Slide 1: Financial Results Presentation for the Year Ended 31 December 2016
FINANCIAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2016 28 FEBRUARY AND 1 MARCH 2017
Slide 2: Agenda
1 PERFORMANCE SUMMARY 4 SEGMENTAL PERFORMANCE 2 BUSINESS ENVIRONMENT 5 STRATEGY 3 RESULTS ANALYSED 6 CONCLUSION
Slide 3: Performance Summary
1 PERFORMANCE SUMMARY
Slide 4: Performance Summary
FINAL ORDINARY CASH DIVIDEND OF 300cps DECLARED (+15%) Total cash dividend for the year = 435cps (+13%) A=Cr good chemistry HEPS -9% TO 818c UNDERLYING HEPS +29% TO 920c DISAPPOINTMENTS Limited revenue growth > +1% to R18 586m R82m impairments No acquisitions concluded
Slide 5: Safety: World-Class Performance
4 SAFETY: WORLD-CLASS PERFORMANCE NO FATALITIES IN ’16
Slide 6: Business Environment
2 BUSINESS ENVIRONMENT OA=CI good chemistry
Slide 7: Business Environment
6 BUSINESS ENVIRONMENT › Global » Growth subdued overall » Commodity prices under pressure for most of the year ~ Negative effect on mining sector performance › Overall volumes declined › Mining houses still cautious – pursuing cost savings and revising mining plans ~ Some price recovery in 4Q16, in
Slide 8: Business Environment Cont.
7 BUSINESS ENVIRONMENT CONT. › Rest of Africa » Mining remains a key activity » Political and socio-economic challenges » Hard currency constraints » Extreme weather events » Revival of regulatory consciousness › South Africa » GDP growth of 0,4% » CPI at 6,8% » Mining volumes declined significantly
Slide 9: Historical Price Performance – Gold, Platinum and Copper
8 BUSINESS ENVIRONMENT HISTORICAL PRICE PERFORMANCE – GOLD, PLATINUM AND COPPER Source: SNL
Slide 10: Historical Price Performance – Coal and Iron Ore
9 BUSINESS ENVIRONMENT HISTORICAL PRICE PERFORMANCE – COAL AND IRON ORE Source: SNL
Slide 11: Brent Crude Oil
10 BUSINESS ENVIRONMENT BRENT CRUDE OIL Source: INET Bridge
Slide 12: Ammonia
11 BUSINESS ENVIRONMENT AMMONIA
Slide 13: ZAR/US$ Exchange Rate
12 BUSINESS ENVIRONMENT ZAR/US$ EXCHANGE RATE Source: INET Bridge
Slide 14: SA Mining Volumes
13 BUSINESS ENVIRONMENT SA MINING VOLUMES Source: Stats SA
Slide 15: SA Manufacturing Volumes
14 BUSINESS ENVIRONMENT SA MANUFACTURING VOLUMES Source: Stats SA
Slide 16: Results Analysed
3 RESULTS ANALYSED
Slide 17: Earnings Analysed
16 EARNINGS ANALYSED › Profit from operations -22% to R1 335m › EBITDA -14% to R1 961m › HEPS -9% to 818c › Trading margin = 7,2% (’15: 9,2%) › Tax rate 29% (’15: 31%) » Foreign withholding tax › GCR rating of “A” with stable outlook UNDERLYING › Profit from operations +9% to R1 566m › EBITDA +8,4%
Slide 18: Group Underlying Performance
17 GROUP UNDERLYING PERFORMANCE
Slide 19: Cash Generation and Utilisation
18 CASH GENERATION AND UTILISATION › Cash of R1 918m generated › Capex controlled to below depreciation and amortisation » R502m incl. R183m for expansion projects › Trade WC to revenue of 12,7% (17,2% in ’15) › Net borrowings of R297m › R1,0bn repatriated via dividends › Gearing at 3% vs 17% in Jun
Slide 20: Segmental Performance
4 SEGMENTAL PERFORMANCE
Slide 21: Profit from Operations by Segment (Rm)
20 PROFIT FROM OPERATIONS BY SEGMENT (Rm)
Slide 22: Analysis of Corporate Costs
21 ANALYSIS OF CORPORATE COSTS
Slide 23: Property
22 PROPERTY › Benefits of lower cost base › Shanghai Zendai management contract extended, at Modderfontein › Good efficiencies in Umbogintwini services business › Loss of major site customer at Umbogintwini late in ’16 » Strategy in place to replace lost volumes
Slide 24: Property: Umbogintwini
23 PROPERTY: UMBOGINTWINI
Slide 25: Specialty Chemicals Cluster
24 SPECIALTY CHEMICALS CLUSTER
Slide 26: Specialty Chemicals: Revenue by Market Sector (%)
25 SPECIALTY CHEMICALS: R10 785m REVENUE BY MARKET SECTOR (%)
Slide 27: Specialty Chemicals
26 SPECIALTY CHEMICALS OA=CI PERFORMANCE Revenue R10 785m +9,1% Profit from operations R1 214m +8,3% Trading margin 11,3% (15: 11,396) Trade WE 15% (15: 17%) UNDERLYING PERFORMANCE December December 2016 2015 Profit from Profit from operations operations As reported R1 214m R1 121m Property sales -
Slide 28: Specialty Chemicals
27 SPECIALTY CHEMICALS › Very good performance in context of poor SA manufacturing and mining environment, drought, oil price, exchange rates » Robustness of portfolio diversity » Service-driven, value-add model remains relevant » Effective margin management » Benefits of acquisitions in ’15 » Addit
Slide 29: Specialty Chemicals Cont.
28 SPECIALTY CHEMICALS CONT. › Noteworthy results from Chemical Initiatives, ChemSystems, ImproChem, Nulandis, SANS and Senmin › Senmin » Volume growth (local and export) » 78% overall capacity utilised › ImproChem » Growth in Mining and Public Water businesses (SA and rest of Africa) » Cost savings
Slide 30: Explosives
A=Cr good chemistry
Slide 31: Explosives
30 OA=Cr EXPLOSIVES good chemistry PERFORMANCE Revenue -3,2% Profit from operations +7,4% Trading margin (15: 5.1%) Trade WE (15: 18%) UNDERLYING PERFORMANCE December December 2016 2015 Profit from Profit from operations operations As reported R449m R418m Impairments R54m R18m R503m R436m Trading ma
Slide 32: Explosives
31 EXPLOSIVES › Pleasing improvement in a difficult mining environment › Low ammonia price › Overall volumes flat › Good inventory management, especially in rest of Africa › Generation and repatriation of cash › 59% of revenue generated outside SA › Stronger rand in 2H16 › R54m impairment » Mainly a
Slide 33: Explosives: South Africa
32 EXPLOSIVES: SOUTH AFRICA › Explosives volumes +1,1% » Higher in 2H16 vs 1H16 » New contracts in iron ore and uranium mining sectors › Major customers have optimised mining plans › Initiating systems volumes -5% » Lower overall demand in narrow reef mining sector, mainly platinum ~ Industrial acti
Slide 34: Explosives: Rest of Africa
33 EXPLOSIVES: REST OF AFRICA › Overall volumes -2,9% › Central Africa » Unusually heavy rainfall early in the year » Copper production and prices remained low » Some mines remained on care and maintenance › West and East Africa » Benefited from favourable conditions in gold mining sector › North Af
Slide 35: Explosives: Asia Pacific
34 EXPLOSIVES: ASIA PACIFIC › Profitability of business in the region improved » Overall volumes +1,3% » Lagging price recovery › Indonesia » Costs well controlled » BBRI ANS plant ran well, albeit at 55% utilisation rate › Input VAT refunds » Explosives licensee applied for tax amnesty (to end-’15)
Slide 36: Strategy
J STRATEGY OA=CI’ good chemistry
Slide 37: Revenue by Strategic Pillar
36 REVENUE BY STRATEGIC PILLAR
Slide 38: Mining Solutions
37 MINING SOLUTIONS OA=Cr good chemistry AECI =XP=sas= SOLUTIONS
Slide 39: Mining Indaba: Cape Town, February '17
38 MINING INDABA: CAPE TOWN, FEBRUARY ’17
Slide 40: Mining Indaba: Cape Town, February '17
39 MINING INDABA: CAPE TOWN, FEBRUARY ’17
Slide 41: Group Mining Revenue by Mineral Mined (%)
40 GROUP MINING REVENUE BY MINERAL MINED (%)
Slide 42: Current Pre-Operational African Mining Projects
41 CURRENT PRE-OPERATIONAL AFRICAN MINING PROJECTS
Slide 43: Mining Solutions: Explosives
42 MINING SOLUTIONS: EXPLOSIVES › Mines in Central Africa expected to resume operations › Four new tenders gained in Africa – US$25m annualised revenue » Three in West Africa » One in East Africa » Investments meet AECI’s return hurdle rate › Large platinum mining contract rolled over for five years
Slide 44: Intellishot: The Future of Electronic Initiating Systems
43 INTELLISHOT THE FUTURE OF ELECTRONIC INITIATING SYSTEMS
Slide 45: Mining Solutions: Chemicals
44 MINING SOLUTIONS: CHEMICALS
Slide 46: Water Solutions
45 WATER SOLUTIONS AECI WATER SOLUTIONS OA=Cr good chemistry
Slide 47: Water: Delivering Comprehensive Solutions
46 WATER: DELIVERING COMPREHENSIVE SOLUTIONS
Slide 48: Water Solutions
47 WATER SOLUTIONS
Slide 49: Agrochemicals
48 AGROCHEMICALS
Slide 50: Agrochemicals
A=Cr good chemistry
Slide 51: Food Additives and Ingredients
50 FOOD ADDITIVES AND INGREDIENTS
Slide 52: Food Additives and Ingredients
51 FOOD ADDITIVES AND INGREDIENTS
Slide 53: Specialty Chemicals
52 SPECIALTY CHEMICALS OA=CI AECI PORTFOLIO OF SPECIALTY CHEMICALS
Slide 54: Portfolio of Specialty Chemicals Businesses
53 PORTFOLIO OF SPECIALTY CHEMICALS BUSINESSES
Slide 55: Innovation Project
54 INNOVATION PROJECT › Objective is to increase revenue and profitability of the Group » Target is 25% of total revenue from projects in next five years » Higher IRR and quality of earnings » Accelerate growth through diversification » Increased market penetration » Identified growth themes › Throu
Slide 56: Conclusion
6 CONCLUSION
Slide 57: Outlook for '17
A=Cr good chemistry Developing countries Sub-Saharan Africa SA
Slide 58: Salient Dates
ThE rca HALF-YEAR ENDS HALF-YEAR RESULTS RELEASE AND JHB PRESENTATION CT PRESENTATION 26 JULY 27 JULY
Slide 59: Disclaimer
58 DISCLAIMER This document has been prepared and issued by and is the sole responsibility of the management of AECI Ltd (the “Company”) and its subsidiaries. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or s
Slide 60: Thank You
THANK YOU