Slide 1: 2020 Interim Results
2020 INTERIM RESULTS For the half-year ended 30 June 2020 29 July 2020
Slide 2: Welcome & Introduction
WELCOME & INTRODUCTION 01. COVID-19 RESPONSE & IMPACT 02. PERFORMANCE SUMMARY 03. OTHER BUSINESS DRIVERS 04. EARNINGS ANALYSED 05. PERFORMANCE BY SEGMENT 06. NEW STRUCTURE & BRANDING 07. OUTLOOK & FOCUS
Slide 3: Introduction: Executive Team
INTRODUCTION: EXECUTIVE TEAM 2 Mark Dytor – CE Mark Kathan – CFO Edwin Ludick – Executive Dean Mulqueeny – Executive Dean Murray – Executive Candice Watson – Group HC Executive
Slide 4: Non-Executive Directors
NON-EXECUTIVE DIRECTORS 3 Khotso Mokhele Steve Dawson Fikile De Buck Walter Dissinger Godfrey Gomwe Jonathan Molapo Rams Ramashia Marna Roets Philisiwe Sibiya
Slide 5: COVID-19 response & impact
01. COVID-19 response & impact
Slide 6: COVID-19: Response
COVID-19: RESPONSE 5 – Risk acknowledged in February – Task Team established early March › Strategic intent defined › Manage and mitigate effects on people and business (BCM) › Response Plan developed and updated as required › All Exco members plus internal and external subject experts › Daily meeti
Slide 7: COVID-19: International Context – Cumulative Cases
COVID-19: INTERNATIONAL CONTEXT – CUMULATIVE CASES (AS AT 24 JULY 2020) 6 Germany Active: 0 Recovered: 1 Mali Active: 0 Recovered: 1 Ghana Active: 0 Recovered: 3 DRC Active: 0 Recovered: 2 Indonesia Active: 0 Recovered: 2 South-Africa Active: 90 Hospitalised: 1 Recovered: 80 Mortality: 3 CUMULATIVE
Slide 8: COVID-19: South Africa – Employee Distribution
COVID-19: SOUTH AFRICA – EMPLOYEE DISTRIBUTION 7 EMPLOYEE DISTRIBUTION IN DESCENDING ORDER (%) 3 2 3 4 PROVINCE 5 Gauteng KwaZulu-Natal 6 Western Cape Employees Free State 8 4 714 54 Mpumalanga North West Limpopo Eastern Cape 15 Northern Cape
Slide 9: COVID-19: Employee Health Tracker Review
COVID-19: EMPLOYEE HEALTH TRACKER REVIEW 8 International Cumulative cases recorded: April to July Cases recorded in SA by province Active Recovered Hospitalised Mortality Active Recovered Hospitalised Mortality 183 3 1 2 1 48% 89 39 recovered 1 44 10 1 90 6 32 10 3 20 7 37 6 4 10 11 1 1 4 1 1 6 5 1
Slide 10: COVID-19 Response: Working Arrangements
COVID-19 RESPONSE: WORKING ARRANGEMENTS 9 JUL 81% 12% 7% JUNE 81% 11% 8% MAY 62% 13% 25% APRIL 47% 14% 39% MARCH 35% 18% 47% Working on Site Working from Home Lockdown Full lockdown Partial lockdown Lockdown restrictions lifted Nigeria Burkina Faso; Tanzania; Brazil; Australia; Namibia; Botswana; Ch
Slide 11: COVID-19: Relief Initiatives as at July 2020
COVID-19: RELIEF INITIATIVES AS AT JULY 2020 10 R11,8m donated internationally R9,8m invested 120 000 R1,87m pledged 3 200 food R2m for Solidarity Fund beneficiaries for food parcels parcels distributed DISTRIBUTION OF 10 000 PARCELS TARGETED Initial socio-economic relief initiatives focused on prov
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Slide 13: Performance summary
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Slide 14: Performance Summary
PERFORMANCE SUMMARY 13 REVENUE HEPS -6% to R11 265m -34% to 240c Underlying* +3% to R12 280m Underlying* +28% to 593c Foreign & export revenue: 48% of total revenue EBITDA GEARING -18% to R1 111m 32% (FY19: 36%) Underlying* +7% to R1 618m PROFIT FROM OPERATIONS INTERIM DIVIDEND OF -32% to R558m 100c
Slide 15: Performance Summary
PERFORMANCE SUMMARY 14 COVID-19 effects on people and business in 2Q › No certainty on timing/extent of recovery to pre-pandemic business levels Cash management prioritised Restructuring of Food & Beverage and Chemicals segments › Costs of R64m incurred › R69m impairments (exit non-performing busine
Slide 16: Sale of Paper Chemicals Business Unit
SALE OF PAPER CHEMICALS BUSINESS UNIT 15 (R100m) Selling price Net assets disposed of and liabilities recognised R208m >7x EBITDA R108m Profit on disposal of business − Group was principal’s pulp and paper specialty chemical distributor in Africa − Strategic decision by principal to supply market di
Slide 17: Performance Summary Cont.
PERFORMANCE SUMMARY CONT. 16 Safety performance › Improvement trend sustained › TRIR of 0,36 (1H19: 0,51 & FY19: 0,38) Retained Level 2 B-BBEE Contributor status GCR rating maintained: A+ with stable outlook
Slide 18: Safety Performance: TRIR
SAFETY PERFORMANCE: TRIR 17 1,0 0,8 0,6 0,58 0,45 0,39 0,38 0,4 0,35 0,36 0,2 0,0 2015 2016 2017 2018 2019 1H20
Slide 19: Other business drivers
—-— SS 03. Other business-drivers
Slide 20: Business Drivers: ZAR/US$ Exchange Rate
BUSINESS DRIVERS 19 ZAR/US$ exchange rate
Slide 21: Business Drivers: Gold
BUSINESS DRIVERS 20 Gold US$/oz 1800 1700 1600 1500 1400 1300 1200 1100 2018Q1 Q2 Q3 Qa 201901 Q2 Q3 a4 2020Q1 Q2 Source: Bloomberg
Slide 22: Business Drivers: PGMs
BUSINESS DRIVERS 2 PGMs Platinum/ Rhodium palladium USS/oz USS/oz 2.400 10 600 a 9 600 2220 8600 2000 7600 1800 6600 1600 5 600 1400 4600 1200 3600 1000 2600 800 1600 600 600 400 aq fej 2018Q1 Q2 Q3 Qa 2019Q1 Q2 Q3 Qa 2020Q1 === Rhodium === Platinum === Palladium Source: Bloomberg
Slide 23: Business Drivers: Cobalt, Copper and Nickel
BUSINESS DRIVERS 22 Cobalt, copper and nickel
Slide 24: Business Drivers: Coal and Iron Ore
BUSINESS DRIVERS 23 Coal and iron ore
Slide 25: Business Drivers: SA Mining Production Volumes
BUSINESS DRIVERS 24 SA mining production volumes
Slide 26: Business Drivers: Brent Crude Oil
BUSINESS DRIVERS 25 Brent crude oil
Slide 27: Business Drivers: SA Manufacturing Production Volumes
BUSINESS DRIVERS 26 SA manufacturing production volumes
Slide 28: Earnings analysed
V4 04. : ( <7 Earnings analysed 4
Slide 29: Performance Analysed
PERFORMANCE ANALYSED 28 1H20 1H19 % change Profit from Profit from Profit from EBITDA operations HEPS EBITDA operations HEPS EBITDA operations HEPS (Rm) (Rm) (cps) (Rm) (Rm) (cps) (%) (%) (%) Reported 1 111 558 240 1 361 826 365 (18,4) (32,4) (34,2) Restructuring/strategic realignment 92 92 59 156 1
Slide 30: Profit from Operations Analysed
PROFIT FROM OPERATIONS ANALYSED 29 Rm 1H19 1H20 1 200 1 000 454 1 065 156 982 800 445 826 600 92 611 92 558 (108) 69 400 466 381 200 0 1Q19 2Q19 1H19 Restructuring Strategic Underlying 1Q20 2Q20 1H20 Profit on sale Impairments Restructuring Underlying COVID-19 Underlying realignment 1H19 of business
Slide 31: Earnings Analysed
EARNINGS ANALYSED 30 – EBITDA -18,4% to R1 111m HEPS – Profit from operations -32,4% to R558m 1 150 – HEPS -34,2% to 240c 1 045 959 – Trading margin = 5% (’19: 6,9%) 894 818 – RONA of 11,4% (’19: 13,3%) – Tax rate unchanged at 32% 565 458 386 365 293 240 15 16 17 18 19 H1 20 1H20 H1 (cps) 1H FY (cps
Slide 32: COVID-19: Cash Management
COVID-19: CASH MANAGEMENT 31 – Capex = R322m 4 500 95 › R117m for expansion projects 4 000 4 177 85 › R205m for sustenance 576 75 3 500 514 – NWC to revenue of 18,7% (17,8% in ’19) 3 454 65 3 000 3 208 – Net borrowings of R3 722m 55 2 500 – Gearing at 32% (53% in June ’19) 41 45 2 000 36 – Cash inte
Slide 33: Net Debt & Cash Utilisation
NET DEBT & CASH UTILISATION 32 Rm Proceeds from the Net Net cash sale of borrowings Finance generated paper Money Finance at 31 Dec lease 31 Dec '19 from Net interest Working chemicals Acquisition market FX 30 Jun '20 lease '19 liabilities Pre-IFRS 16 operations paid Tax paid capital Net capex busin
Slide 34: Net Debt & Cash Generation (excl. IFRS 16)
NET DEBT & CASH GENERATION (EXCL. IFRS 16) 33 Rm 1Q20 2Q20 Deferred cash flows COVID-19 At 30 June '20 Net cash Money market Net borrowings Dividend Performance with deferred At 31 Dec '19 Net cash utilised FX movements At Q1 '20 generated FX movements At Q2 '20 investments at 30 June '20 declared s
Slide 35: Net Debt Analysis
NET DEBT ANALYSIS 34 PAYMENT PROFILE Rm 2020 2021 2022 2023 2024 Group loan covenants Existing term 1 100 1 100 Net debt to EBITDA: ≤2,5 DMTM auction 360 520 880 – Actual: 1,3 DMTN private placement 500 300 800 Term – ZAR 200 500 700 Net debt to EBITDA breached if Term – US$ 208 243 261 348 1 060 –
Slide 36: Cancellation of Treasury Shares
CANCELLATION OF TREASURY SHARES 35 – AECI subsidiary held 9,755% of listed ordinary shares – Transaction approved and implemented to cancel these treasury shares › No negative impact on shareholders › No additional cost to the Group – All regulatory requirements fulfilled and shares successfully del
Slide 37: Performance by segment
05. Performance by segment
Slide 38: Performance by Segment: Reported
PERFORMANCE BY SEGMENT: REPORTED 37 Segment Revenue EBITDA Profit from ops MINING R5 397m R694m R393m SOLUTIONS 3,5% 12,9% 21,2% WATER & R676m R126m R100m PROCESS 4,4% 70,3% 104,1% PLANT & R2 616m R229m R126m ANIMAL HEALTH 19,5% 21,2% 22,3% FOOD & R563m (R13m) (R31m) BEVERAGE 12,
Slide 39: Mining Solutions
MINING SOLUTIONS good <hemistiy
Slide 40: Mining Solutions: Revenue by Mineral Mined
MINING SOLUTIONS 39 REVENUE BY MINERAL MINED (%) 9 Gold 8 5 25 PGMs 9 22 4 Coal 5 Copper 18 Diamond 16 22 Iron ore 16 Other 20 Outer:1H20 Inner: 1H19 21
Slide 41: Mining Solutions
MINING SOLUTIONS 40 Revenue EBITDA Trading profit Trading margin Trade WC R5 397m R694m R393m 7,3% -3,5% -12,9% -21,2% 19,7% (1H19: 8,9%) Underlying Underlying Underlying (1H19: 18,3%) 1H20: R5 957m 1H20: R1 090m 1H20: R789m Underlying 6,5% 20,9% 30,8% 1H20: 13,2% – Revenue – Two very di
Slide 42: Mining Solutions: COVID-19 Impact 1H20
MINING SOLUTIONS: COVID-19 IMPACT 1H20 41 Rm 1H19 1H20 900 800 700 382 789 600 500 104 603 400 293 49 15 300 200 344 100 206 0 1Q19 2Q19 Strategic realignment Underlying 1H19 1Q20 2Q20 Restructuring COVID-19 impact Underlying 1H20 TP margin 8% 10% 11% 13% 2% 13% – SA: severely affected – SADC countr
Slide 43: Mining Solutions: Mining Explosives
MINING SOLUTIONS 42 MINING EXPLOSIVES Two key SA tenders adjudicated in 1H – First tender › Awarded 100% of tender volumes for 5 years (coal mining) » Value-added products and services – Second tender › Lost bulk commodity product volumes (surface mining), effective August ‘20 » Aggressive pricing f
Slide 44: Mining Solutions: Mining Chemicals
MINING SOLUTIONS 43 MINING CHEMICALS – Very good 1Q but volumes lower in underground mining in 2Q › Slow recovery » At 70%-80% in May and June – Liquid xanthates sales severely affected › Mainly in SA – Full order book for solid xanthates › Improved sales to South America – Good sales of flocculants
Slide 45: Mining Solutions: Outlook
MINING SOLUTIONS 44 OUTLOOK – South Africa – Central Africa › Underground mining remains a concern › Normalised activity expected to ramp up to year-end › More normalised business in 1Q/H21 › Significant tender activity › Closed ANFEX plant at Modderfontein – SADC countries › Rolling out underground
Slide 46: Water & Process
WATER & PROCESS
Slide 47: Water & Process
WATER & PROCESS 46 Revenue EBITDA Trading profit Trading margin Trade WC R676m R676m R126m R126m R100m R100m 14,8% -4,4% 70,3% -4,4% 70,3% 104,1% 104,1% 23,7% 23,7% Underlying 12,4% Underlying Underlying UnderlyingUnderlyingUnderlying (1H19: 6,9%) (1H19: (1H19: 18,4%) 18,4%) 1H20: R709m 1
Slide 48: Water & Process: Earnings Analysed
WATER & PROCESS: EARNINGS ANALYSED 47 Rm 1H19 1H20 140 120 17 124 100 7 101 80 44 52 60 40 56 16 20 33 0 1Q19 2Q19 Realignment Underlying 1H19 1Q20 2Q20 Realignment COVID-19 impact Underlying 1H20 TP margin 10% 4% 14% 17% 13% 18%
Slide 49: Project Purpose: Ecosystem and Focus Areas
PROJECT PURPOSE: ECOSYSTEM AND FOCUS AREAS 48 Objectives – Improve access to drinking water for all – Reduce use of potable water for non-drinking purposes – Improve quality of water/effluent discharged – Drive and enhance environmental and societal benefits Implement or improve – Water re-use and r
Slide 50: Project Purpose: Public Water
PROJECT PURPOSE: PUBLIC WATER 49 KZN DRINKING WATER PROJECT COMMISSIONED JULY 2020 – Private-public partnership – Decentralised model allows for localised solutions – Phase 1 commissioned in ’18 – Supplied 1m litres per day – Phase 2 upgrade commissioned July ‘20 – Supplying 1,5m litres per day (>6
Slide 51: Project Purpose: Public Water
PROJECT PURPOSE: PUBLIC WATER 50 CLEAN WATER SUPPLIED TO OVER 3 000 CHILDREN Phalesane and Tane Primary Schools Containerised plant – Supplying 1 800 children with drinking water daily – 3 x 10 000ℓ tankers supplying 800 families in surrounding area Kekana Primary School – D2 Skid – 900 children Mau
Slide 52: Project Purpose: Public Water
PROJECT PURPOSE: PUBLIC WATER 51 LIMPOPO D2 SKID AND HIPPO ROLLER HAND OVER Making a difference in Ravele Village & Mauluma Primary School Limpopo – Treating borehole water – 72 000ℓ per day provided for 450 people – Particularly relevant during COVID-19 – Significant growth in sales of D2 Skid solu
Slide 53: Project Purpose: Private Sector, AECI Sites
PROJECT PURPOSE: PRIVATE SECTOR, AECI SITES 52 – Target: reduce fresh water consumption by >20% by ‘25 – Modderfontein › Phase 1 – influent potable water reduction › Increase PSE water consumption and optimise operational water reuse › Initial potable water annualised savings of over 400m litres › C
Slide 54: Project Purpose: Opportunities
PROJECT PURPOSE: OPPORTUNITIES 53 >R300m PROJECT FUNNEL Sector Active Public 9 Private 5 Mining 5 TOTAL 19 – Key opportunities being prioritised – Awarded contract – potable water reduction technology at a refinery – Borehole water treatment solutions deployed in Gauteng and Limpopo – Drought relief
Slide 55: Water & Process: Outlook
WATER & PROCESS: OUTLOOK 54 – COVID-19 impact remains a risk as mining and refining sectors return to normalised trading – Realignment project annualised upliftment on track – Working capital reduction – Continuity of supply on new Water Board tenders – Water treatment technologies of the future und
Slide 56: Plant & Animal Health
PLANT & ANIMAL HEALTH good <hemistiy
Slide 57: Plant & Animal Health
PLANT & ANIMAL HEALTH 56 Revenue EBITDA Trading profit Trading margin Trade WC R2 616m R229m R126m 4,8% 19,5% 21,2% R126m 22,3% 4,8% R2 616m -13,5% R229m (1H19: 4,7%) 14,5% 14,5% 19,5% 21,2% Underlying Underlying 22,3% Underlying (1H19: 4,7%) Underlying (1H19: (1H19: 18,2%) 18,2%) 1H20:
Slide 58: Plant & Animal Health: Schirm
PLANT & ANIMAL HEALTH 57 Schirm – Further improvement in safety performance – Cost reduction projects executed at all German facilities – Sugar beet project completed › Registration process concluded by customer › Production on new synthesis plant fully ramped up to meet customer demand › Leased Mag
Slide 59: Schirm: Outlook
SCHIRM: OUTLOOK 58 – Capex › Suspension concentrate plant (herbicides) in US to be completed in time for ’20/21 agricultural season › Blender at Bar-Ebenhausen installed and being ramped up – Ramp-up of new blue chip contract at Wolfenbüttel – Automotive chemical additives market expected to remain
Slide 60: Plant & Animal Health: Nulandis
PLANT & ANIMAL HEALTH 59 Nulandis – Minimal COVID-19 impact › Essential service in SA – 2H19 momentum maintained – Local sales of in-house products +18% – New agents appointed to grow SA footprint – Strong growth in exports – Cost savings initiative completed, including some restructuring › Annualis
Slide 61: Nulandis: In-house Products
NULANDIS: IN-HOUSE PRODUCTS 60 No Alexin Xanbac No Xanbac Alexin Alexin Alexin Untreated control Farm standard Biocult WS Soil pathogen control Root development Alexin Stress management No Alexin Alexin Frost control
Slide 62: Nulandis: New Products & Services (AECI.GO)
NULANDIS: NEW PRODUCTS & SERVICES (AECI.GO) 61 IoT APPLIED: CONNECTED VALUE CHAIN Farmers app KHULA Khula & AECI facilitating Management access to platform E-commerce resources, information and profitable market offtake for Agri- Products emerging farmers Agri-Services & Agri -Tech + 200k emerging f
Slide 63: Nulandis: Outlook
NULANDIS: OUTLOOK 62 – Positive outlook to year-end › Good winter rainfall in Western Cape › Benefits of growing agent footprint in SA › Sustained focus on in-house products and technology › Export drive › SupPlant deployed on 5 farms – another 5 targeted for 2H20 › Khula app – targeting 200 000 eme
Slide 64: Food & Beverage
80O FOOD EVERAGE good
Slide 65: Food & Beverage
FOOD & BEVERAGE 64 Revenue EBITDA Trading profit Trading margin Trade WC R563m -R13m -R31m -5,5% -12,5% -127,1% Change: -214,8% (1H19: 4,2%) 20,7% Underlying Underlying Underlying Underlying (1H19: 23,4%) 1H20: R648m 1H20: R49m 1H20: R31m 1H20: 4,8% 0,7% 2,5% 15,6% – Severe COVID-19 impa
Slide 66: Chemicals
CHEMICALS
Slide 67: Chemicals
CHEMICALS 66 Revenue EBITDA Trading profit Trading margin Trade WC R1 969m R137m R53m 2,7% -30,5% -57,8% Change: -77,4% (1H19: 8,3%) 14,3% Underlying Underlying Underlying Underlying (1H19: 12,9%) 1H20: R2 553m 1H20: R245m 1H20: R161m 1H20: 6,3% -9,9% -24,5% -31,1% – Disappointing perfor
Slide 68: Much Asphalt
MUCH ASPHALT 67 Disappointing performance y-o-y Outlook – Delays in SANRAL and major project work – Initiated cost saving and realignment project - – COVID-19 effects significant in 2Q – 100% R30m annualised benefit expected closure in April – Work in Namibia to commence in August – Bitumen supply t
Slide 69: Portfolio Management & Restructuring
PORTFOLIO MANAGEMENT & RESTRUCTURING 68 – Food & Beverage incorporated in AECI Chemicals › 2 businesses consolidated into 1 – 4 Chemical businesses consolidated into 2 – s189 process completed – 30% reduction in employee complement – R64m restructuring costs incurred in 1H › To be recovered in 2H20
Slide 70: AECI Chemicals: Pillar Breakdown
AECI CHEMICALS 69 PILLAR BREAKDOWN
Slide 71: New structure & branding
06. New structure & branding
Slide 72: AECI Brand Architecture
AECI BRAND ARCHITECTURE 71 PILLARS
Slide 73: AECI Mining: Pillar Breakdown
AECI MINING 72 PILLAR BREAKDOWN
Slide 74: AECI Water: Pillar Breakdown
AECI WATER 73 PILLAR BREAKDOWN
Slide 75: AECI Agri Health: Pillar Breakdown
AECI AGRI HEALTH 74 PILLAR BREAKDOWN
Slide 76: AECI Chemicals: Pillar Breakdown
AECI CHEMICALS 75 PILLAR BREAKDOWN
Slide 77: AECI Property Services: Pillar Breakdown
AECI PROPERTY SERVICES 76 PILLAR BREAKDOWN
Slide 78: Sustainability
Technology . Energy efficiency _ Safety Responsible mining Air Skills development and training Controls Corporate social investment Governance Waste management Clean ° @ = Equality ee’ Zero harm Diversity Accountability Social development goals hiss One AECISrouth or a better world Employment equity
Slide 79: Outlook & focus
07. Outlook & focus
Slide 80: Outlook: Environment
OUTLOOK: ENVIRONMENT 80 CHANGE RISK/OUTLOOK SINCE FEB ’20 GLOBAL Uncertainty created by shifts in world trading relationships Increased Effects of COVID-19 Increased exponentially Effects of extreme weather events Unchanged Socio-political instability on the continent Unchanged Mining sector outlook
Slide 81: Focus: Progress Against 2020 Objectives
FOCUS: PROGRESS AGAINST 2020 OBJECTIVES 81 Improve safety performance further and continue implementing Zero Harm strategy Progress further the achievement of the investment case objectives of Schirm and Much Asphalt Ensure delivery of expected annualised benefits from strategic realignment projects
Slide 82: Focus: Progress Against Objectives for 2020 Cont.
FOCUS: PROGRESS AGAINST OBJECTIVES FOR 2020 CONT. 82 Continue to leverage existing geographic footprint Continue to explore and pursue growth opportunities, incl. acquisitions and opportunities identified through AECI’s Growth and Innovation office Develop Water and Food security strategy further Di
Slide 83: Thank You
OA=CI THANK YOU