Slide 1: Financial Results Presentation for the Half-Year Ended 30 June 2017
FINANCIAL RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 JUNE 2017 26 AND 27 JULY 2017
Slide 2: PERFORMANCE SUMMARY SEGMENTAL PERFORMANCE BUSINESS ENVIRONMENT
1 PERFORMANCE SUMMARY 4 SEGMENTAL PERFORMANCE 2 BUSINESS ENVIRONMENT 5 STRATEGIC PILLAR UPDATE 3 RESULTS ANALYSED 6 OUTLOOK
Slide 3: Performance Summary
1 PERFORMANCE SUMMARY
Slide 4: Performance Summary
3 PERFORMANCE SUMMARY › Resilient overall performance in extremely difficult environment › Profit from operations +19% › HEPS +32% to 386c › 1H16 profit from operations and HEPS impacted by PRMA settlement cost › Good cash generation continued » Disciplined capex management » Borrowings lower vs 1H1
Slide 5: Safety: All Workers TRIR
4 SAFETY: ALL WORKERS TRIR
Slide 6: Business Environment
2 BUSINESS ENVIRONMENT OA=CI good chemistry
Slide 7: Business Environment: Global
6 BUSINESS ENVIRONMENT: GLOBAL › Growth expected to strengthen to 2,7% » Pick-up in manufacturing and trade » Rising confidence » Favourable global financing conditions » Commodity prices stabilised › Oil price firmer vs 1H16 › More robust demand from China › Mining » Mining houses remain cautious »
Slide 8: Business Environment: Africa, excl. SA
7 BUSINESS ENVIRONMENT: AFRICA, EXCL. SA › Some recovery after sharp slowdown in ’16 › Growth of 2,6% forecast for sub-Saharan Africa in ’17 » Strengthening external demand, particularly from China » Higher metal prices › Foreign exchange controls and foreign currency shortages › Revival of regulato
Slide 9: Business Environment: South Africa
8 BUSINESS ENVIRONMENT: SOUTH AFRICA › Low business confidence and consumers under pressure › Technical recession › Sovereign credit rating downgrades › Political/policy uncertainty › Stronger ZAR/US$ exchange rate › Higher commodity prices » But lower ammonia price › Higher mining production › Manu
Slide 10: Historical Price Performance – Gold, Platinum and Copper
9 BUSINESS ENVIRONMENT HISTORICAL PRICE PERFORMANCE – GOLD, PLATINUM AND COPPER Source: SNL
Slide 11: Historical Price Performance – Coal and Iron Ore
10 BUSINESS ENVIRONMENT HISTORICAL PRICE PERFORMANCE – COAL AND IRON ORE Source: SNL
Slide 12: Brent Crude Oil
11 BUSINESS ENVIRONMENT BRENT CRUDE OIL Source: iress
Slide 13: Ammonia
12 BUSINESS ENVIRONMENT AMMONIA Source: AEL
Slide 14: ZAR/US$ Exchange Rate
13 BUSINESS ENVIRONMENT ZAR/US$ EXCHANGE RATE Source: iress
Slide 15: SA Mining Volumes
14 BUSINESS ENVIRONMENT SA MINING VOLUMES Source: Stats SA
Slide 16: SA Manufacturing Volumes
15 BUSINESS ENVIRONMENT SA MANUFACTURING VOLUMES Source: Stats SA
Slide 17: Results Analysed
3 RESULTS ANALYSED
Slide 18: Earnings Analysed
17 EARNINGS ANALYSED › Profit from operations +19% to R677m » Underlying -3% › EBITDA +9,2% to R980m › HEPS +32% to 386c » Underlying +2% to 393c › Trading margin = 8,0% (’16: 6,3%) › Tax rate 31% (’16: 31%) » Foreign withholding tax › RONA of 14,8% (13,0% in ’16) » Target >20% › GCR rating of “A” w
Slide 19: Group Underlying Performance
18 GROUP UNDERLYING PERFORMANCE
Slide 20: Cash Generation and Utilisation
19 CASH GENERATION AND UTILISATION › Cash of R1 102m generated › Capex controlled to R261m – below depreciation and amortisation » R91m for expansion projects › NWC to revenue: 18,5% (17,9% in Jun ’16) » Customers delayed remittances » High sales in Jun » Lower volumes procured » Lower payables › Ne
Slide 21: Segmental Performance
4 SEGMENTAL PERFORMANCE
Slide 22: Profit from Operations by Segment
21 PROFIT FROM OPERATIONS BY SEGMENT
Slide 23: Analysis of Corporate Costs
22 ANALYSIS OF CORPORATE COSTS
Slide 24: Property
23 PROPERTY › Huntsman Tioxide, major site customer at Umbogintwini, closed late in ’16 › Offset by » Benefits of lower cost base » Shanghai Zendai management contract extended, at Modderfontein, to March ’18 » Good occupancy rates maintained at 90% by leasing business » Good efficiencies in Umbogin
Slide 25: Explosives
A=Cr good chemistry
Slide 26: Explosives: Performance
25 EXPLOSIVES: PERFORMANCE › Volumes flat overall › Excellent TP improvement in context of » Stronger ZAR/US$ rate ~ 60% of revenue generated outside SA » Lower ammonia price › Good cost control › Good product and customer mix
Slide 27: Explosives: South Africa
26 EXPLOSIVES: SOUTH AFRICA › Explosives volumes +1% » Benefit of market share gains iron ore and uranium mining sectors » Improved activity in coal mining sector » Improved offtake also by gold mining customers › Initiating systems volumes +3% » Opportunistic sales after competitor declared force m
Slide 28: Explosives: Rest of Africa
27 EXPLOSIVES: REST OF AFRICA › Volumes -2,4% › North Africa » Contract in Egypt lost Dec. ’16 and equipment relocated › West and East Africa » Slow start in West Africa » Five contracts gained ~ Mobilisation in progress › Central Africa » Mining operations resumed after extensive care and maintenan
Slide 29: Explosives: Asia Pacific
28 EXPLOSIVES: ASIA PACIFIC › Profitability improvement in region continued » Overall volumes -1,5% » Good cost control › Indonesia » New contract signed – commencing 2H17 » Renegotiating terms of engagement with explosives licensee › Australia » Tropical Cyclone Debbie in Queensland » New business
Slide 30: Specialty Chemicals Segment
29 SPECIALTY CHEMICALS SEGMENT
Slide 31: Specialty Chemicals Segment: Revenue of R4 909m
30 SPECIALTY CHEMICALS SEGMENT: REVENUE OF R4 909m REVENUE BY MARKET SECTOR (%)
Slide 32: Specialty Chemicals: Performance
31 SPECIALTY CHEMICALS: PERFORMANCE › Resilient result in context of » Strong ZAR » Effects of severe drought in Western Cape » Closure of Huntsman Tioxide » Delayed exports
Slide 33: Specialty Chemicals
32 SPECIALTY CHEMICALS › Overall volumes -2,4% » Manufactured +4,7% » Traded -14,2% › Senmin exports delayed to 2H17 › Noteworthy performance from Experse » Volume growth (local and export) › Nulandis hampered by drought effects in winter rainfall areas › Solid results from ImproChem » Growth in Min
Slide 34: Strategic Pillar Update
9 STRATEGIC PILLAR UPDATE OA=CI’ good chemistry
Slide 35: Revenue by Strategic Pillar
34 REVENUE BY STRATEGIC PILLAR
Slide 36: Mining
35 MINING
Slide 37: Mining: International Footprint
36 MINING: INTERNATIONAL FOOTPRINT
Slide 38: Group Revenue by Mineral Mined (%)
37 GROUP REVENUE BY MINERAL MINED (%)
Slide 39: Pre-operational Mining Projects: Africa
38 PRE-OPERATIONAL MINING PROJECTS: AFRICA
Slide 40: Pre-operational Mining Projects: Australia
39 PRE-OPERATIONAL MINING PROJECTS: AUSTRALIA
Slide 41: Explosives: Mako Mine – Senegal
40 EXPLOSIVES: MAKO MINE – SENEGAL MOBILISING ASSETS. BLASTING SCHEDULED AUG ’17
Slide 42: Explosives: Mako Mine – Senegal Cont.
41 EXPLOSIVES: MAKO MINE – SENEGAL CONT.
Slide 43: Explosives: Burkina Faso – Houndé Gold
42 EXPLOSIVES: BURKINA FASO – HOUNDÉ GOLD
Slide 44: Explosives: Burkina Faso – Boungou Natougou
43 EXPLOSIVES: BURKINA FASO – BOUNGOU NATOUGOU
Slide 45: Mining Chemicals
44 MINING CHEMICALS
Slide 46: Water
AD water OA=Cr good chemistry ImproChem Wiater& Eneray Solutions
Slide 47: Water: Global Trends
A=Cr good chemistry GLOBAL TRENDS 39% 2/ EXPECTED GROWTH OF GLOBAL YEAR AGING GLOBAL IN GLOBAL POPULATION INFRASTRUCTURE POPULATION WATER DEMAND WILL-NOT HAVE IN MATURE BY 2050 BY 2050 ACCESS.10 MARKETS CLEAN WATER
Slide 48: Agriculture
A=CI good chemistr ULANDIS AGRICULTURE
Slide 49: Agriculture
A=Cr good chemistry
Slide 50: Food
49 FOOD
Slide 51: Innovation Project
50 INNOVATION PROJECT › Objective: increase Group revenue and profitability » Ideation Platform ~ Significant internal adoption and progress made » Growth office: AECI.GO ~ Growth themes identified ~ Good progress in technology partnerships with universities and research institutions locally and ove
Slide 52: AECI.GO
51 AECI.GO FOUR BROAD INNOVATION THEMES AECI.GO focus area 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 53: US$5m Strategic Investment: Origin Materials
52 US$5m STRATEGIC INVESTMENT: ORIGIN MATERIALS POSITIONS AECI IN RENEWABLE CHEMICALS AS PREFERRED INDUSTRIALISATION AND APPLICATIONS DEVELOPMENT PARTNER WITH ACCESS TO AFRICA AND THE GLOBE And making new chemistry matter › Renewable chemicals start-up US$45bn 100% › Entered the commercialisation ph
Slide 54: Outlook
6 OUTLOOK
Slide 55: Outlook
54 OUTLOOK › 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. However » Good opportuniti
Slide 56: Disclaimer
55 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 57: Thank You
THANK YOU