PRESENTATION 22 AND 23 FEBRUARY 2011 EXECUTIVE TEAM Graham - - PowerPoint PPT Presentation

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PRESENTATION 22 AND 23 FEBRUARY 2011 EXECUTIVE TEAM Graham - - PowerPoint PPT Presentation

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FINANCIAL RESULTS FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 PRESENTATION 22 AND 23 FEBRUARY 2011 EXECUTIVE TEAM Graham Edwards Chief Executive Mark Kathan M k K th Financial Director and CFO Fi i l Di t d CFO

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SLIDE 1

FINANCIAL RESULTS FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

PRESENTATION

22 AND 23 FEBRUARY 2011

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SLIDE 2

EXECUTIVE TEAM

  • Graham Edwards

Chief Executive M k K th Fi i l Di t d CFO

  • Mark Kathan

Financial Director and CFO

  • Mark Dytor
  • Edwin Ludick

Chemical Executives

  • Schalk Venter
  • Tobie Louw

Managing Director AEL Mining Services

  • Tobie Louw

Managing Director, AEL Mining Services

  • Anthony Diepenbroek

Managing Director, Heartland

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SLIDE 3

OVERVIEW

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SLIDE 4

PERFORMANCE HIGHLIGHTS

  • Best ever safety performance
  • HEPS +67%, in line with guidance
  • Overall volumes +11%
  • Operating profit from continuing operations +38%

O ll i i t t 9 2%

  • Overall margin improvement to 9,2%
  • Final cash dividend of 135 cps declared
  • Ramp-up of strategic projects making good progress

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SLIDE 5

SUMMARY

  • Global economy stronger and commodity prices increasing sharply
  • Improvement in mining volumes and manufacturing now more robust

Improvement in mining volumes and manufacturing now more robust

  • Revenue R11,6bn

+8%

  • Profit from continuing operations R1 062m

+38%

  • Profit from continuing operations R1 062m +38%
  • Net working capital management sustained

G i i d t 40%

  • Gearing improved to 40%
  • Stronger currency of R7,32 ave for ’10 (’09: R8,27 ave)

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SLIDE 6

BUSINESS ENVIRONMENT VOLUME IMPROVEMENT

SA manufacturing volumes

Source: StatsSA

January ’04 – December ’10

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SLIDE 7

BUSINESS ENVIRONMENT VOLUME IMPROVEMENT CONT.

SA mining volumes

Source: StatsSA

January ’05 – December ’10

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SLIDE 8

BUSINESS ENVIRONMENT CONT.

  • Volume recovery in mining and

manufacturing – Low inflation and strong rand suppressing prices – Inventory pipeline normalised

  • Commodity prices increasing in line

with Brent Crude

  • Customers remain cautious and

not making large commitments

  • Property market

p y – Impacted by financial institutions’ credit policies – Lagging the economic recovery Lagging the economic recovery

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SLIDE 9

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PERFORMANCE PERFORMANCE

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SLIDE 10

SAFETY AND HEALTH PERFORMANCE

Maximum tolerable level

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SLIDE 11

RESULTS HEADLINE EARNINGS

1,000 800 900 500 600 700 300 400 500 100 200 Headline Earnings '09: R 370m Specialty Chemicals: R328m Mining Services: R80 Property: R33m Specialty Fibres: R24m Finance: Costs 67m SANS Belville:

  • R66m

Corporate:

  • R170m

Tax:

  • R53m

Other: R6m Headline Earnings '10: R619m

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SLIDE 12

RESULTS OPERATING MARGIN AND VOLUMES

Operating margin

  • Operating margin improved to 9,2%
  • Volumes +11% overall

Chemicals volumes +10%

10.0 12.0

– Chemicals volumes +10%

  • Manufactured volumes +3%
  • Traded volumes +19%

8.0

– Explosives volumes +13% due to foreign expansion and African growth

  • Foreign sales +23,5% in rand terms

6.0

%

(39% in US$) largely due to improved explosives volumes outside of SA

  • In general, market share maintained or

i d i titi i t

2.0 4.0

improved in a competitive environment

0.0 '05 '06 '07 '08 '09 '10

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SLIDE 13

RESULTS HEPS

900

Half- and full- year HEPS

  • HEPS at 577 cps up 67%
  • Abnormally high corporate charge
  • f R226m

700 800 900

  • Retrenchment costs R67m
  • Interest R80m lower, R13m less

500 600 700

capitalised

  • Operating profit from continuing
  • perations up 38%

300 400 500 cps 100 200 300 100 '05 '06 '07 '08 '09 '10

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SLIDE 14

RESULTS CONT.

  • Capex R634m – incl R385m for

Borrowings Gearing

p expansion projects

  • NWC to sales at 15,1%

60 70 2,500

  • Borrowings at R1 769m
  • Gearing 40%

50 1 500 2,000

  • Cash interest cover 5,6x
  • All loan covenants met

30 40 1,000 1,500 % R millions

  • Cash dividend 135 cps

20 500 , 10 '05 '06 '07 '08 '09 '10 '05 '06 '07 '08 '09 '10

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SLIDE 15

RESULTS PROFIT FROM CONTINUING OPERATIONS (Rm) ( )

900 600 700 800 400 500 600 200 300 '09 '10 100 S l h l S l f b Corporate (200) (100) Specialty chemicals Mining services Specialty fibres Property (300)

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SLIDE 16

RESULTS CORPORATE COSTS

Corporate '09:

  • R56m

Legacy (incl. PRMA):

  • R80m

Long-term incentives:

  • R51m

Corporate restructure:

  • R10m

Captive insurance:

  • R17m

Other:

  • R12m

Corporate '10:

  • R226m

(50) (100) (150) (200)

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(250)

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SLIDE 17

CORPORATE COSTS ANALYSIS

Group services R226m R56m (’09)

  • PRMA

– Closed scheme of 4 400 members (pensioners and current employees) – Reduction in net discount rate to 1,75% Medical aid increase 9 5% for ’11 – Medical aid increase 9,5% for 11 – Additional members

  • LTI

– Earnings-based and share price-based – Provision driven by increases in above components

  • Captive insurance company liquidated listed investments in ’09 for a profit
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SLIDE 18

MINING SERVICES ENVIRONMENT

  • Recoveries in global volumes and prices
  • Diamonds, surface platinum, iron ore, coal and copper showed strong growth
  • Earnings diluted by rand strength
  • High rainfall in SA and Indonesia

g

  • SA deep level mining remains challenging
  • Key input costs up - ammonia and fuel increasing
  • Key input costs up - ammonia and fuel increasing

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MINING SERVICES PERFORMANCE

  • Revenue

R4 832m +19%

  • TP

R378m +27% T di i (%) 7 8 7 3 i ’09

  • Trading margin (%) 7,8

7,3 in ’09

  • Stronger second half than first half – good momentum from investment projects
  • Includes R39m shocktube-related retrenchment provision for ’11
  • Year-on-year weighted volume growth of 13%
  • Good progress on input cost management
  • WC tightly managed despite growth: 16,9% to 14,0%
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SLIDE 20

MINING SERVICES PERFORMANCE

700 750 550 600 650 400 450 500 250 300 350 100 150 200 50 R 298m: Actual trading margin '09 R 402m: Business Contribution growth (R 114m): Fixed cost inflation (R 119m):

  • Manuf. &

support costs (R 25m): Exchange differences (R 25m): Depreciation (R 39m): I SAP severance R 378m: Actual trading margin '10

20

growth

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SLIDE 21

SPECIALTY CHEMICALS ENVIRONMENT

  • Good start to the year from a low base in 1H09
  • More consistent volume growth in 2H10

More consistent volume growth in 2H10

  • Prices remained under pressure
  • Commodity prices started increasing in 2H10
  • Strong growth in agriculture, food and mining sectors in the second half
  • Quality of business remains solid; earnings improvement on volume growth and

non-recurrence of the bad debt of ’09

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SLIDE 22

SPECIALTY CHEMICALS PRICE AND VOLUME ANALYSIS

8,000 7,000 6,000

ions

5,000

R milli

4,000 3,000

Revenue '09 Volume 9,8% Price (9,9% ) Revenue '10 (1,1% )

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SLIDE 23

SPECIALTY CHEMICALS PERFORMANCE

  • Revenue

R6 453m

  • 1%
  • TP

R811m +68%

  • TP

R811m +68%

  • Trading margin (%)

12,6 7,4 in ’09

  • Volumes +10%: manufactured +2,7%; traded +18,9%
  • Prices down 10%
  • Good cash generation on the back of stronger profitability
  • Excellent performances from Akulu, ImproChem, IOP, Lake, Resinkem

Good recoveries from CI Duco Plaaskem

  • Good recoveries from CI, Duco, Plaaskem
  • Positive signs from Resitec (Brazilian JV)
  • Senmin produced a solid performance considering

– high start-up costs of PAM facility – xanthate dryer underperforming – strong rand

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SPECIALTY FIBRES PERFORMANCE

  • Revenue

US$40,2m +48%

  • TP

US$4 5m +309%

  • TP

US$4,5m +309%

  • Trading margin (%)

11,2 4,1 in ’09

  • Recovery in global automotive market - volumes +48%
  • Margins under pressure
  • New capacity, additional 33% came on line in Sept ’10
  • Demand remained strong, more than 50% of sales outside the US
  • Cash positive and self-sustaining
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PROPERTY ENVIRONMENT

  • No real growth year-on-year across the spectrum of residential sector
  • Industrial and commercial sectors hampered by lack of investment in

Industrial and commercial sectors hampered by lack of investment in manufacturing and oversupply of office space, respectively

  • Discreet activity in prime nodes based on tenants consolidating activities

y p g

  • Rate of increase of vacancies reduced
  • Downward pressure on rentals remains but bad debts and delinquencies reducing

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PROPERTY PERFORMANCE

  • Revenue

R370m +75%

  • TP

R66m +100%

  • TP

R66m +100%

  • 3 commercial sales transacted

– Somerset West 2,8ha Modderfontein 1 25ha and 0 47ha – Modderfontein 1,25ha and 0,47ha

  • Longlake township approvals for 220ha saleable land achieved; release in phases

Infrastructure installation implementation to market demand

  • Infrastructure installation implementation to market demand
  • First top structure development in joint venture
  • Leasing portfolio performed well
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SLIDE 27

PROPERTY FILLING THE PIPELINE (zoned land ready for sale) ( y )

700

Pipeline (cumulative)

600 134 267 400 500 132 134 300 400 Commercial Industrial Residential 89 110 230 270 104 132 200 16 75 75 103 103 13 89 28 100 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013

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SLIDE 28

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PROJECTS PROJECTS UPDATE

28 UPDATE

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SPECIALTY CHEMICALS GROWTH STRATEGIES

  • CS2 plant commissioned and run at nameplate capacity

S lid th t ll t l t t h l d

  • Solid xanthate pellet plant technology proved

− Production rates limited by dryer operation − New dryer designed and being fabricated − Now planned to be operational by July ’11

  • AM and PAM

AM and PAM − Biofermentation process fully operational − Acrylamide produced successfully (bioconversion) Pol acr lamide prod ction commissioned s ccessf ll − Polyacrylamide production commissioned successfully − Final process guarantees underway − On target to ramp-up in ’11

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SPECIALTY CHEMICALS CS2 PLANT

2 30

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SPECIALTY CHEMICALS PAM PLANT

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SPECIALTY CHEMICALS SHORT-TERM STRATEGIC OBJECTIVES

  • Optimise current businesses
  • Sell excess capacity from new plants

M k t d t f

  • Market and customer focus
  • Expand vendor management models into the rest of Africa
  • Water, oil, gas and energy driven by ImproChem
  • Develop and grow food additives and agriculture
  • Acquisitions authorised in ’10 (approx R180m)

− Toll manufacturing: SAPC (completed) g ( p ) − Agricultural chemicals distribution: Plaaskem (completed) − Bulk caustic soda business: Crest (sale agreement signed) Mine/effluent water technology: ImproChem (heads of agreement signed) − Mine/effluent water technology: ImproChem (heads of agreement signed)

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MINING SERVICES CAPITAL PROJECTS

Total major capital project spend R344m

  • Ammonia storage inspection

R36m (R13m in ’10) ISAP R695 (R102 i ’10)

  • ISAP

R695m (R102m in ’10)

  • Indonesian plants

R130m (R41m in ’10)

  • Africa infrastructure capital

contributed well and bedded down

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MINING SERVICES ISAP (three plants) ( )

  • Tubing plant running to 100% design output
  • Detonator plant: record output in Sept – 7 5 million

Detonator plant: record output in Sept 7,5 million − Further upgrade and debottlenecking Oct - Dec

  • Auto assembly plant doubled in ’10
  • Auto-assembly plant doubled in 10
  • Products well received – spray-dried delay powder technology commercialised

D l d d i t d i l t t i l

  • Developed and introducing lower cost raw materials
  • Export orders for shocktube continue to grow
  • New generation ISAP shocktube to be launched in ’11

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MINING SERVICES MAJOR PROJECTS - OUTLOOK

  • Investment programme has been significant
  • International company structure working well

International company structure working well

  • Continued capital investment in Modderfontein base
  • Consolidating Africa and International investments
  • Consolidating Africa and International investments
  • Much activity in customer tenders

Af i i th l b l tli ht t t

  • Africa in the global spotlight – new entrants
  • Expecting dynamic market in Africa – strong rand, capacities
  • More growth projects in the pipeline

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SLIDE 36

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CONCLUSION CONCLUSION AND OUTLOOK AND OUTLOOK

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CORPORATE ISSUES

  • BBBEE transaction to be announced in 1H11

– Employee and community trust share schemes Employee and community trust share schemes – 10% planned Shareholder approval will be sought – Shareholder approval will be sought

  • Corporate restructuring complete and working well

A ti tf li t ti

  • Active portfolio management continues

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SLIDE 38

AECI ’10 REVENUE SPLIT

Property 3% Fibres 2% 3% 2% Mining services 51% Manufact. 37% 38 Agri 7%

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SPECIALTY CHEMICALS REVENUE BY MARKET SECTOR

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MARKETS ’10 MINING SALES SPLIT

Copper, Quarry, Constr, Civils 7% Gold 16% Cobalt, Chrome, Nickel 12% Diamonds 6% I ron ore 2% Phosphate 1% 16% Uranium 1% Other 13% Coal 17% Other 9% Platinum 29%

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OUTLOOK

  • Mining volumes appear robust globally
  • Manufacturing volumes in SA appear to have stabilised

Manufacturing volumes in SA appear to have stabilised

  • R/US$ rate remains a challenge but likely to be less of an issue in ’11
  • Property likely to remain unexciting for the next 12 months
  • Property likely to remain unexciting for the next 12 months
  • Businesses well positioned to take advantage of market growth

R f l t ill h iti i t i t 12 18

  • Ramp-up of new plants will have positive impact on margins over next 12 - 18

months

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SLIDE 42

INVESTORS’ CALENDAR

  • 87th Annual General Meeting

30 May 1H11 lt l d 26 J l

  • 1H11 results released

26 July − Presentation in JHB 26 July − Presentation in Cape Town 27 July

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THANK YOU THANK YOU

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