tax 398 385 464 222
Slide 31: Statement of financial position
Statement of financial position Equities and liabilities R’000 Audited Feb 2023 Audited Feb 2022 Total equity 3 849 014 3 007 200 Borrowings 312 576 643 826 Provisions 290 960 265 252 Overdraft - 1 805 Trade and other payables 703 870 663 729 Other liabilities / deferred tax 524 712 464 485 Total eq
Slide 32: Provision for iron ore pricing
Provision for iron ore pricing Audited Audited Trade and other receivables R’000 Feb 2023 Feb 2022 Trade receivables – net 428 426 427 387 Trade receivables at fair value through profit or loss 160 355 142 362 Provision for final price adjustment 35 990 122 967 Other 117 289 100 627 Total trade and
Slide 33: Total capital expenditure
Total capital expenditure CAPEX (F2023) ▪ Bulk Commodities 4% 11% − Developing of an underground mine and 13% opening of two opencast pits at Nkomati 4% mine − Mine development cost to access additional source at Demaneng mine 15% − Completion and commissioning of fixed crushing plant at Jenkins min
Slide 34: Total capital expenditure
Total capital expenditure Capital Expenditure 2016 - Planned 2024 (R'000) Improvement capital Feb 2023 Feb 2022 1 200 000 Nkomati (developing of 963 093 underground mine and other mine R432 m R54 m 1 000 000 development, etc.) 782 446 800 000 Jenkins R62 m R400 m* 273 438 293 587 Demaneng (further o
Slide 35: PBIT movement
a PBIT movement Y= AFRIMAT PBIT movement (Feb 2023 vs Feb 2022) R'000 Mi increase Ml Decrease Ml Total 1.200 000 1.000 000 23 906 800 900 600 000 1108 911 400 000 200 000 PBIT 2022 Demaneng PBIT Rest of Business - Fuel Nkomati PBIT Jenkins PBIT Rest of Business - Other PBIT 2023
Slide 36: Segmental performance
5 SEGMENTAL PERFORMANCE The value of diversification
Slide 37: Fleet efficiency drive tons per machine hour
Fleet efficiency drive tons per machine hour Average Efficiency Average Average Efficiency Average Average Efficiency Average before project improvement after project before project improvement after project before project improvement after project 37
Slide 38: Bulk commodities
Bulk commodities Another excellent performance based on product diversification Revenue Operating profit and margin 3 000 880 35,7% 860 2 500 840 31,8% 820 2 000 R’million 800 R’million 780 1 500 760 46,4% 860 2 409 2 480 1 000 740 1 584 720 788 500 700 735 680 - 660 Feb '21 Feb '22 Feb '23 Feb '21
Slide 39: Composition of bulk commodities (F2023)
Composition of bulk commodities (F2023) Segment contributed 51% of revenue and 82% of operating profit Revenue contribution Operating profit (R’000) Op profit F2022 Op profit F2023 644 533 Jenkins Mine 35% Demaneng (2022:23%) Mine 398 578 369 321 42% 264 820 (2022:62%) Nkomati Anthracite Mine 19 754
Slide 40: Nkomati anthracite mine
Life of mine: 20 years Market: Domestic Nkomati anthracite mine Location: Mpumalanga Volumes achieved (tonnes) ▪ Profitable with increased volumes to come Steady-state target – 540 000tpa ▪ Contributed 23,1% to the segment revenue ▪ Long-term life of mine enhanced by opening two opencast pits and un
Slide 41: Jenkins iron ore mine
Life of mine: 11 years Market: Domestic Jenkins iron ore mine Location: Northern Cape Volumes achieved (tonnes) ▪ Fully operational ▪ Producing at required capacity ▪ Innovative technology solutions to optimise mine fleet efficiencies 305 661 Amount (R m) Remaining planned capex 30 Capex spent (HY1
Slide 42: Demaneng iron ore mine
Life of mine: 4 years Market: International export Demaneng iron ore mine Location: Northern Cape ▪ Lower international iron ore price Volumes achieved (tonnes) ▪ Approaching end of LOM with slightly higher strip Targeted volumes – 870 000tpa ratio $155 * ▪ Remain pleased with the performance ▪ Tran
Slide 43: Sales volumes (tonnes)
Sales volumes (tonnes) 0 50 000 100 000 150 000 200 000 Jan-20 69 702 Feb-20 92 673 Mar-20 57 623 Apr-20 46 437 May-20 69 582 Jun-20 68 189 Jul-20 81 189 Aug-20 69 650 Sep-20 80 735 Iron ore sales by rail Oct-20 56 804 Nov-20 57 778 Dec-20 55 395 Jan-21 67 678 Feb-21 69 206 12 952 Export sales Mar-2
Slide 44: 62% FE Platts index price (USD)
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 - 44
Slide 45: Lump premium (USD)
Lump premium (USD) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 45
Slide 46: Freight rate China (USD)
Freight rate China (USD) Avg. Platts South Africa - China Capesize 35.00 30.00 25.00 20.00 15.00 10.00 5.00 - 46
Slide 47: Industrial Minerals
Industrial Minerals Delivered satisfactory results across all regions Revenue Operating profit and margin 580 90 18,0% 560 80 540 70 10,8% 520 60 R’million 8,9% R’million 500 50 480 40 85 554 460 514 30 55 49 440 471 20 420 10 400 - Feb '21 Feb '22 Feb '23 Feb '21 Feb '22 Feb '23 ▪ Revenue increased
Slide 48: Construction Materials
Construction Materials Suffered impact of economic slowdown Revenue Operating profit and margin 1 800 180 9,0% 160 1 700 140 7,2% 120 6,6% R’million R’million 1 600 100 1 809 1 751 80 158 1 500 60 129 1 595 105 1 400 40 20 1 300 - Feb '21 Feb '22 Feb '23 Feb '21 Feb '22 Feb '23 ▪ Revenue increased b
Slide 49: Afrimat Construction Index – Q4 2022
Afrimat Construction Index – Q4 2022 130 ACI 4-quarter avg. 120 110 Index: Q1 2011=100 100 90 80 70 60 50 Q1'19 2 3 4 Q1'20 2 3 4 Q1'21 2 3 4 Q1'22 2 3 4 49
Slide 50: Future Materials & Metals
Future Materials & Metals Ramp up of operation in progress Revenue Operating profit and margin 30.0 Feb '22 Feb '23 25.0 0.0 20.0 (2.2) R’million R’million 15.0 - 5.0 (11.4) 25.2 10.0 5.0 - 10.0 3.0 0.0 Feb '22 Feb '23 - 15.0 ▪ Substantial increase in revenue ▪ Start-up losses of R11,4 m ▪ Site esta
Slide 51: Glenover: HG Phosphate and Vermiculite
Glenover • Site layout completed, infrastructure established; and General • Electrical reticulation project to be completed by July 2023. • In production • Commissioning of final plant expected by November HG Phosphate • Market development underway. 2023 with ramp up from December 2023 to March 2024
Slide 52: Future outlook
6 FUTURE OUTLOOK An increase in volumes and more acquisition opportunities
Slide 53: Looking ahead
Looking ahead ▪ Remain vigilant, react quickly and keep employees safe ▪ Strong projects to execute on like Jenkins, Nkomati and Driehoekspan to advance steady- state ▪ Industrial Minerals to maintain momentum with market and product development ▪ Construction Materials to be bulked up when potentia
Slide 54: Core message
Core message Strategy is working and Substantial providing a progress made trajectory for on strategic sustained long- projects term growth Company culture and high standard of execution support Group moats 54
Slide 55: Investor Relations contacts
Investor Relations Andries van Heerden CEO 021 917 8853 Vanessa Rech Keyter Rech Investor Solutions vrech@kris.co.za 083 307 5600 55