Slide 1: Interim Financial Results
INTERIM For the half-year ended 30 June 2015 FINANCIAL RESULTS 28 and 29 July 2015
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 and deliverables
Slide 3: Performance Summary
PERFORMANCE 5 , SUMMARY — OASCI good chemistr:
Slide 4: Performance Summary
PERFORMANCE SUMMARY 3 › Safety performance improvement continued – TRIR of 0,33 › Revenue +8% to R8,6bn » Foreign revenue of R3,1bn = 36% of total › Headline earnings +45% to R632m › Profit from operations +22% to R991m › EPS +9% to 588c › HEPS +45% to 565c » 230c benefit of Somerset West land sale
Slide 5: Performance Summary: TRIR
PERFORMANCE SUMMARY 4 Performance improvement trend continued – TRIR of 0,33 All workers TRIR 1,0 Maximum 0,8 tolerable level 0,6 0,4 0,2 0,0 10 11 12 13 14 15
Slide 6: Performance Summary: Positive impacts
PERFORMANCE SUMMARY 5 Positive impacts › Bulk sale of property assets at Somerset West » R400m in cash, to be received on transfer › Excellent results again from the specialty chemicals segment in a difficult environment » Benefits of acquisitions and strategic portfolio management evident » Good re
Slide 7: Performance Summary Cont.: Negative impacts
PERFORMANCE SUMMARY CONT. 6 Negative impacts › AEL performance » Low commodity prices and cost pressures ~ Weak margins owing to re-tendering processes ~ Some volumes secured in SA’s coal and iron ore mining sectors did not materialise ~ Poor demand in Indonesia › Electricity supply constraints in S
Slide 8: Business Environment
BUSINESS ENVIRONMENT a OASCI good chemistr:
Slide 9: SA mining volumes
BUSINESS ENVIRONMENT 8 SA mining volumes Jan ’10 – May ’15 Source: Stats SA
Slide 10: Historical price performance – gold and platinum
BUSINESS ENVIRONMENT 9 Historical price performance – gold and platinum
Slide 11: Historical price performance – coal
BUSINESS ENVIRONMENT 10 Historical price performance – coal
Slide 12: Business Environment: Mining
BUSINESS ENVIRONMENT 11 Mining › Global » Collapse of commodity prices affecting coal and iron ore volumes, in particular » Mine closures, operational restructuring, cost containment » Customers targeting high-grade ores and reducing stripping ratios » Low capex levels and cutbacks in exploration ac
Slide 13: SA manufacturing volumes
BUSINESS ENVIRONMENT 12 SA manufacturing volumes Jan ’08 – May ’15 Source: Stats SA
Slide 14: SA manufacturing
BUSINESS ENVIRONMENT 13 SA manufacturing › Subdued overall » Energy constraints a serious concern ~ Effects on customers, particularly SMEs » Sector growth not tracking GDP growth » Weak demand impacts margin and volume growth » No significant improvement in exports by customers, even with weak ZAR
Slide 15: ZAR/US$ exchange rate
BUSINESS ENVIRONMENT 14 ZAR/US$ exchange rate Jan ’14 – Jun ’15 Source: Standard Bank of SA
Slide 16: Brent oil (US$/bbl)
BUSINESS ENVIRONMENT 15 Brent oil (US$/bbl) Source: INET Bridge
Slide 17: Strategic Context
STRATEGIC CONTEXT [L OASCI good chemistr:
Slide 18: Strategy Summarised
( STRATEGY SUMMARISED | 7] AECI FOOD appiTives AND INGREDIENTS LS =bke Foods % SENMIN OA=CI good chemistry
Slide 19: Revenue Split in This Context (%)
REVENUE SPLIT IN THIS CONTEXT (%) 18 Mining solutions = 59% of revenue
Slide 20: Group Mining Revenue
GROUP MINING REVENUE 19 Revenue by mineral mined 1H15 (%)
Slide 21: Specialty Chemicals
SPECIALTY CHEMICALS 20 Revenue by market sector 1H15 (%) – water solutions = 16%
Slide 22: Results Analysed
RESULTS ANALYSED OASCI good chemistr:
Slide 23: Cash Utilisation
CASH UTILISATION 22 › Capex well controlled Borrowings (Rm) » R272m – incl. R146m for expansion projects Gearing (%) › NWC to revenue: 21% (19% in ’14) 3 000 80 » R400m for land sale not yet received › Net borrowings: R1 588m 2 500 › Gearing at 20% vs 22% in Jun ’14 60 (9% in Dec ’14) 2 000 » Specia
Slide 24: HEPS
HEPS 23 › Profit from operations +22% Half-year HEPS (cps) to R991m › EBITDA +20% to R1,3bn 600 › HEPS +45% to 565c » 230c from property sale 500 › Tax rate: 23,0% (’14: 19,4%) 400 › Return on net assets: 18,7% (17,5% in ’14) 300 › Target = 20%+ › EVA remains positive 200 100 0 10 11 12 13 14 15
Slide 25: Segmental Performance
PERFORMANCE (ec Oy OASCI good chemistr:
Slide 26: Profit from Operations by Segment (Rm)
PROFIT FROM OPERATIONS BY SEGMENT (RM) 25 600 500 400 300 200 100 Corporate 0 Explosives Specialty Property -100 chemicals -200 14 15
Slide 27: Property
PROPERTY 26 Profit from Profit from Revenue Revenue operations operations Rm 2015 2014 2015 2014 Land sales 435 475 354 414 Shanghai Zendai transaction — 462 33 421 Somerset West 435 13 321 (7) Rental and services 172 177 39 33 607 652 393 447 › Somerset West bulk sale to City of Cape Town concluded
Slide 28: Property: Somerset West Valuation Analysis
PROPERTY: SOMERSET WEST VALUATION ANALYSIS 27 Rm Ha Standard Bank valuation (Sep ’14) 545 734 Less: Valuation of Precinct 1 119 25 Value of site excluding Precinct 1 426 709 City of Cape Town transaction price 400 709 › 15ha of zoned and serviced land remains in Precinct 1 › Value to be realised in
Slide 29: Explosives: Performance Drivers
EXPLOSIVES: PERFORMANCE DRIVERS 28 › Market share gained in SA » Coal, iron ore, gold › Anticipated volume increases in SA did not all materialise » But AEL deployed › Mining houses seeking efficiency gains » Volumes generally retained in re-tender processes, but margin sacrificed › Volumes in plati
Slide 30: Explosives
EXPLOSIVES 29 Performance Revenue R3 956m +11% Profit from operations R212m +77% Trading margin 5,4% (’14: 3,4%) Trade WC 22% (’14: 20%) › Overall explosives volumes +10%; › Overall explosives volumes in Africa +6% Initiating systems volumes +59% » Good growth in Central Africa continued » Platinum,
Slide 31: Explosives: Performance
100 200 300 400 0 Actual 2014 Platinum business recovery R120m R110m EXPLOSIVES: PERFORMANCE Africa improvement R115m Margin loss -R85m Asia Pacific volume decline -R30m Inflation on cost base -R77m Restructuring cost taken 1H14 R62m Other -R3m Actual 2015 R212m 30
Slide 32: Indonesian Coal Production Decline
INDONESIAN COAL PRODUCTION DECLINE 31 › Effect on explosives volumes » Miners focused on higher grades, cost and efficiencies optimisation ~ Non-explosives mining (free digging) increased from 4% to over 20% ~ Explosives consumption per m2 reduced by 16% » Numerous mines mothballed and new projects
Slide 33: Indonesian Investment Case
INDONESIAN INVESTMENT CASE 32 › Indonesian coal market = >400 million tonnes › KPC estimated at 60 million tonnes » Life of mine is 20 years » Mine is 1,5x the size of Singapore › KPC has extended mining licence › Remains the lowest cost producer in the region › Outlook for long-term sales for power
Slide 34: Update: Australian Entry
UPDATE: AUSTRALIAN ENTRY 33 › Emulsion plant fully commissioned and running at required capacities › Emulsion quality acknowledged by customers › Supply chain operating effectively › Electronic detonators » Blast with 4 555 detonators » Another with 6 000+ planned › AEL and Thiess working closely on
Slide 35: Specialty Chemicals
SPECIALTY CHEMICALS 34 Performance Revenue R4 393m +8,1% Profit from operations R532m +34% Trading margin 12,1% (’14: 9,8%) Trade WC 21% (’14: 23%) › Volumes +4% › Improved performances from » Manufactured +11% Chemfit, ChemSystems, Experse, » Traded -4% IOP, Lake Foods, STF › Pleasing recovery by S
Slide 36: Specialty Chemicals: Performance Drivers
SPECIALTY CHEMICALS: PERFORMANCE DRIVERS 35 › Benefits of acquisitions » Focus on strategic pillars » Enhanced footprints in Africa › Active portfolio management » Consolidation and rationalisation › Excellent cost management › Collaboration drive › Some market share gains › Rapid response to custom
Slide 37: Specialty Chemicals: Portfolio Management
SPECIALTY CHEMICALS: PORTFOLIO MANAGEMENT 36 › Akulu restructuring complete » PJ business closed; assets sold » White oils business moved to IOP » Surfactants business divisionalised into CI » Personal care division moved to ChemSystems › Pigments portfolio moved from Experse to Chemfit › Disposal o
Slide 38: Specialty Chemicals Cluster
SPECIALTY CHEMICALS CLUSTER 37 JVs Chemfit Industrial Oleochemical Products Chemical Initiatives Lake Foods ChemSystems Nulandis Crest Chemicals SANS Technical Fibers Experse Surfactant Technologies Senmin ImproChem Specialty Minerals SA
Slide 39: Acquisitions: Water Solutions
ACQUISITIONS: WATER SOLUTIONS 38 › GE business acquired in ’12 and Clariant business in ’14 › Both merged with ImproChem › Good growth in public water sector › African footprint enhanced › North African acquisition opportunities being evaluated › Leading industrial, effluent and municipal water trea
Slide 40: Acquisitions: Agrochemicals
ACQUISITIONS: AGROCHEMICALS 39 › Farmers Organisation (Malawi) » Purchase price = US$11m ~ 4x EBITDA » Merged with Nulandis » Effective 1 June » A leading supplier to commercial and smallholder farmers in Malawi, Southern and East Africa » Opportunity for Nulandis to increase sales of in-house produ
Slide 41: Acquisitions: Southern Canned Products
ACQUISITIONS: SOUTHERN CANNED PRODUCTS 40 › Manufacturer and distributor of ingredients for juice-based drinks and products, in Cape Town › Strengthens Food Additives and Ingredients pillar › Purchase price = R235m » 6 – 7x EBITDA
Slide 42: Capex: Food Additives and Ingredients
CAPEX: FOOD ADDITIVES AND INGREDIENTS 41 New Afoodable plant › Sauces and marinades › Consolidated footprint in Cape Town › Increased capacity and higher efficiencies › Quality enhancements » HACCP registered » FSSC 22000 registration in 1Q16 ~ Fundamental in the food industry
Slide 43: Senmin's Centre of Excellence
SENMIN’S CENTRE OF EXCELLENCE 42 Solutions for the future › Four main challenges for mining industry » Availability of fresh water » Energy costs and availability » Environmental impact » Diminishing grades and increased complexity of ores › Capability in » Biotechnology » Polymer chemistry » Surfac
Slide 44: Outlook and Deliverables
OUTLOOK AND DELIVERABLES | ||@ E] OASCI good chemistr:
Slide 45: Outlook for 2H15
OUTLOOK FOR 2H15 44 Global › Global environment will remain challenging overall SA › Electricity supply a serious concern › Wage negotiations in the gold mining sector in ’15 › No major turnaround forecast in SA economy or manufacturing sector
Slide 46: Deliverables for '15
DELIVERABLES FOR ’15 45 › Reshape and refocus the business model for “New Normal” in resources sector › Strategy unchanged: Mining Solutions, Water Solutions, Agrochemicals, Food Additives and Ingredients, SA-based Specialty Chemicals portfolio › Continue to drive cost control and working capital ma
Slide 47: Investors' Calendar
INVESTORS’ CALENDAR 46 Investor Day, CT 27 October Financial year-end 31 December Results released and JHB presentation 23 February ’16 CT presentation 24 February ’16
Slide 48: Thank You
THANK YOU OASCI good chemistr: