Slide 1: A year of transition: Results Presentation
A year of transition RESULTS PRESENTATION FOR THE H A L F YEAR E N D E D 30 J U N E 2024 We Are One AECI, for a Better World
Slide 2: Cautionary statement
Cautionary statement This document has been prepared and issued by and is the sole responsibility of the management of AECI Ltd (the Company) and its subsidiaries (the Group). This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer
Slide 3: Welcome: 2024, a year of transition
Welcome AECI half year 2024 results presentation 2024, a year of transition We Are One AECI, for a Better World
Slide 4: Presentation overview
Presentation overview Strategy Group Performance Group Financial U O Outlook Update Overview Performance We Are One AECI, for a Better World
Slide 5: Strategy Update
Strategy Update
Slide 6: Successful commencement of strategy execution
Successful commencement of strategy execution Double profitability of the core business by 2026 Based on 2022 FY results ATTAIN AMBITION Attain a global market position in Mining of #3 by 2030 a global market position of A high-performance culture underpinned Optimise Drive operational Deliver step
Slide 7: Unlocking value and on track to deliver 2026 targets
Unlocking value and on track to deliver 2026 targets Groundwork is done, we are in implementation mode ▪ People and culture ▪ In progress ▪ Optimise portfolio ▪ On track ▪ Drive excellence ▪ R400m EBITDA run rate achieved STRATEGIC PILLARS ▪ Growth ▪ R800m defined growth projects ▪ Capital allocatio
Slide 8: Our ambition, sustainable value creation
Our ambition, sustainable value creation Reconfirming our goals and where we are after six months DOUBLE ATTAIN profitability a global market by 2026 position of 2022 base TRANSFORMATION PROJECT TIMELINE FULL PROFIT AND LOSS BENEFIT FROM 36 MONTHS CURRENT TRANSFORMATION PROGRAM 2024 2025 2026 2027 2
Slide 9: Value unlock on track to deliver 2026 target
Value unlock on track to deliver 2026 target Run-rate on track, first financial benefits delivered We Are One AECI, for a Better World
Slide 10: First divestment delivered; rest within 12–18 months
First divestment delivered Rest of divestments delivered within 12–18 months | expected proceeds of R3bn – R4bn DELIVERY TIMELINE PROGRESS ON DIVESTMENTS Animal Announced Health Nov 2023 EXPECTED SIGNING Q3 2024 EBITDA disposal of R215m (H1 2024) Started Divestment cost 7-8% of transaction value Feb
Slide 11: AECI Core Business
AECI Core Business On track and delivering globalisation strategy Bulk Initiating Mining Digital Explosives Systems Chemicals Solutions SERVICE OFFERING REGIONS Africa APAC Latin America Europe North America DEFEND #1 GROW TO #3 RAMPING UP ENTERED PREPARING We Are One AECI, for a Better World
Slide 12: Group Performance Overview
Group Performance Overview
Slide 13: Successful interventions delivering benefits
Successful interventions delivering benefits Occupational Fatalities ▼ illnesses H1 2024: 0 H1 2024: 1 H1 2023: 2 H1 2023: 1 Life altering Process Safety Total injuries Incident Rate (PSTIR) ▲ H1 2024: 1 H1 2024: 0.62 H1 2023: 1 H1 2023: 0.60 Total Recordable Moderate environmental Injury Rate (TRIR
Slide 14: ESG: Progressive year towards achieving 2025 goals
ESG: Progressive year towards achieving 2025 goals Potable water – consumption ▼ COշ footprint – scope 1 and 2 ▲ 219k H1 2024: 794km³ H1 2024: tCOշe 210k (8%) H1 2023: 862km³ 4% H1 2023: tCOշe 442k Target: 1 614km³ Target: tCOշe Water discharge – sea or sewer ▼ Gender equality – females H1 2024: 289
Slide 15: AECI Mining Performance
AECI Mining Performance We Are One AECI, for a Better World
Slide 16: The new AECI Mining EVP
The new AECI Mining EVP Attracting global talent ▪ Joining from Orica, where he was the VP Asia ▪ Bachelor of Engineering (Mining) ▪ Over 25 years global mining sector experience ▪ Expertise includes strategic planning, project management, and leadership in the drill and blast sector ▪ Start date 16
Slide 17: Diverse commodity and geographic portfolio creates resilience
AECI’s diverse commodity and geographic portfolio creates resilience Mining industry market Global commodity prices Our commodity portfolio year-on-year June 2024 YTD June 2024 June 2024 Global 6% Gold 19% Asia Pacific 6% Copper 14% Africa 5% PGMs (5%) Uranium 2% Other South Africa (9%) Coal (23%) P
Slide 18: Ammonia supply chain strengthened
Ammonia supply chain strengthened Long term strategy in place and being implemented Ammonia supply security in South Africa AMMONIA FOB PRICES – ACTUAL AND FORECAST (US$/T) ▪ Ramping up ▪ Richards Bay rail transport ▪ Inland rail and road ▪ Long-term supply alternatives being explored – internationa
Slide 19: AECI Mining operations update
AECI Mining operations update Delivering asset health Statutory shutdowns ▪ 2023 statutory shutdown deferred to 2024 AECI Mining ▪ Maintenance aligned with traditionally softer first half ▪ Statutory shutdowns resulted in: 2023 2024 0 4 ▪ Lower plant recovery ▪ ANS buy-ins and higher cost of goods s
Slide 20: Delivering on our globalisation strategy
Delivering on our globalisation strategy Europe APAC Growth LATAM Wolfenbüttel Lihir Growth ▪ Assets repurposed ▪ Plant built in SA and shipped, ▪ Brazil: acquired 2nd business, ▪ Access new markets for on the ground market expansion mining chemicals ▪ In-country delays – civils ▪ Chile: plant on tr
Slide 21: Delivering on our globalisation strategy
Delivering on our globalisation strategy SA Export Growth Sustainability Digitalisation Specialty Chemicals Green Ammonia Repurposing of Chemicals ▪ Execution of long-term ▪ Extend service offering into assets towards Mining ammonia supply strategy digital Chemicals ▪ NDA signed ▪ Use big data to dr
Slide 22: AECI Mining business performance
AECI Mining business performance As reported Revenue ▼ EBITDA ▼ Free cashflow ▼ ROIC % ▼ H1 2024: R9 376m H1 2024: R1 172m H1 2024: R80m H1 2024: 20.8% (6%) (12%) (84%) (1.8pt) H1 2023: R10 004m H1 2023: R1 338m H1 2023: R499m H1 2023: 22.6% Profit from Working Working ops ▼ EBITDA % ▼ capital ▼ cap
Slide 23: AECI Mining business performance (normalised)
AECI Mining business performance Normalised for R204m investment spend, H1-2024 vs. H1-2023 EBITDA (normalised) ▼ EBITDA % (normalised) ▲ Second half EBITDA expected to be higher than H2 2023 H1 2024: R1 376m H1 2024: 14.7% ▪ New contract extensions in Asia Pacific (2%) 0.7pt H1 2023: R1 399m H1 202
Slide 24: Continued international growth of AECI Mining
Continued international growth of AECI Mining H1 BULK EXPLOSIVES SALES GROWTH H1-2024 Highlights CAGR (South Africa) 2% ▪ Continued growth outside SA, especially in the DRC CAGR (International) 7% and Indonesia ▪ Market share gains in Asia Pacific following new contracts (+35% growth) ▪ Reducing exp
Slide 25: AECI Chemicals and Managed Businesses Performance
AECI Chemicals AECI Managed Businesses Performance We Are One AECI, for a Better World
Slide 26: AECI Chemicals
AECI Chemicals Continued cash delivery Revenue ▼ EBITDA ▲ Free cashflow ▼ ROIC % ▲ H1 2024: R4 363m H1 2024: R467m H1 2024: R98m H1 2024: 17.1% (4%) 7% (31%) 1.0pt H1 2023: R4 555m H1 2023: R436m H1 2023: R142m H1 2023: 16.1% Profit from Working Working ops ▲ EBITDA % ▲ capital ▼ capital % H1 2024:
Slide 27: AECI Managed Business
AECI Managed Business Preparing for divestment Revenue ▼ EBITDA ▲ Free cashflow ▲ ROIC % ▲ H1 2024: R3 731m H1 2024: R215m H1 2024: (R5m) H1 2024: (0.7%) (2%) >100% 87% 2.0pt H1 2023: R3 800m H1 2023: R82m H1 2023: (R37m) H1 2023: (2.7%) Profit from Working Working ops ▲ EBITDA % ▲ capital ▲ capital
Slide 28: Group Financial Performance
Group Financial Performance We Are One AECI, for a Better World
Slide 29: Profit performance reflects strategy execution investment spend
Profit performance reflects strategy execution investment spend As reported ▪ Revenue subdued due to lower commodity prices and ▪ Net finance costs increased due to interest of R35 million paid as volumes in South Africa part of a transfer pricing audit assessment ▪ EBITDA margin of 8% (H1 2023: 10%
Slide 30: EBITDA reconciliation
EBITDA reconciliation Normalisation of R654 million spend H1 2024 H1 2023 119 2 051 82 28 2 044 106 85 255 1 826 204 1 390 Margin Margin Margin Margin 8% 12% 10% 11% Reported Mining margin Transformation M&A cost Divestment Severence cost Schirm turnaround Normalised Reported EST cost Schirm Normali
Slide 31: Solid underlying operational performance
Solid underlying operational performance ▪ Normalised EBITDA is in line with the prior year despite subdued revenues ▪ Margins maintained ▪ Normalised HEPS and EPS impacted by the higher tax rate Normalised EBITDA Normalised Profit Normalised EBITDA % ▲ from operations ▼ H1 2024: R2 044m H1 2024: 12
Slide 32: Tax rate reconciliation
Tax rate reconciliation Non-deductible expenses and foreign withholding taxes impact tax rate Driven by lower profitability Foreign withholding taxes Non-deductible expenses ▪ Increase in dividends received from foreign subsidiaries ▪ Interest paid on transfer pricing audit assessment – (2.1%) ▪ Div
Slide 33: Continued focus on balance sheet strength
Continued focus on balance sheet strength Prudent capital allocation in support of strategy ▪ Working capital slightly elevated at 18%, expect to normalise ▪ Free cashflow reflects EBITDA performance and increased within target range of 14-16% for full year working capital ▪ Gearing down to 41%, mar
Slide 34: Working capital management continues to be a key focus area
Working capital management continues to be a key focus area Mining segment delivers within target range ▪ Group working capital outside target range of 14% - 16%, expect ▪ Decrease in accounts payable mainly due to Agri FY23 peak to be within range for full year supplier payments (supplier terms 90
Slide 35: Gearing % set to be within guided range for the year
Gearing % set to be within guided range for the year Well within covenants with sufficient headroom ▪ Net debt increases by R758 million ▪ Expect to end full year within the target range of 20% - 40% ▪ Undrawn bank facilities of R2 billion available (2023: R3.7 billion), in addition to the cash on h
Slide 36: Capital expenditure supports improved efficiencies and growth
Capital expenditure supports improved efficiencies and growth H1 maintenance capex spend, includes five statutory shutdowns ▪ Maintenance capital expenditure spend within target range of 0.8x –1.2x of depreciation ▪ AECI Mining spent R407 million capex of which R255 million was on maintenance ▪ We c
Slide 37: Interim dividend decision guided by our policy
Interim dividend decision guided by our policy Commitment made in terms of framework Disciplined capital allocation framework ▪ Focus on maintenance capex in the period Free Cash Flow (FCF) ▪ Build and maintain balance sheet strength a priority ▪ We are committed to prudent capital management 1 2 ▪
Slide 38: Balance sheet optimisation remains a strategic priority
Balance sheet optimisation remains a strategic priority BSO delivering on planned initiatives Improved cash People conversion cycle Realised By 6 days, Dedicated workstream R70m H1 2023 on H1 2024 in place Systems Working capital control Attracted new skills tower Data scientist Governance Reorganis
Slide 39: Outlook
Outlook We Are One AECI, for a Better World
Slide 40: Committed on delivering strategic targets
Committed on delivering strategic targets Group outlook Half Year Performance Full Year Outlook Targets Category KPI 2024 2024 2026 EBITDA (Rm) 1 390 In line with 2023 5 600 to 6 300 EBITDA margin (%) 8% In line with 2023 13% to 15% Operational Free Cash Flow conversion 41% In line with H1 2024 31%
Slide 41: Thank you
Thank you We Are One AECI, for a Better World
Slide 42: Appendix
Appendix We Are One AECI, for a Better World
Slide 43: Summarised statement of profit or loss
Summarised statement of profit or loss ZAR million H1 2024 H1 2023 Change Revenue 17 580 18 404 (824) Net operating costs (16 762) (17 135) 373 EBIT 818 1 269 (451) EBIT % 5% 7% (2pts) Net finance costs (292) (274) (18) Share of profit of equity-accounted investees, net of taxation - 20 (20) Profit
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Intentionally left blank We Are One AECI, for a Better World