Slide 1: Capital Markets Day November 2023
WE ARE ONE AECI, FOR A BETTER WORLD 2023 CAPITAL MARKETS DAY NOVEMBER 2023
Slide 2: Cautionary Statement
WE ARE ONE AECI, FOR A BETTER WORLD 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 iss
Slide 3: Agenda
WE ARE ONE AECI, FOR A BETTER WORLD AGENDA 1 2 3 4 5 Welcome Case for Back to the Optimising the Into the Leadership Change Future Portfolio Future Matters 6 7 8 9 Driving Strategy Operational & Key Enablers Delivering Closing on a Page Functional Outperformance Excellence 3
Slide 4: Speakers
WE ARE ONE AECI, FOR A BETTER WORLD SPEAKERS KHABONINA DENVOR RAMOUPI GOVENDER Group Chief People AECI Mining Executive Officer Global Operations (September 2023) (May 2016) HOLGER RAFAEL DEAN RIEMENSPERGER FERNANDES MURRAY Group Chief Executive Acting Group Chief Group Executive (May 2023) Financia
Slide 5: The Case for Change
WE ARE ONE AECI, FOR A BETTER WORLD 01 THE CASE FOR CHANGE
Slide 6: Revenue, EBITDA, EBIT, working capital, gearing
WE ARE ONE AECI, FOR A BETTER WORLD WORKING FINANCE REVENUE EBITDA EBIT GEARING CAPITAL COST 10% 9% 10% 2% 3% 92% SEPT 2023: SEPT 2023: SEPT 2023: SEPT 2023: SEPT 2023: SEPT 2023: R27 654M R2 728M R1 895M 45% 19% R425M SEPT 2022: SEPT 2022: SEPT 2022: SEPT 2022: SEPT 2022: SEPT 2022: R25 138M R2 499
Slide 7: Our Current Portfolio: A Highly-Diversified Industrial Business
WE ARE ONE AECI, FOR A BETTER WORLD OUR CURRENT PORTFOLIO Mine-to-mineral Crop and livestock Application know-how Water treatment solutions health Greener chemicals Explosives Industrial Animal Health Industrial Chemicals Public Plant Health Specialty Mining Schirm Food & Beverage Much Asphalt SANS
Slide 8: Multiple Business Models Typically Underperform
WE ARE ONE AECI, FOR A BETTER WORLD MULTIPLE BUSINESS MODELS TYPICALLY UNDERPERFORM TSR, 2018-2022 (%) 8 7 5 Current Business Model -1 MULTIPLE ASSET MARKET TECHNOLOGY BUSINESS BASED BASED MODELS BASED AECI TSR 6% Note: TSR = Total Shareholder Return Source: Company reports; S&P Capital IQ 8
Slide 9: Underperformance Reflected in the Share Price
WE ARE ONE AECI, FOR A BETTER WORLD UNDERPERFORMANCE REFLECTED IN THE SHARE PRICE 200 180 160 Start of COVID-19 2015/16 Global stock pandemic (Mar '20) crash 140 120 100 100 80 Announcement of 60 Schirm and Much Asphalt acquisitions 40 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 AECI JSE
Slide 10: The Change Compound
WE ARE ONE AECI, FOR A BETTER WORLD THE CHANGE COMPOUND Internal Factors External Factors Non-core High gearing levels, AECI Schirm and businesses with interest rates Much Asphalt performed below expected to remain underperforming core businesses elevated CLIMATE ENERGY DEGLOBALISATION CHANGE TRANSI
Slide 11: Strategy Is Not a One Person Business
WE ARE ONE AECI, FOR A BETTER WORLD 25 150+ STRATEGY IS NOT Workstreams 17 AECI members A ONE PERSON Investors and an BUSINESS 20+ analyst 100+ 4 6 Expert Customer sessions interactions EC working EC leadership sessions interviews 2 11
Slide 12: Back to the Future
WE ARE ONE AECI, FOR A BETTER WORLD 02 BACK TO THE FUTURE
Slide 13: Operations and execution, core businesses, capital allocation
WE ARE ONE AECI, FOR A BETTER WORLD 1 2 3 Operations Core businesses Capital allocation and execution existing strength and execution E F D 13
Slide 14: Our Strategic Pillars
WE ARE ONE AECI, FOR A BETTER WORLD OUR STRATEGIC PILLARS RESTRUCTURING THE GROUP TO CREATE A PLATFORM FOR GROWTH APPROACHING 2026 POST- 2026 FUTURE OPPORTUNITIES BUILDING THE BASE FOR VALUE DELIVERY THROUGH A HIGH- PERFORMANCE CULTURE, OPERATIONS EXCELLENCE AND PORTFOLIO OPTIMISATION THROUGH A DISC
Slide 15: Strategy at a Glance
WE ARE ONE AECI, FOR A BETTER WORLD STRATEGY AT A GLANCE Purpose WE ARE ONE AECI, FOR A BETTER WORLD BACK TO THE Double profitability of the core business (Mining and Chemicals) by 2026 FUTURE Ambition Attain a global market position in Mining of #3 by 2030 ATTAIN Strategic A high- performance Drive
Slide 16: Unpacking the Strategic Pillars
WE ARE ONE AECI, FOR A BETTER WORLD UNPACKING THE STRATEGIC PILLARS AMBITION DOUBLE PROFITABILITY OF THE CORE BUSINESS (MINING AND CHEMICALS) BY 2026 ATTAIN A GLOBAL MARKET POSITION IN MINING OF #3 BY 2030 01 02 03 04 A HIGH-PERFORMANCE OPTIMISE THE DRIVE OPERATIONAL DELIVER STEP CHANGE CULTURE UNDE
Slide 17: Optimising the Portfolio
WE ARE ONE AECI, FOR A BETTER WORLD 03 OPTIMISING THE PORTFOLIO 17
Slide 18: AECI Mining Is the Core of the Group
WE ARE ONE AECI, FOR A BETTER WORLD AECI MINING IS THE CORE OF THE GROUP SEGMENTAL PERFORMANCE 2022 Revenue Employee headcount EBITDA (R35.6 billion) (7 168) (R3.5 billion) 5% 6% 7% 10% 20% 20% 51% 59% 20% 63% 15% 24% EVA FCF (R million) (R million) 594 197 209 449 197 -7042 -4151 -608 1. Agri Healt
Slide 19: Focus on Mining and Chemicals, Divesting Non-Core Businesses
WE ARE ONE AECI, FOR A BETTER WORLD FOCUS ON MINING AND CHEMICALS, DIVESTING OUT OF NON-CORE BUSINESSES AECI CORE Main growth focus MINING BUSINESS Ambition to double profitability by 2026 CUSTOMER Attain a global market position in Mining of #3 by 2030 SHARING COST SHARING AECI REORGANISED & To pro
Slide 20: Unpacking the Optimised Portfolio Structure
WE ARE ONE AECI, FOR A BETTER WORLD UNPACKING THE OPTIMISED PORTFOLIO STRUCTURE CURRENT PORTFOLIO FUTURE PORTFOLIO MANAGED PORTFOLIO 2022 EBITDA (R billion) to Dec 2023 (R3.7 billion) Jan 2024 (R3.3 billion) Jan 2024 (R0.5 billion) AGRI MANAGED MINING CHEMICALS WATER HEALTH MINING CHEMICALS BUSINESS
Slide 21: A Global Mining Business and a Focused Chemicals Business
WE ARE ONE AECI, FOR A BETTER WORLD A GLOBAL MINING BUSINESS AND A FOCUSED CHEMICALS BUSINESS MINING WILL BE CORE WITH SELECT BUSINESS UNITS THAT GENERATE CASH TO SUPPORT THE CORE MINING MINING MINING CHEMICALS GLOBAL FOCUSED EVP Mining EVP Chemicals Explosives Explosives Explosives Manufactured Tec
Slide 22: Into the Future
WE ARE ONE AECI, FOR A BETTER WORLD 04 INTO THE FUTURE
Slide 23: Mergers and Acquisition Strategy
WE ARE ONE AECI, FOR A BETTER WORLD MERGERS AND ACQUISITION STRATEGY ACQUISITIONS ARE NOT A KEY PRIORITY FOR THE NEXT 12-18 MONTHS AND WILL BE GUIDED BY SET GUARD RAILS STRATEGIC STRATEGIC STRATEGIC LOW RISK NON- STRATEGIC DILUTIVE Strategic pillars aligned Within our expertise and know-how Value ac
Slide 24: Leadership Matters Disproportionately
WE ARE ONE AECI, FOR A BETTER WORLD 05 LEADERSHIP MATTERS DISPROPORTIONATELY
Slide 25: Group Leadership Operating Model
WE ARE ONE AECI, FOR A BETTER WORLD GROUP LEADERSHIP OPERATING MODEL Chief Financial Officer 1 EVP Mining Strategic Execution of the operating EVP Chemicals model Chief People Officer 2 Focus on Chief Operations Officer streamlining HOLGER the organisation RIEMENSPERGER Group Chief Executive Chief T
Slide 26: Strategy on a Page
WE ARE ONE AECI, FOR A BETTER WORLD 06 STRATEGY ON A PAGE
Slide 27: AECI Mining Strategy
WE ARE ONE AECI, FOR A BETTER WORLD AECI MINING STRATEGY Purpose WE ARE ONE AECI, FOR A BETTER WORLD Become a global top 3 integrated mining explosives and chemicals solutions provider, Ambition a leader in profitability, safety and operational excellence EXPLOSIVES CHEMICALS Strategic pillars Prote
Slide 28: AECI Chemicals Strategy
WE ARE ONE AECI, FOR A BETTER WORLD AECI CHEMICALS STRATEGY Purpose WE ARE ONE AECI, FOR A BETTER WORLD To double profitability by 2026; and to enhance cash-generation, that prioritises high- Ambition margin products and services and maximises output across all assets CHEMICALS EXPLOSIVES Manufactur
Slide 29: Driving Operational and Functional Excellence
WE ARE ONE AECI, FOR A BETTER WORLD 07 DRIVING OPERATIONAL AND FUNCTIONAL EXCELLENCE
Slide 30: Driving Value Through Excellence
WE ARE ONE AECI, FOR A BETTER WORLD DRIVING VALUE THROUGH EXCELLENCE Streamline manufacturing footprint Improve plant productivity OPERATIONAL Drive strategic procurement EXCELLENCE EBITDA Optimise SG&A expenses R1.2BN Build renewable energy capacity POTENTIAL VALUE TO UNLOCK EBITDA COMMERCIAL R1.6B
Slide 31: Operational Excellence
WE ARE ONE AECI, FOR A BETTER WORLD OPERATIONAL EXCELLENCE AECI COST BASE OF R20.8BN 1 2 3 4 MANUFACTURING UTILITIES AND PROCUREMENT LOGISTICS EXCELLENCE ENERGY Targeted initiatives to Drive increased Reduce logistics cost – Deploy energy monitoring direct and indirect spend productivity and reduced
Slide 32: Commercial Excellence
WE ARE ONE AECI, FOR A BETTER WORLD COMMERCIAL EXCELLENCE 11 MARKET AND CUSTOMER 22 OPTIMISED PRIORITISATION COMMERCIAL 33 MODEL FOCUS ON SALES LEVERAGE 44 EXECUTION CUSTOMER 55 LIFE CYCLE MANAGEMENT ENABLEMENT +3-5 ppts POTENTIAL VALUE R0.3BN UNLOCK to R0.4BN 32
Slide 33: Key Enablers
WE ARE ONE AECI, FOR A BETTER WORLD 08 KEY ENABLERS
Slide 34: Unpacking the Key Enablers
WE ARE ONE AECI, FOR A BETTER WORLD UNPACKING THE KEY ENABLERS 1 2 3 Redesign and drive strong Accelerate digitalisation Execute an objective P&L ownership and with a focus on framework, methodology increase the value sustainable value and process of investing brought by the delivery capital to maxi
Slide 35: Operating Model
WE ARE ONE AECI, FOR A BETTER WORLD 8.1 OPERATING MODEL
Slide 36: We Have Redesigned Our Operating Model
WE ARE ONE AECI, FOR A BETTER WORLD SUPPORT FROM THE CENTRE BUSINESS UNIT ACCOUNTABILITY & GO TO MARKET WE HAVE REDESIGNED OUR OPERATING MODEL EXCELLENCE IN SUPPORT FUNCTIONS TO UNLOCK THE VALUE WITHIN OUR NEW STRATEGY ORGANISATION EFFICIENCY FOCUSED AND EFFECTIVE ORGANISATION 36
Slide 37: AECI Human Capital Blueprint
WE ARE ONE AECI, FOR A BETTER WORLD AECI HUMAN CAPITAL BLUEPRINT REWARD AND RECOGNITION WAYS OF PEOPLE WORK EXPERIENCE TRANSFORMATION CHANGE DIVERSITY AND TEAM MANAGEMENT INCLUSION EXCELLENCE PERFORMANCE ORGANISATIONAL MANAGEMENT ARCHITECTURE TALENT 37
Slide 38: Digital Future
WE ARE ONE AECI, FOR A BETTER WORLD 8.2 DIGITAL FUTURE
Slide 39: Digitise Business and Future Proof Systems
WE ARE ONE AECI, FOR A BETTER WORLD DIGITISE BUSINESS AND FUTURE PROOF SYSTEMS Digital Starter Digital Literate Digital Performer Digital Leader DIGITAL JOURNEY ASPIRATION CURRENT Share of revenue invested in IT Share of EBITDA invested in IT 13.0% 3.0% 8.0% 0.8% Industrial Goods Industrial Goods av
Slide 40: Balance Sheet Optimisation & Capital Allocation
WE ARE ONE AECI, FOR A BETTER WORLD 8.3 BALANCE SHEET OPTIMISATION & CAPITAL ALLOCATION
Slide 41: Balance Sheet Optimisation
WE ARE ONE AECI, FOR A BETTER WORLD BALANCE SHEET OPTIMISATION Working capital TACTICAL Freeing up cash to OPTIMISATION drive efficiency and Optimise gearing productivity REQUIRED Cash and cash equivalents International POTENTIAL VALUE Maturing capital structure balance sheet UNLOCK Drive and improv
Slide 42: Maintain Financial Strength
WE ARE ONE AECI, FOR A BETTER WORLD MAINTAIN FINANCIAL STRENGTH MANAGING DEBT LEVEL DEPENDING ON THE OVERALL MACRO-ECONOMIC ENVIRONMENT High 1 4 REDUCE GROWTH DEBT ENVIRONMENT Interest Rate Environment <2 2-3 2 3 FUTURE GROWTH INVEST & DIVEST & M&A Low 2-3 3-4 Debt Level as multiple of Slow Economic
Slide 43: Disciplined Capital Allocation Framework to Enable the Strategy
WE ARE ONE AECI, FOR A BETTER WORLD DISCIPLINED CAPITAL ALLOCATION FRAMEWORK TO ENABLE THE STRATEGY Dynamic to maintain balance sheet resilience, while enabling capital allocation to relevant, Framework accretive investment opportunities FCF Free Cash Flow (“FCF”)1 From operations or disposals CHEMI
Slide 44: Disciplined Capital Allocation Framework to Enable the Strategy
WE ARE ONE AECI, FOR A BETTER WORLD DISCIPLINED CAPITAL ALLOCATION FRAMEWORK TO ENABLE THE STRATEGY Dynamic to maintain balance sheet resilience, while enabling capital allocation to relevant, Framework accretive investment opportunities FCF Excess FCF (post debt repayment and sustain capex investme
Slide 45: Maintain Financial Strength
WE ARE ONE AECI, FOR A BETTER WORLD MAINTAIN FINANCIAL STRENGTH CAPITAL ALLOCATION ENHANCED BY ADDRESSING EXISTING CHALLENGES Keep balance sheet resilient through cycles Manage gearing levels through the cycle Ensure shareholder participation through Project prioritisation and management procedure,
Slide 46: Delivering Outperformance
WE ARE ONE AECI, FOR A BETTER WORLD 09 DELIVERING OUTPERFORMANCE
Slide 47: Strategy Execution Ambitions
WE ARE ONE AECI, FOR A BETTER WORLD STRATEGY EXECUTION AMBITIONS AMBITION (2022-2026) | EBITDA (Rbn) 1.3 – 1.6 5.6 – 6.3 1.2 – 1.6 6 500 – 7 000 3.1 2022 Baseline Operational and Organic growth 2026 Ambition functional excellence 47 47
Slide 48: KPIs to Measure Strategy Execution
WE ARE ONE AECI, FOR A BETTER WORLD KPIs TO MEASURE STRATEGY EXECUTION FINANCIAL EBITDA FCF EBITDA Margin (Rbn) Conversion Ratio 2022 3.1 11% -10% 2026 5.6 to 6.3 13% to 15% 31% to 34% Net Working ROIC Gearing Capital 2022 12% 19% 45% 2026 17% to 21% 14% to 16% 20% to 40% RGrowth and expansion capex
Slide 49: KPIs to Measure Strategy Execution: Non-Financial
WE ARE ONE AECI, FOR A BETTER WORLD KPIs TO MEASURE STRATEGY EXECUTION NON-FINANCIAL Environmental Operational Social Total Carbon Footprint Safety Gender Equity 31% female representation 10% reduction by 2025 Zero Harm at top, senior and middle from a 2022 baseline management by 2025 Water Discharg
Slide 50: Investment Case
WE ARE ONE AECI, FOR A BETTER WORLD 1 INVESTMENT CASE A LEGACY OF RESILIENCE Strong resilience, built over a 100-year legacy, we are a trusted partner to our customers and the communities in which we operate. This is our core foundation for the next 100 years. 2 EXCELLENCE Operations and functional
Slide 51: Thank You
WE ARE ONE AECI, FOR A BETTER WORLD Thank You 51
Slide 52: Investor Relations
WE ARE ONE AECI, FOR A BETTER WORLD Investor Relations Zanele Salman Group Head Investor Relations +27 66 473 8878 zanele.salman@aeciworld.com 52