FINANCIAL RESULTS PRESENTATION FOR THE YEAR ENDED 31 DECEMBER 2019 25 February 2020
01. INTRODUCTION 02. PERFORMANCE SUMMARY 03. EARNINGS ANALYSED 04. SEGMENTAL PERFORMANCE 05. OUTLOOK AND FOCUS 06. SUMMARY AND 2020 OBJECTIVES
NON-EXECUTIVE DIRECTORS 2 Khotso Mokhele Steve Dawson Fikile De Buck Walter Dissinger Godfrey Gomwe Jonathan Molapo Allen Morgan Rams Ramashia Philisiwe Sibiya
INTRODUCTION: EXECUTIVE TEAM 3 Mark Dytor – CE Mark Kathan – CFO Edwin Ludick – Executive Dean Mulqueeny – Executive Dean Murray – Executive Candice Watson – Group HC Executive
02 PERFORMANCE SUMMARY
PERFORMANCE SUMMARY 5 – Revenue +6% to R24 799m › Foreign and export revenue = 40% of total revenue – EBITDA +26% to R3 326m – Profit from operations growth trend maintained: +2,0% to R2 031m › R156m cost of strategic realignment projects recovered › R147m goodwill impairment at SCP – EPS +30% to 1 223c › Proceeds from sale of 50% shareholding in Crest Chemicals › Land sale – Solid HEPS growth: +10% to 1 150c › IFRS 16 negative impact of 24c – Good cash generation from operations: R1 868m – Final ordinary cash dividend of 414cps declared (570cps for FY19): +11% on FY18
PERFORMANCE SUMMARY CONT. 6 – Excellent improvement in safety performance › TRIR of 0,38 – Air emissions abatement projects, Modderfontein › R100m spent in ’19 of total R180m investment › On track for completion in 3Q20 – Achieved Level 2 B-BBEE Contributor status in the year – GCR rating upgraded to A+ with stable outlook
SALE OF 50% SHAREHOLDING IN CREST CHEMICALS 7 R196m R430m Final adjusted purchase price* R234m >10X EBITDA * Incl. initial purchase price consideration of R390m and R40m purchase price adjustment on working capital, received in Feb ’20
SAFETY: TRIR 8 1,0 0,8 0,58 0,6 0,45 0,39 0,38 0,4 0,35 0,2 0,32* 0,22* 0,0 2015 2016 2017 2018 2019 * Excl. acquisitions
03 BUSINESS DRIVERS
BUSINESS DRIVERS 10 ZAR/US$ exchange rate
BUSINESS DRIVERS 11 Gold
BUSINESS DRIVERS 12 PGMs
BUSINESS DRIVERS 13 Cobalt, copper and nickel
BUSINESS DRIVERS 14 Coal and iron ore
BUSINESS DRIVERS 15 SA mining volumes
BUSINESS DRIVERS 16 Brent crude oil
BUSINESS DRIVERS 17 SA manufacturing volumes
03 EARNINGS ANALYSED
EARNINGS ANALYSED 19 – Profit from operations +2% to R2 031m – Tax rate 28% (’18: 34%) › Normalised: +9% to R2 178m › Lower foreign withholding tax › Jurisdiction mix – Trading margin = 8,2% (’18: 8,6%) – Final ordinary cash dividend of 414c declared – EBITDA +26% to R3 326m – Dividend cover of 2,0x for the year › Normalised: +23% to R3 239m » Goodwill impairment of R147m » R234m from sale of Crest – EPS +30% to 1 223c – HEPS +10% to 1 150c
EARNINGS ANALYSED 20 Dividend Dividend Dividend HEPS HEPS HEPS 570 570 561 1 800 1 800 1 800 600 600 600 515 515 515 478 478 478 1 500 1 500 1 500 500 500 500 435 435 435 385 385 385 1 150 1 150 1 150 1 200 1 200 1 200 400 400 400 1 045 1 045 1 045 959 959 959 894 894 894 818 818 818 900 900 900 300 300 300 600 600 600 200 200 200 300 300 300 100 100 100 0 0 0 0 0 0 15 15 15 16 16 16 17 17 17 18 18 18 19 19 19 FY (cps) FY (cps) FY (cps) FY (dps) FY (dps) FY (dps)
PERFORMANCE ANALYSED 21 2019 Profit from ops EBITDA HEPS R millions (Rm) (Rm) (cps) Reported 2 031 3 326 1 150 Impairment of goodwill 147 147 – Sale of Crest – (234) – Normalised 2 178 3 239 1 150 IFRS 16 (28) (249) 24 Normalised, excl. IFRS 16 2 150 2 990 1 174 Growth (%) 7,5 13,6 12,3
CASH 22 – Capex of R833m vs depreciation of R736m 4 500 114 4 177 › Expansion: R159m 94 3 454* › Sustenance: R674m 3 600 » Air emissions abatement: R100m 74 – NWC to revenue of 17,2% (16,0% in ’18) 2 700 › Lower than expected sales in Dec. 54 1 741 › Pre-payment to creditor for better prices 1 800 › Lower inventory in Chemicals offset by increase 34 41 1 178 in Mining Solutions 31 900 25 666 – Excl. IFRS 16 impact 297 424 14 15 12 › Net borrowings of R3 454m 5 3 0 -6 › Gearing at 31% (41% in Dec. ’18) 13 14 15 16 17 18 19 – Cash interest cover at 7,8x Borrowings (Rm) Gearing (%) * Excl. IFRS 16
NET DEBT AND CASH UTILISATION 23 Rm 6 000 g Cash 5 000 (3 262) 4 177 576 4 030 4 000 (64) (390) 774 246 (15) 3 454 538 3 000 544 509 2 000 397 1 000 At 31 Dec Net cash Net Tax paid Net Working Net capex Proceeds Proceeds Lease Other & At 31 Dec Finance At 31 Dec '18 generated interest dividends capital from sale from sale payments translation '19 Pre- lease '19 from paid paid of land of Crest IFRS 16 liabilities operations Gearing: Gearing: Gearing: 41% 31% 36%
NET DEBT ANALYSIS: PAYMENT PROFILE 24 Rm Dec '18 Dec '19 g Finance lease liabilities (IFRS 16) 576 g Term debt/repay 2023 2 725 g Term debt/repay 2022 2 671 g Term debt/repay 2021 716 710 g Term debt/repay 2020 g 1 861 Short-term borrowings 1 856 g Cash 173 168 283 27 (1 581) (1 978)
PERFORMANCE ANALYSED: IFRS 16 IMPACT 25 Income statement % FY19 Rm change 2018 2019 IFRS 16 underlying Revenue 6,4 23 314 24 799 – 24 799 Trading profit 1,6 1 999 2 031 (28) 2 003 Trading margin (%) (4,5) 8,6 8,2 8,1 Equity-accounted investees, net of tax (438,5) (78) 264 (1) 263 Finance costs 25,2 (365) (457) 62 (395) Tax (3,4) (529) (511) (10) (521) Profit after tax 29,2 1 027 1 327 25 1 352 HEPS 10,0 1 045 1 150 24 1 174 EBITDA 26,4 2 631 3 326 (249) 3 077
PERFORMANCE ANALYSED: IFRS 16 IMPACT 26 Statement of financial position 2019 Rm 2018 2019 IFRS 16 Underlying Non-current assets 11 681 11 884 (597) 11 287 Property, plant and equipment and intangible assets 5 768 5 722 (592) 5 130 Deferred tax 382 234 (6) 228 Other non-current assets 5 531 5 928 1 5 929 Current assets 10 594 11 249 56 11 305 Cash and cash equivalents 1 581 1 978 – 1 978 Other current assets (incl. tax receivable) 9 013 9 271 56 9 327 Equity (10 205) (11 084) (18) (11 102) Liabilities (12 070) (12 049) 559 (11 490)
PERFORMANCE EXCL. ACQUISITIONS 27 2019 2018 % change Excl. Excl. Excl. Rm acquisitions Acquisitions Reported acquisitions Acquisitions Reported acquisitions Acquisitions Reported Revenue 20 947 3 852 24 799 20 174 3 140 23 314 3,9 2,5 6,4 Profit from ops 1795 236 2 031 1 868 131 1 999 (3,9) 5,5 1,6 HEPS (cps) 1 169 (19) 1 150 1 096 (51) 1 045 6,6 3,4 10,0 PPA effects (cps) 29 29 57 57 HEPS excl. PPA (cps) 1 169 10 1 179 1 096 6 1 102
POTENTIAL TRANSACTION: TREASURY SHARES 28 – AECI subsidiary holds 9,755% of AECI’s listed ordinary shares – Limits AECI’s capacity to repurchase shares › 10% limit for subsidiary companies – Investigating a transaction to cancel these treasury shares › Without any negative impact on shareholders › At no cost to the Group – Once all regulatory matters have been assessed and addressed, AECI intends implementing the transaction
04 PERFORMANCE BY SEGMENT
SUMMARY BY SEGMENT: REPORTED 30 Segment Revenue EBITDA Profit from ops MINING R11 537m R1 923m R1 305m 4,8% 25,6% 2,4% SOLUTIONS WATER & R1 452m R229m R190m 5,5% 38,8% 58,3% PROCESS PLANT & R4 783m R376m R203m 8,1% 51,0% 70,6% ANIMAL HEALTH FOOD & R1 466m -R46m -R88m 17,5% -151,1% -218,9% BEVERAGE R5 567m R903m R512m CHEMICALS 5,7% 30,9 % -8,4% R24 799m R3 326m R2 031m GROUP 6,4% 26,4% 1,6%
MINING SOLUTIONS 32 Revenue by mineral mined (%) 4 1 23 Gold 4 23 22 PGMs 9 19 Coal 18 Copper 9 Iron ore 18 4 Diamond 22 1 Uranium 4 Other minerals 19
MINING SOLUTIONS 33 Volume Revenue Profit from ops Margin Trade WC EBITDA R11 537m R1 305m R1 923m 11,3% 19,3% 1,0% 4,8% 2,4% 25,6% ’18 11,6% ’18 16,0% – Revenue growth in both Explosives and – Growth in foreign revenue: 59 % of total revenue Mining Chemicals – Profit from operations › Improved product mix › Excellent cost control › Weaker average ZAR/US$ exchange rate › R104m Explosives realignment project costs incurred » Forex benefit offset ammonia price decline in 1H recovered in 2H › Further growth on African continent, especially › R200m annualised project benefits still anticipated in West Africa » “Get Healthy” phase completed; “Get Strong” › Good export sales for Mining Chemicals on back and “Get Business” phases in progress of improved plant utilisation
MINING SOLUTIONS CONT. 34 – Capex › On track to complete air emissions abatement compliance projects in 3Q20 » R100m spent to date – Disappointing working capital performance › Inventory increased ahead of air emissions shutdown › Unexpected slowdown in demand in 4Q19 in SA (especially in Dec.) » Power supply interruptions » Increased inventory ahead of work for emissions abatement – Social and political challenges remain/heightened in some countries of operation
BUSINESS DRIVERS 35 Ammonia
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