Slide 1: Financial Results Presentation
FINANCIAL For the year ended 31 December 2015 RESULTS PRESENTATION 23 and 24 February 2016
Slide 2: Presentation Outline
PRESENTATION OUTLINE 1 1. PERFORMANCE SUMMARY 2. BUSINESS ENVIRONMENT 3. STRATEGIC CONTEXT 4. RESULTS ANALYSED 5. SEGMENTAL PERFORMANCE ˃ Property ˃ Explosives ˃ Specialty chemicals 6. OUTLOOK, STRATEGY AND OBJECTIVES
Slide 3: Performance Summary
PERFORMANCE SUMMARY OA=SCI good chemistr
Slide 4: Performance Summary
PERFORMANCE SUMMARY 3 › Safety performance: TRIR of 0,35 (’14: 0,50) › Revenue +9% to R18,4bn » Foreign revenue of R6,4bn = 34% of total › Profit from operations +7% to R1 703m › Underlying profit from operations +18% to R1 881m » R178m (before tax) expense – post-retirement obligations de-risking ›
Slide 5: Performance Summary Cont.
PERFORMANCE SUMMARY CONT. 4 › Realisation of property assets at Somerset West › Benefits of acquisitions and strategic portfolio management realised » Integration of ~ Farmers Organisation Limited (Nulandis) – effective June ~ SCP – effective August ~ Biocult (Nulandis) – effective November › De-ris
Slide 6: Safety Performance: TRIR of 0,35
SAFETY PERFORMANCE: TRIR OF 0,35 5 OVERSHADOWED BY TWO FATALITIES All workers TRIR 1,0 0,8 0,6 0,4 0,2 0,0 10 11 12 13 14 15
Slide 7: Business Environment
BUSINESS ENVIRONMENT OA=SCI good chemistr
Slide 8: Business Environment: SA Mining Volumes
BUSINESS ENVIRONMENT 7 SA MINING VOLUMES JAN ’10 – DEC ’15 Source: Stats SA
Slide 9: Historical Price Performance – Gold and Platinum
BUSINESS ENVIRONMENT 8 HISTORICAL PRICE PERFORMANCE – GOLD AND PLATINUM (US$/OZ) Source: SNL
Slide 10: Historical Price Performance – Coal and Iron Ore
BUSINESS ENVIRONMENT 9 HISTORICAL PRICE PERFORMANCE – COAL AND IRON ORE (US$/TONNE) Source: SNL
Slide 11: Business Environment: Mining
BUSINESS ENVIRONMENT 10 MINING › Global » Deceleration of demand from China, in particular ~ Collapse of commodity prices ~ Mine closures, operational restructuring, cost containment, asset shedding, mining assets underutilised, impairments (incl. suppliers) › Ongoing » Aggressive procurement proces
Slide 12: SA Manufacturing Volumes
BUSINESS ENVIRONMENT 11 SA MANUFACTURING VOLUMES JAN ’08 – DEC ’15 Source: Stats SA
Slide 13: ZAR/US$ Exchange Rate
BUSINESS ENVIRONMENT 12 ZAR/US$ EXCHANGE RATE JAN ’14 – DEC ’15 Source: INET Bridge
Slide 14: Brent Crude Oil
BUSINESS ENVIRONMENT 13 BRENT CRUDE OIL (US$/BBL) Source: INET Bridge
Slide 15: SA Manufacturing and Agriculture
BUSINESS ENVIRONMENT 14 SA MANUFACTURING AND AGRICULTURE › Manufacturing » GDP targets revised down » Electricity supply more stable but remains a concern » No step-change in exports, even with weak ZAR » Rationalisation and lower production levels due to cost competitiveness factors » Weak demand i
Slide 16: Strategic Context
STRATEGIC CONTEXT OASCI good chemistr
Slide 17: Strategy Summarised
AECI PORTFOLIO OF SPECIALTY WATER ADDITIVES AND CHEMICALS SOLUTIONS INGREDIENTS BUSINESSES OA=CIr good chemistry
Slide 18: Revenue Split in This Context
R18,4bn REVENUE SPLIT IN THIS CONTEXT (%) 17 MINING SOLUTIONS = 56% OF REVENUE 44 Explosives 12 Mining chemicals 12 Agriculture 22 Manufacturing 5 Food and beverage 5 Property
Slide 19: Group Mining Revenue by Mineral Mined
GROUP MINING REVENUE BY MINERAL MINED (%) 18 19 Platinum 19 Copper 19 Gold 17 Coal 6 Diamond 6 Quarry, construction, civil 6 Iron ore 8 Other
Slide 20: Specialty Chemicals: Revenue by Market Sector
SPECIALTY CHEMICALS : R9,9bn REVENUE BY MARKET SECTOR (%) 19 WATER SOLUTIONS = 14% 25 Agriculture 24 Mining 11 Food and beverage 6 Chemical industry 6 Paper and packaging 5 Oil and refining 4 Textiles and leather 3 Toiletries, cosmetics and pharmaceuticals 3 Plastics and rubber 3 Coatings, ink and a
Slide 21: Results Analysed
RESULTS ANALYSED OASCI good chemistr
Slide 22: Cash Utilisation
CASH UTILISATION 21 › Capex in line with depreciation Borrowings (Rm) and amortisation Gearing (%) » R583m – incl. R283m for expansion projects 2 500 60 › NWC to revenue: 17,2% (15,4% in ’14) » R150m for land sales outstanding 50 2 000 › Net borrowings: R1 178m › Gearing at 13% vs 20% in Jun ’15 40
Slide 23: Earnings Analysed
EARNINGS ANALYSED 22 › Profit from operations +7% HEPS (cents) to R1 703m › EBITDA +7% to R2,3bn 1 000 › Underlying EBITDA +15% to R2,5bn » R178m (before tax) expense – post-retirement 800 obligations de-risking › HEPS +6% to 894c 600 › More than R400m repatriated via dividends › Tax rate: 31% (’14:
Slide 24: Cash Returned to Shareholders in '15
CASH RETURNED TO SHAREHOLDERS IN ’15 23 › Ordinary cash dividends » ’14 final of 225cps R258m » ’15 interim of 125cps R143m › Special cash dividend » 375cps R431m › Share repurchase » 5 969 845 ordinary shares purchased and cancelled R563m ~ 4,66% of issued share capital ~ Up to 5% on AGM shareholde
Slide 25: Defined-Benefit Obligations De-risking
DEFINED-BENEFIT OBLIGATIONS DE-RISKING 24 › Four defined-benefit pension funds » Two funds restructured in ’15 ~ AECI Pension Fund; AECI Supplementary Pension Fund › All processes governed by fund trustees, AECI Remuneration Committee and their respective advisors › Transactions approved by FSB › Su
Slide 26: Analysis of the Employer Surplus Accounts
ANALYSIS OF THE EMPLOYER SURPLUS ACCOUNTS 25 Rm Balance of employer surplus account (ESA) 179 PRMA Plan Asset 448 ’14 627 Net surplus allocation from AECI Pension Fund 1 141 AECI Supplementary Pension Fund equalisation (103) PRMA pensioner alternative benefit (652) Other (31) ’15 982 Proposed future
Slide 27: PRMA Analysis
PRMA ANALYSIS 26 Rm 2014 Gross liability 1 275 Liability settled (799) Other 3 2015 PRMA liability 479 Remaining pensioner member liability 351 Employee past service liability 128 479 › 65% of qualifying pensioners accepted alternative benefit offer made in ’14 › Total cost of settlement exceeded th
Slide 28: Segmental Performance
SEGMENTAL PERFORMANCE OASCI good chemistr
Slide 29: Profit from Operations by Segment
PROFIT FROM OPERATIONS BY SEGMENT (Rm) 28 1 200 1 000 800 600 400 200 CORPORATE 0 EXPLOSIVES SPECIALTY PROPERTY -200 CHEMICALS -400
Slide 30: Property
PROPERTY 29 Profit from Profit from Revenue Revenue operations operations Rm 2015 2014 2015 2014 Land sales 554 517 442 433 Shanghai Zendai transaction - 462 48 421 Somerset West 554 55 394 12 Rental and services 368 354 85 57 922 871 527 490 › Somerset West » Bulk sale to City of Cape Town conclude
Slide 31: Property: Somerset West Valuation Analysis
PROPERTY: SOMERSET WEST VALUATION ANALYSIS 30 Rm Hectares Standard Bank valuation (Sep ’14) 545 734 City of Cape Town transaction price 400 709 Precinct 1 sales concluded 187 25 since Sep ’14 Total value realised 587 734 City of Cape Town Precinct 1
Slide 32: Property: Modderfontein
PROPERTY: MODDERFONTEIN 31 › Approx. 216ha of surplus land remains (excl. 275ha Modderfontein Reserve) › AEL footprint = 1 100ha › No plans to realise developable land in short term Remaining AECI surplus AEL footprint Modderfontein Reserve
Slide 33: Explosives: Performance Drivers
EXPLOSIVES: PERFORMANCE DRIVERS 32 SA › Volume improvement » New contracts secured » Most business retained in retendering processes but margin sacrificed › Volume improvement achieved notwithstanding difficult conditions in 2H15 » Large customer in business rescue ~ R27m bad debt provision » Slowdo
Slide 34: Explosives: Performance Drivers Cont.
EXPLOSIVES: PERFORMANCE DRIVERS CONT. 33 Indonesia › Business remained under pressure » But some ramp-up in BBRI volumes in 2H15 › Long cycles for net input VAT refunds – R46m provided Australia › Expected volumes achieved › Product mix not optimised - dry weather conditions › Margins under pressure
Slide 35: Explosives Performance
EXPLOSIVES 34 PERFORMANCE Revenue R8 236m +14% Profit from operations R418m +12% Trading margin 5,1% (’14: 5,1%) Trade WC 18% (’14: 19%) › Overall explosives volumes +13% › Overall explosives volumes in rest of Africa › Initiating systems volumes +34% +14% » Platinum recovery » Good volume growth in
Slide 36: AEL Site Established in Mozambique: Good Potential
AEL SITE ESTABLISHED IN MOZAMBIQUE: GOOD POTENTIAL 35
Slide 37: AEL Site Established in Mozambique: Good Potential
AEL SITE ESTABLISHED IN MOZAMBIQUE: GOOD POTENTIAL 36
Slide 38: Specialty Chemicals Cluster
SPECIALTY CHEMICALS CLUSTER 37 JVs Chemfit Lake Foods Chemical Initiatives Nulandis ChemSystems SANS Technical Fibers Crest Chemicals Southern Canned Products Experse Senmin ImproChem Specialty Minerals SA Industrial Oleochemical Products
Slide 39: Specialty Chemicals: Performance Drivers
SPECIALTY CHEMICALS: PERFORMANCE DRIVERS 38 › Notable performance in a difficult environment » Benefits of acquisitions » Enhanced footprints in Africa » Focus on strategic pillars › Excellent cost management › Some market share gains › Rapid response to customers’ changing circumstances and needs »
Slide 40: Specialty Chemicals Performance
SPECIALTY CHEMICALS 39 PERFORMANCE Revenue R9 886m +6,0% Profit from operations R1 121m +12,1% Trading margin 11,3% (’14: 10,7%) Trade WC 17% (’14: 21%) › Volumes +4,9% › Agrochemicals » Manufactured +3,1% » Nulandis: benefits of acquisitions, negative » Traded +8,2% drought effects › Pleasing recov
Slide 41: Outlook, Strategy and Objectives
OUTLOOK, STRATEGY AND OBJECTIVES
Slide 42: Economic Outlook
ECONOMIC OUTLOOK 41 Global › Growth under pressure for the foreseeable future › Strong US$ › Bearish commodity price outlook (next 3 – 5 years) › Large-scale changes in mining industry SA › Poor business confidence and weak fixed investment › Cycle of low growth and manufacturing capacity underutili
Slide 43: '15 Revenue by Strategic Pillar
’15 REVENUE BY STRATEGIC PILLAR 42
Slide 44: AECI Mining Solutions
AECI MINING SOLUTIONS 43 AECI MINING SOLUTIONS R10,01bn OA=CIr good chemistry
Slide 45: AECI Mining Solutions
AEC! MINING SOLUTIONS A4 Mining Unlocking the future Solutions of mining OA=Cr good chemistry OA=CI good chemistry
Slide 46: AECI Mining Solutions: Addressing the Challenges
AECI MINING SOLUTIONS: ADDRESSING THE CHALLENGES 45
Slide 47: AECI Mining Solutions: Mine-to-Metal Value Wheel
AECI MINING SOLUTIONS: MINE-TO-METAL VALUE WHEEL 46
Slide 48: Water Solutions
WATER SOLUTIONS 4] AECI ImproChem WATER SOLUTIONS OA=CIr good chemistry
Slide 49: ImproChem: African Footprint After Acquisitions
IMPROCHEM: AFRICAN FOOTPRINT AFTER ACQUISITIONS 48
Slide 50: Water Solutions
WATER SOLUTIONS 49 › Containerised package plants » Easy transport and installation » Modular design » Rapid response » Minimal infrastructure required › Designed to customer requirements › Plug and play » Industrial, water recycling and potable water applications › Customers range from mining to lo
Slide 51: Water Solutions: Greenfield and Brownfield Deployment
WATER SOLUTIONS: GREENFIELD AND BROWNFIELD DEPLOYMENT 50 › Water treatment plants designed to customer specifications for large industrial applications › Examples » Tenke (DRC) » Vale (Mozambique) » Chevron (Cape Town) › Design, manufacture, installation, commissioning, chemical supply
Slide 52: Agrochemicals
AGROCHEMICALS ut AECI AGROCHEMICALS OA=CIr good chemistry
Slide 53: Acquisitions: Agrochemicals
ACQUISITIONS: AGROCHEMICALS 53 › Farmers Organisation (Malawi) » Net consideration = R136m ~ 4x EBITDA » Integrated with Nulandis effective June » Supplies commercial and smallholder farmers in Malawi, Southern and East Africa › Biocult (SA) » Net consideration = R17m » Integrated with Nulandis effe
Slide 54: Food Additives and Ingredients
FOOD ADDITIVES AND INGREDIENTS 54
Slide 55: Acquisition: Food Additives and Ingredients
ACQUISITION: FOOD ADDITIVES AND INGREDIENTS 55 › Southern Canned Products » Net consideration = R241m » 6 – 7x EBITDA » Effective August › Manufacturer and distributor of ingredients for juice-based drinks and products, in Cape Town
Slide 56: Food Additives and Ingredients: Revenue Targets
AECI FOOD ADDITIVES AND INGREDIENTS: REVENUE TARGETS (RM) 56 1 800 1 600 1 400 1 200 SCP (5 months) 1 000 800 600 Afoodable 400 200 0 10 11 12 13 14 15 16 17 18
Slide 57: Food Additives and Ingredients: Enhanced Capacity and Capability
FOOD ADDITIVES AND INGREDIENTS: ENHANCED CAPACITY AND CAPABILITY 57 › New Lake Foods facility in Cape Town » Enhanced capacity, quality, efficiencies › SCP acquisition enhanced the offering to the beverage sector, in particular › Great potential for exports to rest of Africa A growing market in SA ›
Slide 58: Specialty Chemicals
@ SENMIN MINING SOLUTIONS R10,01bn SS ImproChem WATER SOLUTIONS AECI “NULANDIS FOOD ADDITIVES AND INGREDIENTS AGROCHEMICALS PORTFOLIO OF SPECIALTY CHEMICALS BUSINESSES OA=CI good chemistry
Slide 59: Specialty Chemicals: Revenue by Market Sector
SPECIALTY CHEMICALS : R9,9bn REVENUE BY MARKET SECTOR (%) 59 WATER SOLUTIONS = 14% 6 Chemical industry 6 Paper and packaging 5 Oil and refining 4 Textiles and leather 3 Toiletries, cosmetics and pharmaceuticals 3 Plastics and rubber 3 Coatings, ink and adhesives 10 Other 25 Agriculture 24 Mining 11
Slide 60: Objectives: '16
OBJECTIVES: ’16 60 › Continue to reshape and refocus the business model › Expand and leverage geographic footprint further › Pursue more acquisitions in SA, the rest of Africa and internationally in support of strategic growth pillars › Enhance the focus on innovation › Ongoing strategic portfolio m
Slide 61: Investors' Calendar '16
INVESTORS’ CALENDAR ’16 61 AGM 30 May Half-year ends 30 June Interim results released and JHB presentation 26 July CT presentation 27 July
Slide 62: Thank You
THANK YOU