Aeci Ltd · JSE:AFE
Aeci — Debt Investor Presentation (June 2018)
40 slides from Aeci's debt investor presentation, Jun 30, 2018
Slide 1: AECI Fixed Income Roadshow
AECI FIXED INCOME ROADSHOW FOR THE HALF-YEAR ENDED 30 JUNE 2018
Slide 2: Who is AECI?
@) 1 WHOIS AECIP BRIEF OVERVIEW » Domiciled in SA; JSE Limited-listed since 1966 » Specialty product and services Group of 17 companies — Acquisition of Schirm and Much Asphalt growing the business » Value-adding solutions through science, technology, industry knowledge > Key earnings drivers: minin
Slide 3: Highlights for the six months ended 30 June 2018
02 HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
Slide 4: Strategy and Investment Philosophy
03 STRATEGY AND INVESTMENT PHILOSOPHY
Slide 5: Growth driven by core strategy
04 GROWTH DRIVEN BY CORE STRATEGY 2018 2017 Growth (%) Operations Key growth metrics excluding Total Total Rm acquisitions Acquisitions reported reported Organic Acquisitions Overall Revenue 9 127 1 345 10 473 8 478 8 16 24 Profit from operations 764 147 911 677 13 22 35 Headline earnings 443 40 483
Slide 6: Key Indicators and Governance
KEY INDICATORS AND GOVERNANCE
Slide 7: Governance structure
+ + SOCIAL % + RISK AND ETHICS REMUNERATION | NOMINATIONS | EXECUTIVE COMMITTEE COMMITTEE COMMITTEE COMMITTEE COMMITTEE * CHAIRED BY NON-EXECUTIVE DIRECTOR
Slide 8: Board composition
MARK DYTOR (56) Chief Executive Executive Director HNDP (Metalliferous Mining), PMD (UCT) MARK KATHAN (47) Chief Financial Officer Executive Director A), AMP (Harvard) KHOTSO MOKHELE (62) Chairman Non-executive Director BSc (Agriculture), MSc (Food Science), PhD (Microbiology)
Slide 9: Board composition continued
08 BOARD COMPOSITION CONTINUED
Slide 10: Board composition continued
09 BOARD COMPOSITION CONTINUED
Slide 11: AECI Structure
AECI STRUCTURE
Slide 12: Key brands/businesses
1 1 KEY BRANDS/BUSINESSES OAE=CI’ good chemistry AEC! OPERATING BUSINESSES aa —’ Za) ACACIA @ Cc REAL ESTATE CHEMICAL INITIATIVES Crest Chemicals Industrial ImproChem Oleochemical Products lakefoods S Aaanait “HE uanpis HEAD OFFICE, | Ss Ss" scp FUNCTIONS
Slide 13: Freedom supported by a framework
12 FREEDOM SUPPORTED BY A FRAMEWORK AT THE HEART OF THE CORPORATE STRATEGY
Slide 14: AECI Guarantors to the DMTN Programme
13 AECI GUARANTORS TO THE DMTN PROGRAMME
Slide 15: Operating environment and highlights for the latest period
OPERATING ENVIRONMENT AND HIGHLIGHTS FOR THE LATEST PERIOD
Slide 16: Key business drivers
15 KEY BUSINESS DRIVERS Price performance gold, platinum and copper Price performance Iron and thermal coal ZAR/US$ exchange rate SA mining volumes
Slide 17: Mining Solutions 1H18: revenue by mineral mined
16 MINING SOLUTIONS 1H18: REVENUE BY MINERAL MINED (%)
Slide 18: Key indicators for the six months ended 30 June
17 KEY INDICATORS FOR THE SIX MONTHS ENDED 30 JUNE 30 Jun 30 Jun KEY RATIOS 2018 2017 EBITDA (Rm) 1 258 905 Trading margin (%) 8,7 8,0 HEPS (c) 458 386 Gearing (%) 55 11 Long-term rating GCR A(za) – A(za) Short-term rating GCR A1(za) – A1(za) PEERS BASED AECI Omnia Afrox Nampak ON SECTOR/SCA
Slide 19: Performance by pillar
OA=CIr good chemistry O4 PERFORMANCE BY PILLAR
Slide 20: Strategic pillars
19 STRATEGIC PILLARS MINING SOLUTIONS LANDIS S schirm PLANT & ANIMAL HEALTH = lakefoods FOOD & BEVERAGE OA=CI good chemistry
Slide 21: High level pillar performance
20 HIGH LEVEL PILLAR PERFORMANCE 1H18 Outer circle 1H17 Inner circle Revenue (%) Profit/(loss) from Excludes inter-segment revenue operations (%) 2 -8 21 2 -14 19 26 48 24 6 57 5 54 70 11 4 3 4 8 12 18 13 6 9 Mining Solutions Water & Process Plant & Animal Health Food & Beverage Chemicals
Slide 22: Mining Solutions
21 MINING SOLUTIONS › The businesses in this pillar provide a mine-to-metal solution for the mining VOLUME 4,2% sector internationally Key businesses › The offering includes surfactants for REVENUE R5 021m explosives manufacture, commercial explosives, initiating systems and blasting 9,8% servic
Slide 23: Water & Process
22 WATER & PROCESS VOLUME 15,4% › ImproChem provides integrated water treatment, process chemicals and REVENUE R678m equipment solutions, for a diverse range of applications in Africa 4,1% Key business › These include, inter alia, public and industrial water, desalination and utilities. PROFIT I
Slide 24: Plant & Animal Health
23 PLANT & ANIMAL HEALTH › Nulandis manufactures and supplies VOLUME 76,3% an extensive range of crop protection products, plant nutrients and services for the agricultural sector in Africa REVENUE R1 882m › Schirm, based in Germany, is a contract Key businesses 98,8% manufacturer of agrochemica
Slide 25: Food & Beverage
24 FOOD & BEVERAGE VOLUME 4,0% › The businesses in this pillar supply ingredients and commodities to the dairy, REVENUE R552m beverage, wine, meat, bakery, health Key businesses 2,6% and nutrition industries. The other main activity is the manufacture and distribution of a broad range of juice-b
Slide 26: Chemicals
25 CHEMICALS › These businesses supply chemical raw Key businesses materials and related services for use VOLUME >100% across a broad spectrum of customers in the manufacturing, infrastructure and general industrial sectors mainly in REVENUE R2 339m South Africa and in other Southern African count
Slide 27: Historical financial performance
26 HISTORICAL FINANCIAL PERFORMANCE FY13 FY14 FY15 FY16 FY17 LTM* Revenue (Rbn) 15,9 16,9 18,4 18,6 18,5 20,5 Profit from ops (Rm) 1 398 1 596 1 703 1 335 1 579 1 813 RONA (%) 16,4 17,8 18,1 16,0 16,7 16,0 Employees 6 279 6 443 6 246 6 630 6 522 7 908 Market cap (Rbn) 16,03 17,16 10,8 12,2 12,2 12,8
Slide 28: Capital structure
OA=Cr good chemistry O5 CAPITAL STRUCTURE
Slide 29: Gearing
28 GEARING Current facilities: Gearing levels ZAR Net Debt Net Debt/EBITDA » EUR128m bridge Rm Gearing » ZAR2,3bn bridge 6 000 2.50 2.00 » ZAR1,1bn non-current 5 000 2.00 term debt 4 000 1.50 3 000 1.00 Commentary: 2 000 0.50 0.31 0.50 » Gearing levels have risen 1 000 0.05 0.11 materially in the cu
Slide 30: Acquisitions and key risks and mitigants
ACQUISITIONS AND KEY RISKS AND MITIGANTS
Slide 31: Acquisition of Schirm
30 ACQUISITION OF SCHIRM Largest provider of Total production volume Schirm is a external of 165 000tpa contract agrochemical 4 synthesis units manufacturer of formulation services agro and fine 55 formulation units in Europe chemicals with a European and US 81 packaging units footprint 800 permanen
Slide 32: Acquisition of Schirm continued
31 ACQUISITION OF SCHIRM CONTINUED Market leader Extension of Long-standing in provision of Schirm’s relationships with formulation manufacturing blue-chip customer services for and distribution base agrochemicals expertise in Europe Substantial investment in capex over past two years to deliver gro
Slide 33: Schirm financial information
32 SCHIRM FINANCIAL INFORMATION June YE 2015 2016 2017 Revenue (€m) 105 113 113 EBITDA (€m) 14 14 14 EBITDA (%) 13,5 12,8 12,3 › Plants largely seasonally-utilised, hence the strategic capital expenditure in 2016 and 2017 › Majority of earnings typically generated from Jan to June » Objective is to
Slide 34: Acquisition of Much Asphalt
33 ACQUISITION OF MUCH ASPHALT Leading asphalt Technological producer in SA capability Only independent asphalt Proprietary technology to producer with a national convert bitumen grades presence and produce performance grade specification binders Much Asphalt team Highly experienced management, 536
Slide 35: Acquisition of Much Asphalt continued
34 ACQUISITION OF MUCH ASPHALT CONTINUED Production in 2016 2,3m tonnes hot mix asphalt; c. 20m litres binders Facilities 18 static asphalt facilities Accreditations Financial performance 3 static emulsion and modified binder factories ISO 9001: 2000 Revenue R2bn 4 mobile asphalt plants 1 bitumen co
Slide 36: Much Asphalt financial information
35 MUCH ASPHALT FINANCIAL INFORMATION › Purchase price consideration of R2,272 billion » Acquisition of 100% share capital of Much Asphalt » Management deal to be finalised Approximately 2% of equity › Implied Enterprise Value/EBITDA above 7x › Rigorous due diligence process over 3-month period ›
Slide 37: Indicative term sheet
OA=CIr good chemistry O'7 INDICATIVE TERM SHEET
Slide 38: Indicative term sheet
37 INDICATIVE TERM SHEET ISSUER AECI LIMITED Arranger and dealer Rand Merchant Bank Issuer credit rating GCR– Long-term A(za) Auction date Early September Settlement T+3 Guarantors › Much Asphalt Pty Ltd › AECI Mauritius Ltd › Chemical Services Ltd › AECI Mining Solutions Ltd Ordinary course [Up to
Slide 39: Contact details
38 CONTACT DETAILS AECI LTD Mark Kathan Chief Financial Officer mark.kathan@aeci.co.za Trevor Starke Group Treasurer trevor.starke@aeci.co.za RAND MERCHANT BANK Delia Patterson Distribution delia.patterson@rmb.co.za +27 (11) 282 4162 Trishalia Naidoo Origination trishalia.naidoo@rmb.co.za +27 (11) 2
Slide 40: Thank you
OAE=CI good chemistry THANK YOU