AECI FIXED INCOME ROADSHOW

Transcription

1 AECI FIXED INCOME ROADSHOW FOR THE HALF-YEAR ENDED 30 JUNE 2018

2 01 WHO IS AECI?

3 02 HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

4 03 STRATEGY AND INVESTMENT PHILOSOPHY

5 04 GROWTH DRIVEN BY CORE STRATEGY Growth (%) Key growth metrics Rm Operations excluding acquisitions Acquisitions Total reported Total reported Organic Acquisitions Overall Revenue Profit from operations Headline earnings HEPS (cents per share) Revenue increase Aquistions Revenue Operating profit increase Aquistions Revenue

6 KEY INDICATORS AND GOVERNANCE

7 06 GOVERNANCE STRUCTURE

8 07 BOARD COMPOSITION

9 08 BOARD COMPOSITION CONTINUED

10 09 BOARD COMPOSITION CONTINUED

11 AECI STRUCTURE

12 11 KEY BRANDS/BUSINESSES

13 FREEDOM SUPPORTED BY A FRAMEWORK 12 AT THE HEART OF THE CORPORATE STRATEGY

14 13 AECI GUARANTORS TO THE DMTN PROGRAMME

15 OPERATING ENVIRONMENT AND HIGHLIGHTS FOR THE LATEST PERIOD

16 15 KEY BUSINESS DRIVERS Price performance gold, platinum and copper Price performance Iron and thermal coal ZAR/US$ exchange rate SA mining volumes

17 16 MINING SOLUTIONS 1H18: REVENUE BY MINERAL MINED (%)

18 17 KEY INDICATORS FOR THE SIX MONTHS ENDED 30 JUNE KEY RATIOS 30 Jun Jun 2017 EBITDA (Rm) Trading margin (%) 8,7 8,0 HEPS (c) Gearing (%) Long-term rating GCR A (za) A (za) Short-term rating GCR A1 (za) A1 (za) PEERS BASED ON SECTOR/SCALE AECI LTM Omnia LTM Afrox LTM Nampak LTM Revenue (Rm) Market cap (Rm) Net debt/ebitda 2,0x 2,3x 2,4x EV (Rm) EV/EBITDA 7,20 7,23 7,85 6,38

19 PERFORMANCE BY PILLAR

20 19 STRATEGIC PILLARS

21 20 HIGH LEVEL PILLAR PERFORMANCE Revenue (%) Excludes inter-segment revenue 2 1H18 Outer circle 1H17 Inner circle Profit/(loss) from operations (%) Mining Solutions Water & Process Plant & Animal Health Food & Beverage Chemicals Property and Corporate

22 21 MINING SOLUTIONS Key businesses VOLUME 4,2% REVENUE R5 021m 9,8% PROFIT FROM OPS R520m 9,0% MARGIN 10,3% 1H17 10,4% TRADE WC 21,3% 1H17 18,3% The businesses in this pillar provide a mine-to-metal solution for the mining sector internationally The offering includes surfactants for explosives manufacture, commercial explosives, initiating systems and blasting services right through the value chain to chemicals for ore beneficiation and tailings treatment. The companies in this pillar have their own unrestricted intellectual property, enabling them to service customers worldwide Between them they have close to 100 operations (including manufacturing plants, sales offices and distribution centres) in more than 20 countries, with a particularly extensive footprint in Africa. AEL has an established presence in Indonesia and Australia and both Senmin and Experse have also expanded their footprints into other countries

23 22 WATER & PROCESS Key business VOLUME 15,4% REVENUE R678m 4,1% PROFIT FROM OPS R80m 2,1% MARGIN 11,8% 1H17 11,6% TRADE WC 22,9% 1H17 21,9% ImproChem provides integrated water treatment, process chemicals and equipment solutions, for a diverse range of applications in Africa These include, inter alia, public and industrial water, desalination and utilities. In Water Solutions, ImproChem has an established footprint in Africa, where water remains a scarce resource This presents opportunities in all sectors of industry in terms of the provision of recycling and usage minimisation solutions. This business continues to show strong organic growth driven by importance of water service delivery by government

24 23 PLANT & ANIMAL HEALTH Key businesses VOLUME 76,3% REVENUE R1 882m 98,8% PROFIT FROM OPS R115m >100,0% MARGIN 6,1% 1H17 3,1% TRADE WC 22,2% 1H17 19,2% Nulandis manufactures and supplies an extensive range of crop protection products, plant nutrients and services for the agricultural sector in Africa Schirm, based in Germany, is a contract manufacturer of agrochemicals and fine chemicals with a European and US footprint. It is the largest provider of external agrochemical formulation services in Europe In Agrochemicals, Nulandis NuWay philosophy recognises the momentum that bio agriculture is gaining globally, including in Africa where Nulandis footprint was expanded through the acquisition of Farmers Organisation, in Malawi, in NuWay is a holistic, more environmentally friendly approach to the application of products for soil and plant health

25 24 FOOD & BEVERAGE Key businesses VOLUME 4,0% REVENUE R552m 2,6% PROFIT FROM OPS R31m 21,0% MARGIN 5,5% 1H17 4,7% TRADE WC 21,6% 1H17 24,2% The businesses in this pillar supply ingredients and commodities to the dairy, beverage, wine, meat, bakery, health and nutrition industries. The other main activity is the manufacture and distribution of a broad range of juice-based products and drinks, including formulated compounds, fruit concentrate blends and emulsions Market growth in the food and beverage sector continues to outpace GDP growth in South Africa and in other Southern African countries. Both Lake Foods and SCP have strong relationships with their customers in the region and this will contribute to their ability to benefit from this trend

26 25 CHEMICALS Key businesses VOLUME >100% REVENUE R2 339m 38,1% PROFIT FROM OPS R241m 50,9% MARGIN 10,3% 1H17 9,4% TRADE WC 20,6% 1H17 16,8% These businesses supply chemical raw materials and related services for use across a broad spectrum of customers in the manufacturing, infrastructure and general industrial sectors mainly in South Africa and in other Southern African countries. SANS Technical Fibers is based in the USA A solid portfolio of chemicals businesses remains core for AECI. These businesses serve a diverse range of customers. They are highly cash generative, to the benefit of the Group as a whole. Their service-driven, value-add business models remain relevant and they have the manufacturing capacity to take advantage of any upturn in local and export markets The active management and enhancement of this portfolio ensures that synergies are maximized to boost overall efficiencies and that costs remain well controlled

27 26 HISTORICAL FINANCIAL PERFORMANCE FY13 FY14 FY15 FY16 FY17 LTM* Revenue (Rbn) 15,9 16,9 18,4 18,6 18,5 20,5 Profit from ops (Rm) RONA (%) 16,4 17,8 18,1 16,0 16,7 16,0 Employees Market cap (Rbn) 16,03 17,16 10,8 12,2 12,2 12,8 Notes Cash proceeds from bulk property sale. R300m negative impact of strikes. 2. Somerset West property sale. Negative R178m negative effect of DB obligations de-risking. 3. Includes negative impact of R149 million from loss on settlement of post-retirement medical aid obligations. 4. Includes R105 million of transaction costs incurred on the acquisitions of Schirm and Much Asphalt. 5. Includes the results from the acquisition of Schirm and Much Asphalt. * Last twelve months

28 CAPITAL STRUCTURE

29 28 GEARING Current facilities:» EUR128m bridge» ZAR2,3bn bridge» ZAR1,1bn non-current term debt Commentary:» Gearing levels have risen materially in the current period to fund the two strategic acquisitions brought into the portfolio» The EUR bridge matures end-november 2018 and the ZAR bridge matures end-march 2019» This debt will be termed out using a mix of bank and capital market funding to create a smoother debt maturity profile before year-end Gearing levels ZAR Net Debt Net Debt/EBITDA Rm Gearing Debt maturity profile Bridge Funding Term Funding Rm Note: Bridge funding and term funding to be refinanced by DCM and Bank loans before year-end.

30 ACQUISITIONS AND KEY RISKS AND MITIGANTS

31 30 ACQUISITION OF SCHIRM Schirm is a contract manufacturer of agro and fine chemicals with a European and US footprint Largest provider of external agrochemical formulation services in Europe Total production volume of tpa 4 synthesis units 55 formulation units 81 packaging units 800 permanent employees Integrated offering across synthesis, formulation and packaging AECI s first major acquisition in Europe Geographic diversification Earnings diversification

32 31 ACQUISITION OF SCHIRM CONTINUED Market leader in provision of formulation services for agrochemicals in Europe Extension of Schirm s manufacturing and distribution expertise Long-standing relationships with blue-chip customer base Substantial investment in capex over past two years to deliver growth Seasonal benefits Supply chain opportunities Enhanced geographic and product diversity Currency diversification in earnings

33 32 SCHIRM FINANCIAL INFORMATION June YE Revenue ( m) EBITDA ( m) EBITDA (%) 13,5 12,8 12,3 Plants largely seasonally-utilised, hence the strategic capital expenditure in 2016 and 2017 Majority of earnings typically generated from Jan to June» Objective is to create a July to December season from fine chemicals and other geographies Favourable finished goods storage contracts negotiated with Imperial Enhanced earnings derived from the rental prepayment of 3,5m Extract from November 2017 presentation

34 33 ACQUISITION OF MUCH ASPHALT Leading asphalt producer in SA Only independent asphalt producer with a national presence Technological capability Proprietary technology to convert bitumen grades and produce performance grade specification binders Much Asphalt team Only commerciallyowned specialist road testing laboratory Highly experienced management, 536 employees and high staff retention Strong brand with over 52 years experience State-of-the-art facilities Access to SRT laboratory and significant bitumen storage capacity

35 34 ACQUISITION OF MUCH ASPHALT CONTINUED Production in ,3m tonnes hot mix asphalt; c. 20m litres binders Facilities 18 static asphalt facilities 3 static emulsion and modified binder factories 4 mobile asphalt plants 1 bitumen convertor Accreditations ISO 9001: 2000 OSHAS 18001: 2007 SANS ISO / IEC Financial performance Revenue R2bn Profit after tax R181m Good cash conversion Capacity Installed production capacity = approx. 50% of total SA asphalt market

36 35 MUCH ASPHALT FINANCIAL INFORMATION Purchase price consideration of R2,272 billion» Acquisition of 100% share capital of Much Asphalt» Management deal to be finalised Approximately 2% of equity Implied Enterprise Value/EBITDA above 7x Rigorous due diligence process over 3-month period Good earnings growth over last 3 years above 10% p.a. Good cash conversion Investment is projected to be earnings accretive Initially negative on RONA Current funding will be replaced through 100% bridge facility from Standard Bank Funding structure will be finalised once all acquisitions finalised Extract from October 2017 presentation

37 INDICATIVE TERM SHEET

38 37 ISSUER INDICATIVE TERM SHEET AECI LIMITED Arranger and dealer Issuer credit rating Auction date Rand Merchant Bank GCR Long-term A(za) Early September Settlement T+3 Guarantors Ordinary course of business funding Indicative pricing Use of proceeds Placement methodology Much Asphalt Pty Ltd AECI Mauritius Ltd Chemical Services Ltd AECI Mining Solutions Ltd [Up to R600m with option to upsize to R800m] 3 year 5 year TBA General corporate purposes Dutch Auction (sealed bids, no feedback)

39 38 CONTACT DETAILS AECI LTD Mark Kathan Chief Financial Officer Trevor Starke Group Treasurer RAND MERCHANT BANK Delia Patterson Distribution +27 (11) Trishalia Naidoo Origination +27 (11) Mthobisi Mthembu Origination +27 (11)

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