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Interim Results for the six months ended 31 August 2012 November 2012
Interim Resultsfor the six months ended 31 August 2012
November 2012
Presentation content
2
Who we are and what we do
What is happening in
our environment
Our view of the future &
what lies ahead
How are we performing financially
• Diversified open cast miner and materials supplier
• “Delivering consistent growth”
• Focus on smallersized projects adds to Afrimat’ssustainability
• Excellent cash conversion
• Managed balance sheet
• Consistent dividend payer
• Acquisitions pay off• Market remains
under pressure• Diversification
underpins sustained performance
Leading black empowered open cast miner and materials supplierStrategically diversified through location and product range
Group overview
3
… portfolio … and footprint
CONCRETE PRODUCTSConcrete brick & block factories (9)
READYMIXBatching sites (17)
MINING & AGGREGATESCommercial quarries (24)
Sand and gravel mines (8)
Dolomite mine (1)
Clinker (1)
… which generates a balanced consistent income stream
CONTRACTING Mobile Crushing
Drilling and Blasting
4
Our diversification
Afrimat’s products
Products from mines:Aggregates (crushed stone)
Metallurgical dolomite
Metallurgical quartzite
Agricultural lime
Clinker
Products from factories:Concrete blocks
Concrete bricks
Pavers
5
Products from readymix batch plants:Readymix concrete
Readymix mortar
Services by the contracting team:Contract crushing
Mobile screening
Drilling
Blasting
Afrimat’s products (continued)
6
Target market segments
Transport infrastructure:Road building materials
Materials for railroads (e.g. ballast)
Industrial minerals:Metallurgical dolomite
Quartzite
Energy infrastructure:Materials for power stations (e.g. Medupi)
Materials for renewable energy projects
Materials for distribution network
7
Target market segments (continued)
Building materials:Affordable housing (Government funded)
Commercial building
Residential (Privately funded)
Agriculture:Agricultural lime
Drainage stone
Paving
8
Strategic principles
Diversified:Wide product range
Across wide geographic markets
Effective hedge against market volatility
Competitive advantage:Geographic location
Unique and scarce products or
Operations with structural cost advantage
Innovation and creativity
Operational expertise
9
Our environment
10
Who we are and what we do
What is happening in
our environment
Our view of the future &
what lies ahead
Our view of the future
Macro environment
International:European economic woes remain
China and India showing signs of slower growth
USA – slow growth at best
In South Africa:Downgraded credit ratings
Government’s focus on infrastructure backlog will act as economic stimulus when implemented
Excellent opportunities
11
Cement sales
12
SA Cementitious Quarterly Sales - Tons
-
10,000
20,000
30,000
40,000
50,000
60,000
Q1 Q2 Q3 Q4
2012 2011 2010 2009
SA Cementitious Daily Average Sales - Tons
-500,000
1000,000 1500,000 2000,000 2500,000 3000,000 3500,000
Q1 Q2 Q3 Q4
2012 2011 2010 2009
Source : Cement & Concrete Institute, Oct 2012
GDP by sector
-,15
-,10
-,5
,0
,5
,10
,15
,20
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mining Manufacturing Construction
Wholesale and retail trade Transport, storage and communication Finance, insurance and real estate
% y/y
Source: SARB, Standard Bank
13
Trends in Afrimat’s markets
High tender activity in most market segments
Industrial markets stable, not as competitive as construction
Action against incompetent government departments (e.g. Provincial roads to SANRAL)
Strong pipeline, specifically government infrastructure (small to medium sized projects)
Exciting opportunities
14
Financial overview
15
Who we are and what we do
What is happening in
our environment
Our view of the future &
what lies ahead
How are we performing financially
Financial highlights
Solid contribution from Clinker Group
Good cash conversion
Active management of balance sheet continues
Revenue 32.5%
HEPS 17.4%
Net asset value 13.8% to 504 cps (NTAV 392 cps)
Net debt : equity ratio 5.3%
Net cash from operating activities 64.8%
Interim dividend 8 cps (up 33.3%)
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Income statement
R’000 Unaudited Aug 2012
Reviewed Aug 2011 % change Audited
Feb 2012
Revenue 671 349 506 717 32.5% 996 137Operating profit 75 623 65 521 15.4% 130 130
Operating profit margin 11.3% 12.9% (12.4)% 13.1%Taxation (22 526) (19 584) 15.0% (38 976)Profit for the period 50 603 44 883 12.7% 90 917
Operating profitRevenue
392,
517
455,
874
506,
717
671,
34938
5,49
9
398,
622
489
420
,0100,000200,000300,000400,000500,000600,000700,000800,000900,000
2010 2011 2012 2013
1st half 2nd half
66,5
88
64,3
29
65,5
21
75,6
23
42,3
36
45,2
68
64 6
09
,0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
2010 2011 2012 20131st half 2nd half
17
32.5%
15.4%
Clinker Group results included with effect from 1 March 2012
Segmental contributions to revenue
71%
17%12%
67%
14%19%
Mining & Aggregates Readymix Concrete Products
0%
10%
20%
30%
40%
50%
60%
70%
80%
HY2011
HY2012
18
Returning to previous levels
Mining & Aggregates revenue sources
19
Civil Construction30.39%
Railway2.61%
Building Construction26.19%
Concrete Products5.74%
Readymix8.83%
Cash Sales11.28%
Agricultural1.28%
Steel Manufacturers9.16%
Other4.52%
Market Segments March - August 2012
Headline earnings per share
Cen
ts p
er s
hare
,24.5
,29.6 ,29.9 ,29.8
,35.0
-
,5.0
,10.0
,15.0
,20.0
,25.0
,30.0
,35.0
,40.0
2008 2009 2010 2011 2012
HEPS for the six months
20
17.4%
79%
Operating profit
Mining & AggregatesPerformance:
Volumes increased particularly in contracting divisionOperating profit margin hurt by strike in Kwazulu-NatalGlen Douglas contributed in line with expectationTough market conditions in Western Cape
R59.4m
21
Mining & Aggregates
R’000 Unaudited Aug 2012
Reviewed Aug 2011
% change
Audited Feb 2012
External revenue 439 942 358 418 22.7% 704 509Operating profit 59 398 57 993 2.4% 110 809Operating profit margin 13.5% 16.2% 15.7%
Performance:
Benefitted from acquisition of SA Block (Clinker Group)Lower volumes in Kwazulu-NatalLabour action in Kwazulu-Natal
79%
16%
Operating profit
Mining & Aggregates
Concrete Products
R75.6m
22
Concrete Products
R’000 Unaudited Aug 2012
Reviewed Aug 2011
% change
Audited Feb 2012
External revenue 134 017 59 484 125.3% 116 112Operating profit 12 714 7 433 71.0% 13 852Operating profit margin 9.5% 12.5% 11.9%
Performance:Improved results in Western CapeKwazulu-Natal impacted by labour strike
79%
16%
5%
Operating profit
Mining & Aggregates
Concrete Products
Readymix
R75.6m
23
Readymix
R’000 Unaudited Aug 2012
Reviewed Aug 2011
% change
Audited Feb 2012
External revenue 97 390 88 815 9.7% 175 516Operating profit 3 861 1 403 175.2% 8 653Operating profit margin 4.0% 1.6% 4.9%
R’000 Unaudited Aug 2012
Reviewed Aug 2011 % change Audited
Feb 2012
Property, plant and equipment 498 750 419 449 18.9% 425 906
Mining licenses and goodwill 159 498 114 685 39.1% 114 355
Inventories 89 444 84 282 6.1% 71 827
Trade and other receivables 231 790 200 702 15.5% 163 548
Cash 123 877 92 374 34.1% 132 557
Other assets / BEE funding 88 290 93 194 (5.3)% 92 184
1 191 649 1 004 686 18.6% 1 000 377
Strong focus on working capital
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Statement of financial position - assets
R’000 Unaudited Aug 2012
Reviewed Aug 2011
% change
Audited Feb 2012
Total equity 721 643 634 212 13.8% 671 906
Borrowings 144 757 85 764 68.8% 81 590
Provisions 32 510 31 089 4.6% 31 260
Overdraft 17 435 28 621 (39.1)% 18 147
Trade and other liabilities 174 300 143 378 21.6% 117 052
Other liabilities / deferred tax 101 004 81 622 23.7% 80 422
1 191 649 1 004 686 18.6% 1 000 377
Ultra low net debt
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Statement of financial position – equities & liabilities
Rand
s
77,378
39,337
51,305
34,222
52,712
86,860
,0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2007 2008 2009 2010 2011 2012
64.8%
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Net cash from operating activities
Net cash at end of period: R106.4m (2011: R63.7m)
Dividends
Afrimat remains a consistent dividend
payer
Cen
ts p
er s
hare
7
5
6 6 6
8
,4.0
,5.0
,6.0
,7.0
,8.0
,9.0
2008 2009 2010 2011 2012 2013
Interim dividend
27
What differentiates us
Strong financial position:Healthy cash flowStrong balance sheetIndustry leading margins throughout economic cycle
Active innovative strategic positioning:Good market intelligence and expertiseContinuously identifying and evaluating opportunitiesTrack record of successful acquisitionsSuccessful greenfield projects
Operational competence:FlexibleReliable quality supplierSuperior reaction time
Operating margin 11,3% vs. industry average 9,6%
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Impact of acquisitions
29
Open pit dolomite mine in Gauteng (metallurgical dolomite, aggregates, agricultural lime)R35 million purchase consideration
Defensive product diversificationIndustrial minerals with vast applicationsAttractive margins and strong profitabilityLife of mine: >30 years
Glen Douglas
Clinker Supplies and SA Block (brick & block manufacturing) in GautengProcessor of clinker material –used in manufacture of concrete productsR121 million purchase consideration
Product diversification which adds to current product line with geographic diversificationVast applicationsAttractive margins and strong profitabilityLife of project: 10 years
Clinker
Clinker Group
30
31
Clinker Group (continued)
Prospects
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Who we are and what we do
What is happening in
our environment
Our view of the future &
what lies ahead
How are we performing financially
Prospects
Short term outlook: Clinker group excitingGlen Douglas a real gemWestern Cape market conditions remain under pressure
Momentum drivers:Power stationsLow cost housingRoads – SANRAL, provinces Renewable energyIndustrial minerals
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Focus is on expanding volumes and driving product diversification further in industrial minerals and
open cast mining
34
Risk mitigation
Risk Mitigating action
Slow delivery on Government infrastructure projects
Widely diversified over markets, products and locations
Actively seeking and exploiting opportunitiesConstruction companies under financial pressure
No single dominant debtor, all less than 4%
Strict efficient credit control
Macro-economic threats Constant strategic management (avoiding threats, exploiting opportunities)
Entrepreneurial culture and creative innovative solutions
Strong balance sheetCountry risk in South Africa
Seeking opportunities outside South Africa
Take away
Afrimat will pursue a conservative but strategic diversified growth strategy
Preserve the status of the balance sheet
Continue to generate high cash conversion rates
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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 orVanessa Rech (Keyter Rech Investor Solutions): 011-447-8656
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