Afrimat Limited · JSE:AFT
Afrimat — RMB Morgan Stanley Off Piste Investor Conference 2022
33 slides from Afrimat's conference presentation, Sep 14, 2022
Slide 1: RMB Morgan Stanley Off Piste Investor Conference Presentation
RMB MORGAN STANLEY OFF PISTE INVESTOR CONFERENCE PRESENTATION 14 September 2022
Slide 2: Core message
Core message Cape Lime, main factory Existing business Growth strategy Balance sheet Remains industry- Meticulously Prudently leading amidst executed to managed amidst global uncertainty sustain long-term global volatility growth Afrimat is currently in a closed period with interim results due to be
Slide 3: Segmental makeup
Segmental makeup Construction Industrial Bulk Materials Minerals Commodities Aggregates | contract crushing, drilling Iron ore | anthracite | manganese (WIP) and blasting | concrete products | Limestone | dolomite | silica | phosphate, rare earths & vermiculite readymix (WIP) Revenue (R’000) Operati
Slide 4: Rationale for our unique strategy
Rationale for our unique strategy ▪ Good blend of locally and internationally priced commodities ▪ Exposure to different currencies ▪ Exposure to different economic cycles CAGR of PAT ▪ Similar operational skills 22% ▪ Delivering smooth growth for more than a decade (Feb 2009 – Feb 2022) ▪ In line w
Slide 5: Growth through diversification
Growth through diversification Profit history with and without acquisitions 600 500 Glen Douglas Clinker Group 400 Infrasors Cents 300 Cape Lime Demaneng 200 Nkomati 100 Jenkins 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Headline earnings per share Reality without strate
Slide 6: Operational Overview
1 OPERATIONAL OVERVIEW
Slide 7: Bulk Commodities revenue and operating profit
Demaneng – iron ore Bulk Commodities Jenkins – iron ore Nkomati – anthracite Revenue Operating profit and margin 3 000 900 34,1% 800 46,4% 2 500 700 2 000 600 R’million R’million 500 1 500 400 31,0% 820 2 409 735 1 000 300 Previously 1 584 200 reported 500 1 038 322 100 - - Feb '20 Feb '21 Feb '22 F
Slide 8: Composition of Bulk Commodities (FY2022)
Composition of Bulk Commodities (FY2022) Segment contributed 52% of revenue and 74% of operating profit Revenue contribution * Operating profit (R’000) 604 821 23% 264 820 15% 62% (49 431) Demaneng Mine Nkomati Anthracite Jenkins Mine Demaneng Mine Nkomati Anthracite Mine Jenkins Mine Mine (*) 2021
Slide 9: Nkomati anthracite mine
Nkomati anthracite mine ▪ Mine is profitable ▪ Currently developing two pits and an underground Contributing to results? Yes shaft, requiring capital investment Targeted volumes: FY2023 – 385,000 t ▪ To ensure consistent feed for the mine Steady-state – 540,000 tpa ▪ Being recognised as a reliable s
Slide 10: Jenkins iron ore mine
Jenkins iron ore mine ▪ Ramped up to required capacity Contributing to Yes ▪ Supplying off-take according to contract results? ▪ Interim price reduction to assist customer Targeted volumes: Jul ‘21 – Jun ’22 – 500,000 tpa Jul’ 22 – Jun ’23 – 1,250,000 tpa ▪ Direct shipping ore (DSO) (no beneficiatio
Slide 11: Contract update
Contract update ▪ Re-negotiated a temporary interim contract at a lower price ▪ This “interim contract” is effective from 1 July 2022 – 28 February 2023 ▪ The original contract is reverted to 1 March 2023 ▪ Temporary contract should still result in an increase in sales volumes compared to the previo
Slide 12: Demaneng iron ore mine
Demaneng iron ore mine ▪ Pricing significantly lower than the previous year Contributing to results? Yes ▪ Good operational performance Targeted volumes: ±870,000 tpa * Volumes achieved: 746 035 ▪ Transnet marginally improved Average price: Significantly below last year ▪ Have sufficient reserves to
Slide 13: Sales Volumes (Tonnes)
Sales Volumes (Tonnes) 80 000 0 20 000 40 000 60 000 100 000 120 000 140 000 Mar-18 45 225 Apr-18 45 758 May-18 57 172 Jun-18 45 705 19 536 Jul-18 45 540 12 896 Aug-18 56 535 18 746 Sep-18 34 264 19 131 Oct-18 45 796 19 208 Nov-18 45 771 19 211 Dec-18 22 41619 054 Jan-19 45 091 19 084 Feb-19 45 418
Slide 14: Industrial Minerals
Lime Industrial Minerals Metallurgical Dolomite Revenue Operating profit and margin 700 120 600 17,3% 14,9% 100 500 80 R’million R’million 400 10,8% 60 300 633 553 514 96 94 40 200 55 100 20 - - Feb '20 Feb '21 Feb '22 Feb '20 Feb '21 Feb '22 Currently: Currently: ▪ Feed lime acquisition strengthene
Slide 15: Construction Materials
Aggregates Construction Materials Bricks & blocks Readymix concrete Revenue Operating profit and margin 1 800 250 11,2% 11,8% 1 700 200 R’million R’million 1 600 150 6,6% 1 500 1 714 100 192 192 1 595 1 626 1 400 50 105 1 300 - Feb '20 Feb '21 Feb '22 Feb '20 Feb '21 Feb '22 Currently: Currently: ▪
Slide 16: Afrimat Construction Index – Q1 2022
Afrimat Construction Index – Q1 2022 130 4Q average Cape Lime, main factory 120 110 Index: Q1 2011=100 100 90 80 70 60 Q1'19 2 3 4 Q1'20 2 3 4 Q1'21 2 3 4 Q1'22 16
Slide 17: New Projects
2 NEW PROJECTS
Slide 18: Gravenhage manganese mining right
Gravenhage manganese mining right Manganese ▪ All conditions not fulfilled by the fulfilment date of 20 August 2022 Proposed transaction ended ▪ In particular, the granting of a “usable” Water Use License ▪ The transaction has been terminated 18
Slide 19: Glenover
Phosphate Glenover Vermiculite Rare Earth Elements In development ▪ Aligned with global trends (decarbonisation, technology advancements, food security etc.) Phase 1 Phase 2 ▪ Enhance the diversification strategy Vermiculite ▪ Good long-term market dynamics with healthy margins (industrial, fire pro
Slide 20: Products and applications
Products and applications Operational Planned steady state Current indicative Project Product commencement production market pricing (est. 6 month ramp-up) High Grade H1 F2023 HG Phosphate 30 000 tpa (Sellable) >R2000 per ton Phosphate (operational) Single Super SSP Fertilizer 30 000 tpa (Sellable)
Slide 21: Financial Review
3 FINANCIAL REVIEW
Slide 22: Financial highlights F2022
Financial highlights F2022 23,7% 22,9% 26,7% Group revenue Operating profit HEPS increased increased to margin to 542,9 cents R4,7 billion 146,0 cents per share 33,0% 12,1% Final dividend Return on net Net debt:equity Total dividend 186,0 cents operating assets ratio (25,7% increase) 22
Slide 23: Revenue and operating profit
Revenue and operating profit Revenue (R’000) Operating profit (R’000) 1 200 000 5 000 000 4 500 000 1 000 000 526 111 4 000 000 2 258 468 3 500 000 800 000 533 183 3 000 000 2 135 130 1 584 574 600 000 1 531 549 2 500 000 282 959 1 184 592 1 196 402 2 000 000 400 000 202 669 268 483 195 504 155 895
Slide 24: Solid metrics
Solid metrics HEPS – full year Net cash from operating activities – full year 600.0 CAGR – 31,7% 1 000 000 CAGR – 47,5% 951 655 (2018 – 2022) (2018 – 2022) 215 100 500.0 900 000 800 000 767 580 400.0 700 000 676 810 Cents per share 600 000 R’000 300.0 542.9 736 555 500 000 410 484 441.7 400 000 200.
Slide 25: Capital strategy
Capital strategy ▪ Balance sheet debt free ▪ Cash generation remaining strong ▪ Accelerated CAPEX spend on: ▪ Glenover (SSP, Vermiculite) ▪ Nkomati (2 open pits and underground) ▪ R680 million capital raise: ▪ Prevents over-gearing in the next year ▪ Buffer against commodity volatility ▪ Dry gun pow
Slide 26: ESG and Sustainability
4 E S G AND SUSTAINABILITY
Slide 27: Afrimat staff
Afrimat staff 2,517 employees 2,474 training days 56 bursaries 512 jobs created awarded to staff Absenteeism Attrition Staff composition 5.0% 4.3% 12.0% 11.2% 80% 68% 4.0% 10.0% 70% 10.0% 60% 7.8% 3.0% 8.0% 50% 2.3% 6.0% 40% 2.0% 6.0% 1.3% 1.4% 30% 4.0% 20% 16% 15% 1.0% 2.0% 10% 6% 0.0% 0% 2019 2020
Slide 28: Community relations
Community relations 70 sites across South Africa Education Distribution of SLP spend CSI F2021 (R’000) 4% 6% 9% 3% 28% 50% Art, Sports & Culture Basic needs Education projects Uplifting community Skills development Small business development • No community unrest or labour • Sponsor math teachers’ s
Slide 29: Statutory relationships and compliance
Statutory relationships and compliance LTFR progress ISHE ASPASA audit trend 2.50 2.03 94.00 93.62 2.00 93.00 92.00 91.75 1.50 1.38 91.00 90.55 1.03 90.00 1.00 88.74 0.77 0.77 89.00 0.66 0.55 0.58 88.00 0.50 0.44 87.00 86.00 0.00 2019 2020 2021 2022 2014 2015 2016 2017 2018 2019 2020 2021 2022 29
Slide 30: The Future
5 THE FUTURE
Slide 31: Looking ahead
Looking ahead ▪ Maintain efficiency at existing operations ▪ Iron ore business to benefit from Jenkins iron ore mine reaching design capacity ▪ Nkomati on track to slightly exceed ramp-up volumes ▪ Industrial Minerals and Construction Materials to maintain efficiency drives to protect margins ▪ Main
Slide 32: Core message
Core message Cape Lime, main factory Existing business Balance sheet Remains Growth strategy Prudently industry-leading Meticulously managed amidst global executed to amidst global uncertainty sustain long- volatility term growth Afrimat is currently in a closed period with interim results due to be
Slide 33: Investor relations
Investor relations Andries van Heerden 19 October 2022 Site visit to Demaneng & Jenkins CEO Kathu 021 917 8853 27 October 2022 Interim results roadshow Cape Town & via webinar Vanessa Rech 16 November 2022 Site visit to Nkomati Anthracite Mine Keyter Rech Investor Solutions Nelspruit vrech@kris.co.z
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