Interim results...Afrimat interim results presentation for the six months ended 31 August 2019 Summary of the period 3 Period-on-period operating profit Construction Materials 6,5%

CONSISTENTLY DELIVERING

®

Interim results for the six months ended 31 August 2019

JHB presentation: 31 October 2019

CPT presentation: 4 November 2019

Afrimat interim results presentation for the six months ended 31 August 2019

Afrimat

2

▪ Track record of excellence in small scale mining and materials supply

▪ Delivered exceptional results supported by a diversification strategy, cost reductions and efficiency improvement initiatives


Summary of the period

3

Period-on-period operating profit

Construction Materials

6,5%

Bulk Commodities

176,2%

Net cash from operations

192,1% to R425,0m

Net debt:equity ratio

9,4% (Aug 2018: 35,7%)

Industrial Minerals

50,4%

Cash utilised to pay down debt

Aug 2019 vs Aug 2018


Balanced portfolio at work

4

54%

17%

29%

2019


Industrial Minerals

Bulk Commodities

Revenue Operating profit

38%

19%

43%

2019

Afrimat final results presentation for the year ended 28 February 2019

Operational overview

Overview

5


Diversified portfolio and footprintwhich generates a balanced, consistent income stream

Northern Cape 1

Western Cape27

Eastern Cape1

KwaZulu-Natal 17

Mpumalanga 4

Limpopo Mozambique 2

Gauteng 3

1

Free State 7

South AfricaBulk Commodities

2

4

3

6

1 Iron ore and manganese mine


25 Commercial quarries

6 Sand & gravel mines

4 Clinker sources

Mobile crushing & screening

Drilling & blasting

9 Concrete brick & block factories

22 Readymix batching sites

Industrial Minerals

2 Limestone mines

2 Dolomite mines

1 Silica mine


Segmental makeup

7

• Aggregates

• Contract crushing, drilling and

blasting

• Concrete products

• Readymix

• Limestone

• Dolomite

• Silica

• Iron Ore

Construction

MaterialsIndustrial

Minerals

Bulk

Commodities

Afrimat interim results presentation for the six months ended 31 August 2019 8

Revenue

870 923

-

200

400

600

800

1 000

Aug '18 Aug '19

R’m

illio

n

• Revenue increased by 6,1%

• Despite slowdown in activities, KZN improved

• Aggregates Western Cape did well

• Market stabilised : green shoots

Operating profit and margin

115 122 -

200

400

600

800

1 000

Aug '18 Aug '19R

’mill

ion

13,2% 13,2%

• Operating profit increased by 6,5%

• Operating profit margin flat

• Internal efficiency drive bearing fruit

Solid results in a tough environment



▪ 53,7% of revenue

▪ 38,4% of operating profit

▪ Continue to supply materials in Mozambique

▪ Good recovery expected from Mozambique

▪ Recovery continues



Revenue Operating profit and margin

284 299

-

100

200

300

400

500

600

700

800

900

1 000

Aug '18 Aug '19

R’m

illio

n


• Entered new markets

• Increased activity

41

62

-

10

20

30

40

50

60

70

80

90

100

Aug '18 Aug '19R

’mill

ion

20,9%


• Operating profit margin increased

• Successful product development

• Efficiency initiatives pay off

14,6%

Industrial Minerals

Strong results across all regions, entering new markets




▪ Delivered strong results

▪ Entered new markets

Industrial Minerals


Revenue Operating profit and margin

280

498

-

100

200

300

400

500

600

700

800

900

1 000

Aug '18 Aug '19

R’m

illio

n


• Increase in iron ore volumes

• Favourable pricing

50 138

-

50

100

150

200

250

300

350

400

450

500

Aug '18 Aug '19R

’mill

ion

27,8%


• Operating profit margin increased

17,9%

Bulk Commodities

Excellent results on favourable market conditions


▪ Exceptional contribution to group



▪ Load out facility completed

▪ Transnet rail line stable

▪ Increased production volumes

Bulk Commodities

13



Financial review

14


Core financial achievements

15

Strong cash

generation used

to pay down

debt

Ability to instantly

adjust to market

signals picked up

by information

systems

Excellent results

on the back of

good overall

performance


Financial overview

16

Group revenue

increased to

R1,7bn

19,9% 18,5%

Operating profit

margin

9,4%

Net debt:equity

ratio

improvement

from 35,7%

94,3%

HEPS increased

to 181,9 cents

89,5%

Interim dividend

per share of

36,0cps

32,3%

Return on net

operating assets


Operating profit (R’000)

Financial overview

17

1 0

03 2

37

1 1

53 2

58

1 1

84 5

92

1 4

34 8

50

1 7

19 8

029

66 5

49

1 0

74 8

99

1 1

96 4

02

1 5

31 5

49

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

3 000 000

3 500 000

2016 2017 2018 2019 2020

1st half 2nd half

159 6

23

206 1

52

194 2

44

202 6

69 3

17 9

93

160 7

65 2

03 4

92

157 2

94

268 4

83

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

2016 2017 2018 2019 2020

1st half 2nd half

19,9%

56,9%

Co

ntr

ibu

tion f

rom

op

era

tions m

arg

in 1

8,5

% (

20

18

: 1

4,1

%)

Revenue (R’000)

Revenue and operating profit



38%

19%

43%

2019

Contribution from operations

18

61%20%

19%

201854%

17%

29%

2019


Industrial Minerals

Bulk Commodities

Revenue

56%

20%

24%

2018Operating

profit


Headline earnings per share - interimC

en

ts p

er

sh

are

61,176,0

95,2 102,293,6

181,9

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

200,0

2014 2015 2016 2017 2018 2019

5-yr CAGR 24,4%

(2014 - 2019)

19


Net cash from operating activities

74 374 98 938

113 748

79

51

0

145 505

425 000

-

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

2014 2015 2016 2017 2018 2019

120 100

192,1%

20

5-yr CAGR of

41,7%

2014 - 2019

R’0

00


Statement of financial position - assets

R’000Unaudited

Aug 2019

Unaudited

Aug 2018

Audited

Feb 2019

Property, plant and equipment 1 514 283 1 451 475 1 469 837

Mining rights and goodwill 221 065 243 173 221 873

Inventories 258 409 289 498 261 249

Trade and other receivables 426 516 432 707 435 458

Cash 156 850 164 945 191 763

Other assets / BEE funding 108 834 120 191 106 832

2 685 957 2 701 989 2 687 012

21


Statement of financial position - equities & liabilities

R’000Unaudited

Aug 2019

Unaudited

Aug 2018

Audited

Feb 2018

Total equity 1 549 246 1 286 556 1 409 517

Borrowings 259 186 463 874 383 546

Provisions 147 232 135 782 141 080

Overdraft 34 381 148 496 134 153

Trade and other payables 469 444 444 844 390 517

Other liabilities / deferred tax 226 468 222 437 228 199

2 685 957 2 701 989 2 687 012

Net debt less cash:equity 9,4%

22


Capital expenditure

23

F2019

▪ General maintenance

▪ Additional fixed plant at

Demaneng of R36,9 million

Planned

F2020

H1: R115,8 m

H2: R 91,7 m

R207,5 m

H1: R100,1 m

H2: R149,4 m

R249,5 m


Dividend payment

Cen

ts p

er

sh

are

13

16

20 20 19

36

-

5

10

15

20

25

30

35

40

2014 2015 2016 2017 2018 2019

89,5%

Interim dividend – 2,75x cover

5-yr CAGR of

22,6%

2014 - 2019

Record date:

Fri 29 Nov 2019

Dividend payment

Mon 2 Dec 2019

24


Iron ore provisions

▪ Iron ore invoice on average price of previous month

▪ Cash received after 30 days

▪ Prices reconciled after 3 months with cash adjustment

▪ Provisions made at end August:

- Platts price assumption: June sales $84/t

July sales $81/t

August sales $79/t

- Lumpy premium: $0,14/dmtu

- Shipping: $17,22/t

25



Operating market

26


Our market

Purposeful exposure to sectors with economic fundamentals

that suit the Afrimat business model, to prosper

27


Iron ore

28

Much higher margins through cycle

Excellent operational fit

Management expertise

USD exposure

Accessible opportunities

Logistics

Quality

Strategic

rationale

▪ Resource LOM program Demaneng > 10 years

▪ Strategic location to export


29

0

0,05

0,1

0,15

0,2

0,25

0,3

0,35

0,4

0,45

0

20

40

60

80

100

120

140

01-Apr-15

01-Jun-15

01-Aug-15

01-Oct-15

01-Dec-15

01-Feb-16

01-Apr-16

01-Jun-16

01-Aug-16

01-Oct-16

01-Dec-16

01-Feb-17

01-Apr-17

01-Jun-17

01-Aug-17

01-Oct-17

01-Dec-17

01-Feb-18

01-Apr-18

01-Jun-18

01-Aug-18

01-Oct-18

01-Dec-18

01-Feb-19

01-Apr-19

01-Jun-19

01-Aug-19

01-Oct-19

Historical Index Pricing

62% Lump Premium

Iron ore



Iron ore sales by rail

30

22 7

15

28 6

29

26 8

13

30 6

43

30 2

82

45 7

43

45 3

92

45 2

25

45 7

58 57 1

72

65 2

44

58 4

63

75 2

81

53 3

95 65 0

04

64 9

82

41 4

70

64 1

75

70 7

94

64 8

93

64 8

52

67 8

63

67 8

11

68 3

84

102 8

28

68 7

85

0

20 000

40 000

60 000

80 000

100 000

120 000

Au

g-1

7

Sep

-17

Oct-

17

No

v-1

7

De

c-1

7

Ja

n-1

8

Feb

-18

Ma

r-18

Ap

r-18

Ma

y-1

8

Ju

n-1

8

Ju

l-18

Au

g-1

8

Sep

-18

Oct-

18

No

v-1

8

De

c-1

8

Ja

n-1

9

Feb

-19

Ma

r-19

Ap

r-19

Ma

y-1

9

Ju

n-1

9

Ju

l-19

Au

g-1

9

Sep

-19

Sales (tons)

(*) Planned Transnet maintenance shut down

*

Stable monthly sales expected to settle at an average of 72,500

31

Afrimat Construction Index – 2nd quarter 2019



Industrial minerals: the market

32

▪ Glass

− Bottles

− Windscreens

− Plate glass

▪ Metallurgical

− Alloys

− Chrome

− Steel

− Foundries

▪ Chemical

▪ Water treatment

− Drinking water

− Acid mine drainage

▪ Industrial powders and fillers

− Fire retardants

− Paints

− Tiles and tile adhesives

− Grout fillers

▪ Agriculture

− Soil pH stabilisation

− Animal hygiene



Looking forward

33


▪ Continuous improvement

▪ Commodities: expanding resource base

▪ Industrial Minerals: many good opportunities

▪ Mozambique and other

▪ Green shoots in economy starting to show

▪ Build on entrepreneurial culture

Our strategy

34Afrimat interim results presentation for the six months ended 31 August 2019


How to assess Afrimat

35

Efficient hedge(against volatile local business

conditions)

Strength of

management

Moat(geographic locations, unique

metallurgy & structural cost advantage)

Cash generative | free

cash flow focus

Operational

diversification

Dividend

payer(2,7 x cover)

Scalability reduces

cyclicality(protects against commodity price

fluctuations)

Rand hedge(Iron ore & Mozambique)


Experience has taught us

▪ Value = weakest link in value chain

▪ Expect the unexpected

▪ Only the best people are good enough

▪ Don’t trust the spreadsheet

▪ Don’t sail too close to the wind

▪ Cash is king – make it back soon

▪ DO NOT OVERPAY

36


People development and transformation

37

38

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

Documents

Interim results...Afrimat interim results presentation for the six months ended 31 August 2019 Summary of the period 3 Period-on-period operating profit Construction Materials 6,5%