PRESENTATION. Standard Bank Africa Investors Conference

Transcription

1 PRESENTATION Standard Bank Africa Investors Conference New York 8 and 9 October 2013

2 1 DISCLAIMER Forward looking statements This presentation has been prepared by AECI Limited. The information contained in this presentation is for informational purposes only. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. This presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of AECI Limited, its Directors, employees or agents, nor any other person accepts any liability, including, without limitation, any liability arising out of fault or negligence, for any loss arising from the use of the information contained in this presentation. In particular, no representation or warranty, express or implied, is given as to the accuracy, completeness or correctness, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in this presentation. Such forecasts, prospects or returns are by their nature subject to significant uncertainties and contingencies. Before making an investment decision, you should consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is no guarantee of future performance. Non-IFRS information This presentation makes reference to certain non-ifrs financial information. Management use this information to measure the operating performance of the business and has been presented as this may be useful for investors. This information has not been reviewed by the Group s auditor.

3 2 PRESENTATION STRUCTURE AECI outline Brief history AECI today Portfolio and strategies» AEL Mining Services: Africa s leading explosives supplier» Specialty chemicals cluster: 15 value-adding specialty chemicals and services businesses» Heartland: embedded value in land holding Outlook and drivers

4 introduction

5 4 EXECUTIVE DIRECTORS Mark Dytor Chief Executive Appointed: 1 March 2013 In addition to his responsibilities as CE, Mark has retained a portfolio of Chairmanships at companies in AECI s specialty chemicals cluster and has led the Company s growth thrust in mining chemicals. He was appointed to AECI s Executive Committee in 2010 and to its Board in January Mark Kathan CFO Appointed: 1 September 2008 Mark is responsible for the Group s finance and treasury functions. He also oversees the Group s Communications and Investor Relations, Legal and Secretariat, Internal Audit and IT Services as well as retirement funds. He is Chairman of SANS Technical Fibers.

6 5 A SOUTH AFRICAN-BASED EXPLOSIVES AND SPECIALTY CHEMICALS COMPANY Focused on regional growth Chemicals, explosives and surplus land assets REVENUE SPLIT 1H13 Specialty product and services Group 9% Value-adding solutions through science, technology, industry knowledge 13% Key earnings drivers: mining and manufacturing employees 57% 31% Domiciled in SA; JSE Limited-listed Focused regional growth strategy Revenue 1H13: R7,2bn» >20% in Africa (excl. SA); 20+ countries Market cap: R15,3bn (Sept 13) Major R2bn capital expenditure cycle complete B-BBEE transactions completed in 12 44% 9% Agriculture 31% Manufacturing 3% Property 3% 57% Mining services 44% Explosives 13% Mining chemicals

7 6 1H13 REVENUE AND PROFIT SPLIT By product segment REVENUE SPLIT R7 496m PROFIT FROM OPERATIONS R751m Property 278 Property 50 Specialty chemicals Explosives Specialty chemicals 389 Explosives 312 Includes intersegment revenue of R273m Excludes corporate costs of R139m

8 7 STRATEGIC POSITIONING SA-based explosives and specialty chemicals company. Businesses growing regionally and internationally; focused on Africa, South America, SE Asia.

9 8 GROUP AFRICAN FOOTPRINT Explosives Specialty chemicals

10 9 GROUP MINING REVENUE 1H13 Customers across the mining spectrum 11% 10% 16% 5% 3% 1% 1% Phosphate Uranium 10% 8% Various other 19% 26% 26% Platinum 19% Coal 16% Gold 11% Copper, cobalt, chrome and nickel 10% Quarry, construction and civil 5% Diamonds 3% Iron ore 10% Other

11 10 SHARE PRICE (SA cents)

12 brief history

13 12 BRIEF HISTORY

14 13 BRIEF HISTORY Roots to 1894 a Nobel dynamite company at Modderfontein, near Johannesburg Listed since 1966; majority ownership/control by ICI and Anglo American for most of its existence Evolved into typical chemical conglomerate and then restructured significantly after SA s readmission into the global economy in 1994 Now 100% free float, focused, specialised businesses and expanding with adequate B-BBEE ownership Embarked on a R2bn capital expenditure programme in 07. Plants complete and profit optimisation underway Restructured in 10: 20 businesses report into a single Executive Committee, and ultimately to the AECI Board AECI brand revamped and relaunched

15 AECI today

16 15 COMPANY STRUCTURE Freedom supported by a Framework BOARD EXECUTIVE BOARD Lake Foods Lake Specialties HEAD OFFICE FUNCTIONS

17 16 GROUP VALUES

18 17 GOVERNANCE

19 18 SAFETY, HEALTH AND ENVIRONMENT Performance and management TRIR of 0,60 (0,53 in 12) Group-wide roll-out of Process Safety Management practices in process Included in JSE s Socially Responsible Investment Index for fourth successive year Participate in global Carbon and Water Disclosure Projects Group-wide environmental improvement programme Green Gauge focuses on water and energy consumption, and waste generation Environmental remediation liability fully provided for at R155m ALL WORKERS TRIR TRIR 1,2 1,0 0,8 0,6 0,4 0,2 Maximum tolerable level 0, YTD

20 19 FINANCIAL PERFORMANCE H13 Revenue R10,2bn R8,5bn R12,9bn R10,7bn R11,6bn R13,4bn R13,8bn R7,7bn Profit from ops R1 102m R807m R1 035m R767m R1 062m R1 316m R1 197m R612m RONA (%) 24,8 16,5 16,9 12,6 15,9 18,1 16,7 15,3 Employees Market cap R8,2bn R9,5bn R6,1bn R7,4bn R9,8bn R9,8bn R10,2bn R14,7bn Notes Large property disposal Excluding closed ops Excluding closed ops Global recession Recovery from recession Strong rand B-BBEE IFRS 2 charge. Restated to equity account for joint ventures

21 20 PERFORMANCE 1H13 Revenue up 13% to R7 223m Profit from operations up 28% to R612m Volumes up 3,7% (excl. sulphur trading) HEPS up 236% to 356c Final cash dividend of 105cps up 35% compared to 78cps in 1H12 Gearing at 35% from 51% in Jun 12 (33% in Dec 12)

22 21 RESULTS 1H13 Operating profit Operating profit up 28% to R612m OPERATING PROFIT (Rm) Volumes declined by 6% (+3,7% excl. sulphur) Chemicals volumes -14,5 (+5% excl. sulphur)» Manufactured +5,1%» Traded -31,6% Bulk explosives +3% Foreign revenue +25,4% to R2 438m

23 22 portfolio and strategy

24 23 EXPLOSIVES

25 24 EXPLOSIVES Sites and plants by African country (excluding SA) Botswana (5) Burkina Faso (7) Congo (1) DRC (6) Egypt (2) Ethiopia (1) Ghana (8) Guinea (3) Mali (2) Mauritius (1) Mozambique (2) Namibia (1) Tanzania (5) Zambia (4) Zimbabwe (4) Sites (41) Plants (11)

26 25 EXPLOSIVES Africa s leading supplier of explosives, initiating systems and value-adding services Bulk explosives plants Africa and Indonesia Presence in 23 countries Throughout African continent Expanding into selected developing markets DetNet: global JV in electronic detonators with Dyno Nobel Strategic AN supply for AEL in Indonesia secured

27 26 EXPLOSIVES Revenue split to 1H13 Portfolio has been diversified decrease in dependence on SA narrow reef sought AEL has deliberately grown its share of the SA surface open-cast mining market substantially in past 5 years Business outside SA strategically grown to constitute almost 50% of current revenue Strategic alignment with SA s narrow reef sector continues 100% 80% 60% 40% 20% 0% 100% 80% 60% 40% 20% 0% SA Underground SA Surface SA Underground SA Surface Outside SA

28 27 EXPLOSIVES Expansion and growth in Africa Strategic move in 95, partnering with customers Currently» Registered businesses in 12 countries, with more to come» 13 bulk plants, 60 MMUs, 1 packaged explosives plant, two IS assembly plants» Work with 11 currencies» Sourcing from SA, India, China, Europe, Russia» 950 employees

29 28 EXPLOSIVES Growth and expansion in Indonesia Entry in 08, supplying KPC Currently» 9 emulsion manufacturing plants» t ANS plant in Bontang (in commissioning)» 19 Mobile Manufacturing Units Support infrastructure for 9 mine sites Shock tube assembly plant in Subang (Jakarta) 385 employees

30 29 EXPLOSIVES Indonesian investment BBRI JV Nitric acid and ANS plant at Bontang, Indonesia Capacity of 68ktpa and back-integrated into a major ammonia source 5 hours by ship from KPC and 7 days sailing to Western or Eastern Australia Phased AECI investment of US$23m for 42,6% shareholding in BBRI Secures a site ideal for future expansion in the region Compressor house (Jun 13) Boiler and demin plant (Jun 13) ANS plant level 3 (Jun 13)

31 30 EXPLOSIVES Performance Revenue R3 551m +22% Operating profit R312m +75% Operating margin (%) 8,8 ( 12: 6,1) Average WC (%) 20 ( 12: 21) Best first-half results delivered Bulk explosives volume growth of 3%» SA s Surface and Massive market grew by 7%» Africa flat, power issues in DRC and labour strike in Ghana» Indonesian volumes grew by 14%, mainly at KPC Initiating systems volumes down» Narrow reef gold and platinum mining under pressure Ammonia price increased by 44% on average Net positive forex impact of R27m in 1H13

32 31 SPECIALTY CHEMICALS

33 32 SPECIALTY CHEMICALS Portfolio of autonomous businesses (currently 15) based on chemistry and strong service element Strengths: value add service models, appetite for growth, successful acquisition history, attraction to global alliances, regional knowledge, and world-class technology licences Currently expanding out of South Africa, with technology unrestricted by licences; strong focus on mining chemicals Grow organically and through acquisitions

34 33 FULL SERVICE PACKAGE MODEL Tailor-made per customer and business Complete basket of products Logistics to customer site Customer site» Safety» Storage: tanks, warehouse» Facilities: dilution, formulation» Addition and metering» Process management or optimisation» Integration with site management

35 34 SPECIALTY CHEMICALS Presence in 23 African countries (plus SA) Specialty chemicals

36 35 SPECIALTY CHEMICALS CLUSTER 15 businesses Akulu Marchon Lake Foods Chemfit Lake Specialties Chemical Initiatives Nulandis Chemisphere Technologies Resinkem ChemSystems Senmin Crest Chemicals SANS Technical Fibers ImproChem Specialty Minerals SA Industrial Oleochemical Products

37 36 SPECIALTY CHEMICALS Strategy Diverse South African specialty chemicals cluster is key to Group strategy African specialty chemicals business focused on» Mining chemicals» Water, oil, energy and gas» Agriculture» Food additives» Personal and home care

38 37 SPECIALTY CHEMICALS Strategic progress Leveraging AEL s established footprint and relationships» progress in mining chemicals, with more to come General Electric s Chemical and Monitoring Solutions business acquired in 12» African footprint with excellent people» specialised equipment for water processing» continued support and technology from a world-class partner» in line with water, oil, gas, energy strategy roll-out

39 38 SPECIALTY CHEMICALS Revenue by market sector 1H13 across full spectrum of manufacturing sectors 6% 8% 5% 5% 5% 5% 5% 4% 4% 3% 9% 1% 1% 1% 1% 1% Appliances and furniture Steel and metals Construction Automotive Engineering and foundry 4% Various other 16% 24% 24% Mining 16% Agriculture 8% Food and beverage 6% Chemical industry 5% Detergents 5% Oil and refining 5% Explosives 5% Paper and packaging 5% Textiles and leather 4% Toiletries, cosmetics and pharmaceuticals 4% Coatings, ink and adhesives 3% Plastics and rubber 9% Other

40 39 SPECIALTY CHEMICALS Performance 1H13 Revenue R3 667m +3% Operating profit R389m -2% Operating margin (%) 10,6 ( 12: 11,1) Average WC (%) 24 ( 12: 20) Volumes -14,5% Excl. sulphur: +4,9%» Manufactured +5,1%» Traded -31,6% Prices +17,1% Excellent results from Chemfit, Lake Foods, Lake Specialties, Nulandis, Senmin R24m profit from sale of Bryanston office in 12 not repeated No sulphur sales into Central Africa Margins under pressure as price attempt to keep up with weak ZAR

41 40 SPECIALTY CHEMICALS Acquisitions update Numerous evaluations undertaken SA Premix acquired» Animal health and nutrition» Merged with the business of Chemfit, effective 1 September 13 Promising possibilities in Africa, for agricultural markets Disappointment in Brazil seller s remorse Alternatives being evaluated

42 PROPERTY Cautionary announcement Strategy: optimise the realisation of real estate assets surplus to operational requirements by selling land and selectively investing in top structures Continue to evaluate all options in respect of surplus real estate assets in Modderfontein and Somerset West Have entered into discussions for the disposal of a large proportion of the surplus property assets at Modderfontein Intention is to have finality on the proposed transaction by 4Q13 Further details will be announced when appropriate

43 42 PROPERTY Land in prime locations at Modderfontein (Johannesburg) and at Somerset West (Cape Town) ~1 600ha of the original 3 770ha of excess land available sold by end 12 Independent valuation (July 08 and May 12) of R2,5bn for land at Modderfontein and Somerset West surplus to requirements Current carrying value in books is R445m Does not take into account remediation spend or other AECI properties

44 43 PROPERTY Development sites SOMERSET WEST LAND USE MODDERFONTEIN LAND USE

45 44 PROPERTY Performance 1H13 Revenue R278m +58% Operating profit R50m +138% Industrial vacancies decreased encourages new development House price growth improving and better access to finance is promoting sales Surplus remains in office accommodation Leasing and services portfolio» R82m revenue» Vacancy rate unchanged at 20%

46 outlook and underlying growth

47 46 POSITIONING, GROWTH DRIVERS AND OUTLOOK Phase of consolidation and transformation complete; now in growth phase SA manufacturing volumes to year-end expected to track GDP growth Strong focus on operational excellence in AEL» Cost reduction; continue to improve AEL s profitability Sales to mining sector in Africa and Indonesia expected to grow on the back of new projects and contracts SA narrow reef platinum and gold mining expected to remain challenging Potential for growth in sales of mining chemicals Strong focus on strategic pillars in specialty chemicals cluster for growth in Africa Acquisition activity expected locally and in Africa and South America Businesses well positioned to take advantage of market growth Profit optimisation of new plants will have further positive impact on margins and revenue

48 thank you