Aeci Ltd · JSE:AFE
Aeci — Merger or Acquisition (October 2017)
34 slides from Aeci's merger presentation, Oct 30, 2017
Slide 1: Acquisition of Much Asphalt
ACQUISITION OF MUCH ASPHALT 30 OCTOBER 2017 30 October 2017
Slide 2: Agenda
AGENDA 1. CONTEXT AND INVESTMENT SUMMARY 2. ABOUT MUCH ASPHALT 3. FINANCIAL INFORMATION 4. INVESTMENT OUTLOOK AND HIGHLIGHTS › Investment highlights 5. INCORPORATION INTO AECI
Slide 3: Context and Investment Summary
1 CONTEXT AND INVESTMENT SUMMARY
Slide 4: Context: 1H17 Results Presentation
3 CONTEXT: 1H17 RESULTS PRESENTATION › Global mining activity gaining momentum » Positive for Group’s Mining pillar » New contracts and increased market share » Footprint expanded » Good order book for mining chemicals › No significant improvement in SA manufacturing sector anticipated to year-end H
Slide 5: AECI.GO: Four Broad Innovation Themes
4 AECI.GO FOUR BROAD INNOVATION THEMES AECI.GO focus areas Market Integrated Green Exponential Expansion Solutions Chemistry Market sector Solutions/offerings Innovative solutions Chemical acquisition through that spans across that result in alternatives, geographic and more than one improved human
Slide 6: AECI Pillars
MINING SOLUTIONS Me improChem WATER & PROCESS PLANT & ANIMAL HEALTH A=CrI good chemistry
Slide 7: Investment Summary
6 INVESTMENT SUMMARY Leading asphalt Technological producer in SA capability Only independent asphalt Proprietary technology to producer with a national convert bitumen grades and presence produce performance grade specification binders Much Asphalt team Highly experienced management, 536 employees
Slide 8: Investment Summary: SA Market Leader
7 INVESTMENT SUMMARY SA MARKET LEADER Production in 2016/17 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 c
Slide 9: Market Environment Overview
8 MARKET ENVIRONMENT OVERVIEW Road infrastructure investment key Strong road spend growth Robust pipeline of future projects Market dynamic supportive of growth
Slide 10: Supply Chain Overview
9 SUPPLY CHAIN OVERVIEW 3 1 1 Key suppliers 2 3 Manufacturing facilities Manufacturing facilities Product categories Bitumen Sites across SA and Namibia Sites across SA and Namibia Generic asphalt solutions Specialist/proprietary 5 Manufacturing facilities Warm/cold asphalt End users 4 Sites across
Slide 11: Key Customers
OA=SCI i 10 KEYCUSTOMERS Chemicals Bd sous African WATIONAL PARKS
Slide 12: About Much Asphalt
2 ABOUT MUCH ASPHALT
Slide 13: History: Much Asphalt Value Chain and Footprint
12 HISTORY: MUCH ASPHALT VALUE CHAIN AND FOOTPRINT First asphalt Murray & Roberts Established 2006: established Acquired 100% of premix supply acquired 100% of operations in East Coast Asphalt SprayPave plant, Table View Much Asphalt Namibia quarry 2006 - 1965 1970 1986 1989 2016 2013 Developed firs
Slide 14: Geographic Footprint
13 GEOGRAPHIC FOOTPRINT MUCH ASPHALT FOOTPRINT › 17 static production facilities across SA and 1 in Namibia › 3 static emulsion and modified binder factories (SprayPave) › 4 mobile asphalt plants › 1 bitumen converter Much Asphalt SprayPave
Slide 15: Well-Respected and Experienced Management Team
14 WELL-RESPECTED AND EXPERIENCED MANAGEMENT TEAM › Extensive management experience in sector › Active member of various industry bodies › Strong focus on in-house training › Efficient, established and effective Bennie Greyling Spencer van Eden Herman Marais management controls Managing Director Fin
Slide 16: Operational Overview: Much Asphalt
15 OPERATIONAL OVERVIEW : MUCH ASPHALT Load bitumen at Deliver bitumen Weigh in Offload bitumen refinery to plant bitumen at and heat Manufacture 1 7 plant 1 1 asphalt 0 2 Test incoming 4 raw materials 4 Mill material from Weigh in mill Process mill 2 8 1 Test asphalt road material at plant material
Slide 17: Operational Overview: SprayPave
16 OPERATIONAL OVERVIEW: SPRAYPAVE Modified binder solutions and emulsions facilities SprayPave converter 4 Test bitumen 2 5 Offload bitumen and heat to blending temperature Travel to 1 Load bitumen SprayPave site 3 Weigh-in at at refinery Spray Pave 6 Blending site process 8 Test modified Allow pro
Slide 18: Governance Framework
17 GOVERNANCE FRAMEWORK Current applicable legislation Health and Safety policy Environmental policy Risk and Compliance Audit
Slide 19: Innovation Track-Record Supported by Leading R&D Capability
18 INNOVATION TRACK-RECORD SUPPORTED BY LEADING R&D CAPABILITY › Developed state-of-the-art technology for automation, operation and process control of asphalt plants › Leader in processing, screening and use of recycled asphalt to maximise yield and economic benefits › Leading R&D capability, techn
Slide 20: Current Innovation and R&D
19 CURRENT INNOVATION AND R&D Much Asphalt › New product development through own laboratories in Cape Town and Benoni and through CSIR › Move towards performance grade specification and certified mixes › Plant optimisation SprayPave › Bitumen converter – 2nd of its kind in the world › Modified bitum
Slide 21: Specialised Product Offering
20 SPECIALISED PRODUCT OFFERING Generic asphalt solutions: wide variety of generic solutions incl. various asphalt grades, mixes and courses Specialist/proprietary solutions: modified asphalts, proprietary products and other specialised surfacing ranges Warm mix asphalt: warm mix asphalt (‘WMA’) is
Slide 22: Financial Information
3 FHNANCIALINFORMA OAZ=CI | Chemicals
Slide 23: Financial Information
22 FINANCIAL INFORMATION › Purchase price consideration of R2,272 billion » Acquisition of 100% share capital of Much Asphalt » Management transaction to be finalised ~ Approximately 2% of equity › Implied Enterprise Value/EBITDA above 7x › Rigorous due diligence process over 3-month period › Good e
Slide 24: Conditions Precedent
23 CONDITIONS PRECEDENT › Approval by Competition Authorities › Change of control consents from certain parties › Finalisation of management transaction › Transaction expected to close in 1Q18
Slide 25: Current Ownership Structure
24 CURRENT OWNERSHIP STRUCTURE Management 25,4% 66% 8,6% 100% 55% 27% 100% Much Asphalt East Coast Specialised Road Namibia SprayPAve Asphalt Technologies (Pty) Ltd (Pty) Ltd (Pty) Ltd (Pty) Ltd
Slide 26: Ownership Structure Post Acquisition
25 OWNERSHIP STRUCTURE POST ACQUISITION
Slide 27: Investment Outlook and Information
4 INVESTMENT OUTLOOK AND INFORMATION
Slide 28: Investment Highlights: SA Road Expenditure Outlook
27 INVESTMENT HIGHLIGHTS: SA ROAD EXPENDITURE OUTLOOK National roads spend (est. Rm) CAGR projected 7% 45 000 47 000 43 500 41 000 36 500 34 000 34 181 2014 2015 2016 2017B 2018B 2019B › SANRAL announced plans to expand road network from 22 000km to 25 000km » Allocated R36,8bn to upgrade and mainta
Slide 29: Investment Highlights: Much Asphalt
28 INVESTMENT HIGHLIGHTS: MUCH ASPHALT Strong growth, healthy Market-leading Well-respected and margins, high cash position; national Strategic bitumen experienced conversion footprint sourcing management team 1 2 3 4 5 6 7 8 Specialised, Diverse customer Independent national Leading technology; dif
Slide 30: Investment Highlights: Much Asphalt Growth Opportunities
29 INVESTMENT HIGHLIGHTS : MUCH ASPHALT GROWTH OPPORTUNITIES SA geographic footprint Expanded converter technology Opportunities in Africa Expanded product offering Acquisition opportunities
Slide 31: Incorporation into AECI
5 INCORPORATION I NTOAECI cr | Chemicals g c
Slide 32: A Stand-Alone Group Entity
31 A STAND-ALONE GROUP ENTITY
Slide 33: AECI Pillars
MINING SOLUTIONS Me improChem WATER & PROCESS PLANT & ANIMAL HEALTH A=CI
Slide 34: Thank You
THANK YOU