Aeci Ltd · JSE:AFE
Aeci — Standard Bank Africa Investors' Conference 2014
47 slides from Aeci's conference presentation, Jun 25, 2014
Slide 1: The AECI Group: An Introduction
THE AECI GROUP AN INTRODUCTION Standard Bank Africa Investors' Conference London, 25 and 26 June 2014
Slide 2: Disclaimer
DISCLAIMER 1 Forward looking statements This presentation has been prepared by AECI Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used
Slide 3: Presentation Structure
PRESENTATION STRUCTURE 2 › Overview › Brief history › AECI today › Portfolio and strategies ◦ AEL Mining Services: Africa’s leading explosives supplier ◦ Specialty chemicals cluster: 14 value-adding specialty chemicals and services businesses ◦ Property: Modderfontein bulk sale completed March ’14;
Slide 4: Overview
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Slide 5: Executive Directors
EXECUTIVE DIRECTORS 4 Mark Dytor Mark Kathan Chief Executive CFO Appointed: 1 March 2013 Appointed: 1 September 2008 In addition to his responsibilities as CE, Mark Mark is responsible for the Group’s finance and has retained a portfolio of Chairmanships at treasury functions. He also oversees the G
Slide 6: A SA-based explosives and specialty chemicals company
A SA-BASED EXPLOSIVES AND SPECIALTY CHEMICALS COMPANY 5 Focused on regional growth internationally and in Africa › Explosives and specialty chemicals › Specialty product and services Group of 16 companies › Value-adding solutions through science, technology, industry knowledge, service excellence, c
Slide 7: 2013 Revenue Split
2013 REVENUE SPLIT IN THIS CONTEXT 6 ▃▃▃ 45% Explosives ▃▃▃ 16% Mining chemicals ▃▃▃ 12% Agriculture ▃▃▃ 23% Manufacturing ▃▃▃ 4% Property
Slide 8: Group Mining Revenue in 2013
GROUP MINING REVENUE IN 2013 7 Revenue by mineral mined ▃▃▃ 23% Platinum ▃▃▃ 21% Copper, cobalt, chrome, nickel ▃▃▃ 16% Gold ▃▃▃ 11% Diamond ▃▃▃ 8% Coal ▃▃▃ 4% Uranium ▃▃▃ 4% Iron ore ▃▃▃ 1% Phosphate ▃▃▃ 12% Other
Slide 9: 2013 Specialty Chemicals Revenue
2013 SPECIALTY CHEMICALS REVENUE 8 Revenue by market sector ▃▃▃ 31% Mining ▃▃▃ 23% Agriculture 1 ▃▃▃ 2 8% Food and beverage 1 ▃▃▃ 5% Chemical industry ▃▃▃ 5% Oil and refining 1 1 1 ▃▃▃ 5% Detergents ▃▃▃ 4% Textiles and leather ▃▃▃ 4% Toiletries, cosmetics 1% Steel and metals and pharmaceuticals 1% C
Slide 10: Share Price
SHARE PRICE Xe) SA cents 60 000 15 000 eatron 13 000 BE 11000 » & 40000 8 g 9000 § = 30000 3 i 7000 ° 20 000 5 000 10 000 3 000 Jan 08 Jan09 Jan10 Jani Jan 12 Jan13 Jan 14 Jun 14 M§ AECI — JSE Industrial Index OA=CI good chemistry
Slide 11: Brief History
2 BRIEF HISTORY
Slide 12: Brief History
BRIEF HISTORY 11 OA=CI good chemistry
Slide 13: Brief History
BRIEF HISTORY 12 › Roots to 1894 – a Nobel dynamite company at Modderfontein, near Johannesburg › Registered as a company in 1924 and listed since 1966; majority ownership/control by ICI and Anglo American for most of its existence › Evolved into typical chemical conglomerate and then restructured s
Slide 14: AECI Today
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Slide 15: Current Group Structure
CURRENT GROUP STRUCTURE 14 Freedom supported by a framework
Slide 16: Freedom Supported by a Framework
FREEDOM SUPPORTED BY A FRAMEWORK 15 At the heart of the corporate strategy
Slide 17: Group Values
GROUP VALUES oy BIGGER = VALUES OVA GAGE We will tackle the difficult challenges in our businesses and will offer customers innovative technical and service solutions. We are passionate about the innovative creation of value for our customers, our shareholders and our people. We acknowledge that our
Slide 18: Governance
BOARD 2 EXECUTIVE DIRECTORS 8 INDEPENDENT NON-EXECUTIVE DIRECTORS, INCLUDING CHAIRMAN * cy cs 3 AUDIT RISK SOCIAL REMUNERATION COMMITTEE COMMITTEE AND ETHICS COMMITTEE COMMITTEE * CHAIRED BY NON-EXECUTIVE DIRECTOR OA=Cl good chemistry
Slide 19: External Performance Drivers: Currency
EXTERNAL PERFORMANCE DRIVERS: CURRENCY 18 ZAR/US$ exchange rate Peak = R11,30 Jan – April ’14 = R10,77 Open ’14 = R10,50 2013 Average = R9,63 Jan – April ’13 = R8,93 Open ’13 = R8,49 2012 Average = R8,20 Source: I Net Bridge
Slide 20: External Performance Drivers: Currency Cont.
EXTERNAL PERFORMANCE DRIVERS: CURRENCY CONT. 19 Effects of the exchange rate on performance › ZAR/US$ depreciated by 21% yt-April ’14 vs yt-April ’13 › 33% of Group revenue is predominantly US$ denominated ◦ Forex benefits being realised as the Group moves out of SA › Rand weakness has boosted reven
Slide 21: External Performance Drivers: Business Environment
EXTERNAL PERFORMANCE DRIVERS: BUSINESS ENVIRONMENT 20 SA mining volumes Jan ’09 – Mar ’14 Base: 2010 = 100 Source: StatsSA y-o-y = -4,7%
Slide 22: External Performance Drivers: Business Environment Cont.
EXTERNAL PERFORMANCE DRIVERS: BUSINESS ENVIRONMENT CONT. 21 Effects of mining environment › In SA ◦ Increase in demand from opencast mining ◦ Longest-ever strike (152 days) has affected stability in the sector » Officially ended 24 June ’14 ◦ Decline in demand from narrow reef mining » Lower gold an
Slide 23: External Performance Drivers: Business Environment Cont.
EXTERNAL PERFORMANCE DRIVERS: BUSINESS ENVIRONMENT CONT. 22 SA manufacturing volumes Jan ’06 – Mar ’14 Base: 2010 = 100 Source: StatsSA y-o-y = 0,7%
Slide 24: External Performance Drivers: Business Environment Cont.
EXTERNAL PERFORMANCE DRIVERS: BUSINESS ENVIRONMENT CONT. 23 SA manufacturing sector growth subdued, still below GDP growth › Weak demand impacts margin and volume growth › No significant improvement in exports by customers › Customers rationalising and reducing production capacity due to cost compet
Slide 25: Safety, Health and Environment
SAFETY, HEALTH AND ENVIRONMENT 24 Performance and management › Best-ever TRIR of 0,52 in ’13 (0,53 in ’12) › Group-wide roll-out of Process Safety Management practices in process › Included in JSE’s Socially Responsible Investment Index for fifth successive year › Participate in global Carbon and Wa
Slide 26: Financial Performance History
FINANCIAL PERFORMANCE HISTORY 25 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 Revenue R10,2bn R8,5bn R12,9bn R10,7bn R11,6bn R13,4bn R13,8bn R15,9bn Profit from ops R1 102m R807m R1 035m R767m R1 062m R1 316m R1 197m R1 398m RONA (%) 24,8 16,5 16,9 12,6 15,9 18,1 16,7 17,3 Employees 7 700 7 120 6 450 6 330 6 800
Slide 27: Performance Summary for 2013
PERFORMANCE SUMMARY FOR 2013 26 › Revenue +15% to R15,9bn ◦ Foreign revenue of R5 224m = 33% of total (20% increase in ’13) › Headline earnings +57% to R885m › Profit from operations +17% to R1 398m › EPS +63% to 845c, HEPS +57% to 791c › 8,8% trading margin (8,7% in ’12) › Final cash dividend of 21
Slide 28: Performance Summary for 2013
PERFORMANCE SUMMARY FOR 2013 27 Driven by › Improved performance from AEL notwithstanding R84m retrenchment charge › Excellent performances from Senmin and property segment › Foreign exchange gains owing to the weakening of the rand › Non-recurrence of the R138m (123cps) non-cash IFRS 2 charge assoc
Slide 29: Performance Summary for 2013
PERFORMANCE SUMMARY FOR 2013 28 SA manufacturing sector growth subdued, below GDP › Weak demand impacted margin and volume growth › No significant improvement in exports by customers › Customers rationalising and reducing production capacity due to cost competitiveness factors › No major investment
Slide 30: Profit from Operations by Segment (Rm)
PROFIT FROM OPERATIONS BY SEGMENT (RM) 29 950 850 750 650 550 450 350 250 150 50 Corporate (50) Explosives Specialty chemicals Property (150) (250) (350)
Slide 31: Strategy and Portfolio
30 4 STRATEGY AND PORTFOLIO
Slide 32: Strategy
STRATEGY 31 SA-based explosives and specialty chemicals company with regional and international businesses in Africa and SE Asia. Other markets of interest are Australia and Latam Strategy › Focus on: ◦ International mining solutions (explosives and chemicals) ◦ Water solutions, agriculture and food
Slide 33: Mining Solutions: International Footprint
MINING SOLUTIONS: INTERNATIONAL FOOTPRINT 32
Slide 34: Explosives
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Slide 35: Mining Chemicals
MINING CHEMICALS 34 OA=CI good chemistry
Slide 36: Strategic Delivery: Mining Solutions
STRATEGIC DELIVERY: MINING SOLUTIONS 35 › Mining solutions ◦ AEL and Senmin negatively affected by platinum industry strikes ◦ Expansion outside SA, across commodities and mining methods has de-risked AEL ◦ New explosives plants in Burkina Faso, DRC and Egypt fully operational ◦ BBRI ANS plant (Indo
Slide 37: Growth Pillar: Mining Solutions Cont.
GROWTH PILLAR: MINING SOLUTIONS CONT. 36 › International (Africa, Indonesia, Latam, Australia and China?) › Mining explosives and chemicals business : AEL, Senmin and Lake’s Experse ◦ Substantial market size ◦ Core businesses ◦ Customer service and value-add model ◦ In-house IP and R&D ◦ Backward in
Slide 38: AEL Mining Services
AEL MINING SERVICES 37 › Africa’s leading supplier of explosives, initiating systems and value-adding services › Bulk explosives plants – Africa and Indonesia › Presence in 23 countries › Throughout African continent › Expanding into selected developing markets › DetNet: global JV in electronic deto
Slide 39: AEL Cont.: Revenue Split
AEL CONT. 38 Revenue split ▃▃▃ SA Underground › Portfolio reflects AEL’s growth beyond ▃▃▃ SA Surface SA and the narrow reef underground ▃▃▃ Outside SA gold and platinum mining sectors, in line with strategy. 100% 32 37 41 43 47 49 51 80% 60% 33 36 31 33 33 34 33 40% 35 20% 27 28 25 20 17 16 0% 07 0
Slide 40: Specialty Chemicals: African Footprint
SPECIALTY CHEMICALS: AFRICAN FOOTPRINT 39
Slide 41: Strategic Delivery
STRATEGIC DELIVERY 40 › Water solutions ◦ Benefits of GE acquisition emerging ◦ Clariant acquisition approved by Competition Tribunal (effective 1 July ’14) ◦ African footprint will be enhanced ◦ Largest industrial, effluent and municipal water treatment chemical company in Africa › Agriculture ◦ SA
Slide 42: Strategic Delivery: Specialty Chemicals Portfolio Management
STRATEGIC DELIVERY 41 Specialty chemicals portfolio management: ’13 and ’14 ytd › Lake International split into Lake Foods and Lake Specialties › Infigro moved to Lake Foods › Industrial Urethanes moved to Lake Specialties › SANS included in specialty chemicals cluster; being prepared for possible d
Slide 43: Specialty Chemicals Cluster Businesses
SPECIALTY CHEMICALS CLUSTER 42 14 businesses Akulu Marchon Lake Foods Chemfit Lake Specialties Chemical Initiatives Nulandis Resinkem ChemSystems Senmin Crest Chemicals SANS Technical Fibers ImproChem Specialty Minerals SA Industrial Oleochemical Products
Slide 44: Outlook and Underlying Growth
43 5 OUTLOOK AND UNDERLYING GROWTH
Slide 45: Outlook
OUTLOOK 44 › Mining in Africa is expected to be buoyant › Ramp-up of BBRI AN plant bodes well for the Indonesian business › Promising growth prospects for the SA iron ore and coal sectors › AECI is well placed to enter new countries in its markets of interest › Outlook for global economy and commodi
Slide 46: Deliverables
DELIVERABLES 45 › Expand AECI’s geographical footprint in Africa as well as in Australia and Latam › Drive the Group’s holistic approach to its mining solutions strategy › Ramp up BBRI AN plant to capacity › Maintain focus on improving AEL’s performance to achieve >10% operating margin in ’15 › Cont
Slide 47: Thank You
THANK YOU
AECI — Standard Bank Africa Investors' Conference 2014 on 6ix