FINANCIAL RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 JUNE - PowerPoint PPT Presentation

FINANCIAL RESULTS PRESENTATION FOR THE HALF-YEAR ENDED 30 JUNE 2017 26 AND 27 JULY 2017

1 PERFORMANCE SUMMARY 4 SEGMENTAL PERFORMANCE 2 BUSINESS ENVIRONMENT 5 STRATEGIC PILLAR UPDATE 3 RESULTS ANALYSED 6 OUTLOOK

1 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 1H16 › Interim ordinary cash dividend of 138cps declared › Safety performance: TRIR of 0,43

4 SAFETY: ALL WORKERS TRIR

2 BUSINESS ENVIRONMENT

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 » Sustainability of recovery in commodities? › Protectionist policies in advanced economies

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 regulatory consciousness (tax, compliance) › Local beneficiation being pursued › Energy and water shortages a constraint › Political and socio-economic challenges remain

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 › Manufacturing continued to decline › Recovery in agricultural sector but drought in Western Cape still critical

9 BUSINESS ENVIRONMENT HISTORICAL PRICE PERFORMANCE – GOLD, PLATINUM AND COPPER Source: SNL

10 BUSINESS ENVIRONMENT HISTORICAL PRICE PERFORMANCE – COAL AND IRON ORE Source: SNL

11 BUSINESS ENVIRONMENT BRENT CRUDE OIL Source: iress

12 BUSINESS ENVIRONMENT AMMONIA Source: AEL

13 BUSINESS ENVIRONMENT ZAR/US$ EXCHANGE RATE Source: iress

14 BUSINESS ENVIRONMENT SA MINING VOLUMES Source: Stats SA

15 BUSINESS ENVIRONMENT SA MANUFACTURING VOLUMES Source: Stats SA

3 RESULTS 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” with stable outlook retained

18 GROUP UNDERLYING PERFORMANCE

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 › Net borrowings: R1 007m › Gearing at 11% vs 17% in Jun ’16 › Cash interest cover: 14,6x › Dividend cover for the period: 2,8x › Interim ordinary cash dividend of 138c declared › Good headroom for acquisitions and growth

4 SEGMENTAL PERFORMANCE

21 PROFIT FROM OPERATIONS BY SEGMENT

22 ANALYSIS OF CORPORATE COSTS

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 Umbogintwini services business

24 EXPLOSIVES

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

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 majeure › Customer production losses due to S54 stoppages in line with 1H16 › Major statutory shutdown underway at No. 11 Nitric Acid plant, Modderfontein

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 maintenance ~ Volumes robust › Southern Africa » Pleasing results in Botswana, with additional volumes gained

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 secured – commencing ’18

29 SPECIALTY CHEMICALS SEGMENT

30 SPECIALTY CHEMICALS SEGMENT: REVENUE OF R4 909m REVENUE BY MARKET SECTOR (%)

31 SPECIALTY CHEMICALS: PERFORMANCE › Resilient result in context of » Strong ZAR » Effects of severe drought in Western Cape » Closure of Huntsman Tioxide » Delayed exports

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 Mining and Public Water businesses (SA and rest of Africa) › Improvement at Lake Foods › No acquisitions concluded

5 STRATEGIC PILLAR UPDATE

34 REVENUE BY STRATEGIC PILLAR

35 MINING

36 MINING: INTERNATIONAL FOOTPRINT

37 GROUP REVENUE BY MINERAL MINED (%)

38 PRE-OPERATIONAL MINING PROJECTS: AFRICA

39 PRE-OPERATIONAL MINING PROJECTS: AUSTRALIA

40 EXPLOSIVES: MAKO MINE – SENEGAL MOBILISING ASSETS. BLASTING SCHEDULED AUG ’17

41 EXPLOSIVES: MAKO MINE – SENEGAL CONT.

42 EXPLOSIVES: BURKINA FASO – HOUNDÉ GOLD

43 EXPLOSIVES: BURKINA FASO – BOUNGOU NATOUGOU

44 MINING CHEMICALS

45 WATER

46 WATER

47 AGRICULTURE

48 AGRICULTURE

49 FOOD

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 overseas ~ Early stages of investigating M&A opportunities aligned with growth themes ~ One opportunity actioned regarding “Early adoption in relevant start-ups and/or disruptors”

51 AECI.GO FOUR BROAD INNOVATION THEMES AECI.GO focus area Exponential Market Integrated Green Chemistry Expansion Solutions Innovative solutions Market sector Solutions/offerings Chemical that result in acquisition through that spans across alternatives, improved human geographic and more than one substitutes to well-being over the customer business unit area chemicals and long term, while segment by combining advanced protecting the expansion multiple products solutions which public against strategies in pursuit (new and existing) have the potential significant of becoming the to create new and to disrupt other environmental developing world differentiated industries and risks or leader solutions create significant ecological value scarcities Guides for innovation focus of AECI.GO

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 maki ng new chemi stry matter › Renewable chemicals start-up US $ 45bn 100% › Entered the commercialisation phase of proprietary technology B-PET B-PEF › Applications include 100% B-PET and B-PEF plastics market › Can convert multiple input feedstock to platform chemicals Renewable › Can be converted to multiple high value downstream applications - Chemistries US$200bn+ › Cost-competitive renewable chemicals › Cost base decoupled from oil › Identified fully committed and invested global commercial partners & with equity stake › Pioneer plant by end ’18

6 OUTLOOK