26 and 27 February 2013

Presentation

For the year ended 31 December 2012

FINANCIAL RESULTS

overview

PRESENTATION 2

› Welcome

› Business environment and performance

› AECI results

› Performance by segment

» Explosives

» Specialty chemicals

› Projects and strategy

› Outlook and underlying growth

Outline

PERFORMANCE 3

Highlights

› Revenue up 11% to R14,9bn

› EBITDA from operations up 6% to a record R1,8bn

› Headline earnings excluding effects of all B-BBEE transactions up 1%

› Profit optimisation of projects underway

› Best ever safety performance achieved

› Gearing reduced to 32%

› Acquisitions of R420m authorised

› AEL’s strategic position in Indonesia enhanced by AN plant acquisition

› Final cash dividend of 185cps up 2,3% compared to 179cps in ’11

business environment and performance

BUSINESS ENVIRONMENT AND PERFORMANCE

› AECI delivered a creditable performance in a difficult trading environment

› Depressed global growth and industrial action in SA made volume growth difficult

› Businesses responded with tight cost management and restructuring

› Strength of the business model, especially in the chemicals cluster, demonstrated in the result

› Looking forward, market growth prospects linked to global economic growth uncertainties

› However, AECI has internal profit optimisation plans that will deliver value independent of external growth scenarios

› AECI also has a healthy pipeline of acquisitions and growth projects

5

Summary

52%

10%

33%

3% 2%

REVENUE SPLIT 6

52% Mining 10% Agriculture 33% Manufacturing 3% Property 2% Fibres

BUSINESS ENVIRONMENT 7

SA manufacturing volumes Jan ’07 – Jan ’13

Cum y-o-y = 2,0%

Base: 2005=100 Source: StatsSA

BUSINESS ENVIRONMENT 8

SA mining volumes Jan ’07 – Jan ’13

Cum y-o-y= -3,1%

Base: 2010=100

Index base year changed in October from 2005 to 2010

Source: StatsSA

BUSINESS ENVIRONMENT 9

ZAR/US$ exchange rate

Average US$/ZAR=7,25

Average US$/ZAR=8,20

Opening Jan 12 US$/ZAR=8,15

Closing Dec 12 US$/ZAR=8,49

BUSINESS ENVIRONMENT 10

Ammonia IPP pricing (ZAR/tonne)

BUSINESS ENVIRONMENT 11

Effect on performance

› Open cast mining volumes in Africa (including South Africa) grew strongly

› Underground mining volumes in SA and Indonesia were negatively impacted by industrial action and other stoppages

› The weaker ZAR/US$ exchange rate helped the mining and manufacturing sectors but failed to lift volumes

› Prices remained high due to high US$ commodity prices and the weaker exchange rate

› The industrial relations environment deteriorated significantly post Marikana and made change management difficult

AECI results

0,0

0,2

0,4

0,6

0,8

1,0

1,2

08 09 10 11 12

ALL WORKERS TRIR

Maximum tolerable level

SAFETY AND HEALTH 13

Performance

ENVIRONMENTAL, B-BBEE AND EE UPDATE 14

Performance and strategy

› Environmental performance

» Formalisation and launch of the Modderfontein Reserve

» Green Gauge – range of environmental improvement projects identified through resource efficiency assessments

» No serious environmental incidents in ’12

» Included in JSE’s Socially Responsible Investment Index for fourth successive year

› B-BBEE ratings improved significantly and nearly all companies are now Level 5 or Level 4 contributors

› EE performance continues to improve

100

150

200

250

300

350

400

450

500

550

600

650

700

750

800

850

Headline

earnings11:

R772m

Specialty

chemicals:R63m

Explosives:

(R79m)

Property:

(R65m)

Specialty

fibres:(R13m)

Corporate:

R149m

CST

& EST SBP:(R168m)

Finance

costs andtax:

(R54m)

Other:

R6m

Headline

earnings12:

R611m

RESULTS 15

Headline earnings (Rm)

400

800

1 200

1 600

2 000

08 09 10 11 12

EBITDA (Rm)

RESULTS

› EBITDA +6% to R1,8bn

› Volumes flat overall

› Chemicals volumes -2,9%

» manufactured -1,4%

» traded -4,3%

› Explosives +5,1%

› Foreign revenue +17% to R4 527m

› Market share maintained

16

EBITDA and volumes

RESULTS

› Operating margin declined from 9,8% to 9,0% mainly due to deterioration at AEL and Heartland

› Favourable impact

» Reduced corporate costs

› Outweighed by

» Nitrates shortages and supplier force majeure

» Negative effect of strikes

» Non-cash B-BBEE transactions IFRS costs

» Restructuring charges

› Therefore, underlying performance is better than reported results

17

Operating margin and volumes

0

2

4

6

8

10

12

08 09 10 11 12

OPERATING MARGIN (%)

RESULTS

› Excluding the IFRS charges of 151cps

» HEPS at 697cps down 3%

» Return on net assets: 17,1%

» Return on invested capital: 13,2%

» Economic value added remains positive

18

HEPS

0

100

200

300

400

500

600

700

800

08 09 10 11 12

HEPS (cps)

0

10

20

30

40

50

60

70

0

500

1 000

1 500

2 000

2 500

08 09 10 11 12

AT 31 DECEMBER

Borrowings

Gearing

Target range

RESULTS

› Capex: R557m – incl. R265m for expansion projects

› NWC to revenue: 18,0% (’11: 17,7%)

› Net borrowings: R1 841m

› Gearing at 32% vs 50% in 1H12

› Cash interest cover: 8,2x

› Final cash dividend: 185cps

19

Cash utilisation

Rm

%

performance by segment

(250)

(150)

(50)

50

150

250

350

450

550

650

750

850

950

Specialtychemicals

Explosives Specialty fibres Property EST SBP

11 12

Corporate

RESULTS 21

Profit from operations (Rm)

SPECIALTY CHEMICALS 22

Business environment

› Firm but volatile commodity prices in US$ terms and weaker R/$ supported prices

› SA manufacturing sector still pedestrian

› However, stronger growth in food and beverage, agricultural and personal care sectors

› Platinum mining sector strikes and closures had negative impact (R45m)

› International competition remains intense

SPECIALTY CHEMICALS

› Volumes -2,9%

» Manufactured -1,4%

» Traded -4,3%

› Prices +14,0%

› Excellent performances from Akulu, CI, IOP, Lake, Nulandis

› Solid performance from Senmin in difficult market

› Restructuring charge of R30m offset by capital profits from Resitec

and CSL HO disposals

› Successful integration of all acquisitions

23

Performance

Revenue R8 397m +11%

TP R944m +7%

Trading margin (%) 11,2 (’11: 11,7)

Average WC (%) 17 (’11: 16)

SPECIALTY CHEMICALS

6 800

7 000

7 200

7 400

7 600

7 800

8 000

8 200

8 400

8 600

Revenue Dec 11 Volumes -2,9% Price +14% Revenue Dec 12+11,1%

24

Price and volume analysis (Rm)

EXPLOSIVES

› Global mining sector is under pressure, but remains attractive

› Strong mining volume growth in Africa (outside SA)

› SA mining: surface volumes grew significantly, narrow reef declined

› Prospects in Africa remain good

› Indonesian mining also affected by industrial relations issues and weakening thermal coal prices

25

Business environment

AEL MANUFACTURING SITES

EXPLOSIVES

› Disappointing performance in difficult circumstances

› Ammonia and AN supply chain interruptions (R50m)

› Mining strikes (R62m)

› Cost reduction exercise underway

26

Performance

Revenue R6 327m +15%

TP R431m -15%

Trading margin (%) 6,8 (’11: 9,3)

Average WC (%) 19 (’11: 17)

350

400

450

500

550

600

650

700

750

R510m: Actualtrading margin

Dec 11

R212m: Materialmargin

(R153m): Fixedcost inflation &depreciation

(R53m):Business

expansion costs

R57m: ReductionISAP / ISCP costs

(R61m): Foreigngain in 2011

(R81m): Supplychain and strike

events

R431m: Actualtrading margin

Dec 12

EXPLOSIVES 27

Performance

PROPERTY

› A disappointing result

› Revenue of R47m from land sales

» Westlake – industrial use

› R66m development expenditure

» Roads and electrical infrastructure

› Outlook for industrial end use improving

28

Performance

Revenue R400m -16%

TP R34m -66%

Trading margin (%) 8,5 (’11: 20,8)

0

20

40

60

80

100

120

Trading profit 2011:

R99m

Development

activities: (R52m)

Leasing activities:

(R22m)

Services: R2m Environmental

charge: R7m

Trading profit 2012:

R34m

PROPERTY 29

Performance

SPECIALTY FIBRES

› Acceptable result in difficult market conditions

› Exports to Europe and Asia under pressure

› US auto volumes improved in 2H12

› Capital investment of US$10m on single-stage process underway

› STF will be included in chemicals cluster in future

30

Performance

Revenue R339m +2%

TP R40m -25%

Trading margin (%) 11,8 (’11: 15,9)

(240)

(220)

(200)

(180)

(160)

(140)

(120)

(100)

(80)

(60)

Corporate

11:(R227m)

Legacy

costs:R71m

Long-term

incentives:R47m

Captive

insurance:R31m

Other:

R0m

Corporate 12:

(R78m)

CORPORATE 31

Sustainable level = (170)

240

260

280

300

320

340

360

Tax charge IFRS 2 charge STC Other PBT tax @ 28%

RESULTS 32

Tax rate (Rm)

projects and strategy

EXPLOSIVES 34

Investments

Total R409m

Expansion capital spend R163m

» SA – Xstrata, Sishen R31m

» Africa – bulk plants for Burkina, Egypt and DRC R63m

» International – new contracts R14m

Sustenance capital R204m

» Nitrates statutory maintenance R64m

BBRI R42m

EXPLOSIVES

› Detonator volumes = 2011 due to lower local demand

› Machines capable of much higher production rates

› Quality and first time pass rates greatly improved

› Machines stable, more uptime achieved via better process and people management systems

35

Initiating systems profit improvement

0

20

40

60

80

100

08 09 10 11 12

ISAP DETONATORS (millions)

EXPLOSIVES

› Automatic assemblies significantly higher than ’11

› Powder development on track for completion in June ’13

› Rest of range to be qualified during ’13

› Cost savings of R57m achieved in 2012 and a further R70m expected in 2013

› Section 189 notices issued

36

Initiating systems profit improvement cont.

0

5

10

15

20

25

30

08 09 10 11 12

ISAP ASSEMBLIES (millions)

Target=31

EXPLOSIVES

› US$23m investment for 42,6% equity share in BBRI in three phases

› In Kalimantan – heart of mining activity and close to KPC, AEL’s largest customer in the region

› ANS capacity of 60ktpa back-integrated into major ammonia source adjacent to the plant

› Construction close to completion and beneficial production expected in 3Q13

BBRI

37

SPECIALTY CHEMICALS

› General Electric’s Chemical and Monitoring Solutions business

» 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

› Senmin PAM plant

» exit of BASF as a partner finalised

» allows AECI to compete in all global mining chemical markets with PAM

› Cellulose Derivatives

» Competition Tribunal approval obtained

› Bolt on acquisition for Lake Foods: Afoodable

› Brazilian country investment still seen as attractive

38

Acquisitions update

SPECIALTY CHEMICALS CLUSTER 39

Restructuring 2012

Chemiphos incorporated into Chemical Initiatives and ChemSystems

Industrial Urethanes incorporated into Lake Chemicals and Chemfit

Duco divisions were sold

Resitec sold

Lake Chemicals new business formed Jan ’13

Lake Foods new business formed Jan ’13

SPECIALTY CHEMICALS CLUSTER

Akulu Marchon Lake Chemicals

Chemfit Lake Foods

Chemical Initiatives Nulandis

Chemisphere Technologies Resinkem

ChemSystems Senmin

Crest Chemicals SANS Technical Fibers

ImproChem Specialty Minerals SA

Industrial Oleochemical Products

40

Now 15 businesses in the Cluster

SPECIALTY CHEMICALS CLUSTER

› African specialty chemicals business focused on

» Mining chemicals Senmin

» Water, oil, gas and energy ImproChem

» Agriculture Nulandis

» Food additives Lake Foods

» Personal and home care Akulu Marchon

› South African diverse specialty chemicals cluster

41

outlook and underlying growth

22% 19%

15%

15% 9%

5%

4%

1%

1%

9% 11%

Phosphate

Uranium

Other

GROUP MINING REVENUE 43

Revenue by mineral mined 2012

22% Platinum

19% Coal

15% Copper, cobalt,

chrome and nickel

15% Gold

9% Quarry, construction

and civil

5% Diamond

4% Iron ore

11% Other

21% 18%

8%

7%

6%

5% 5% 4%

4% 4%

4%

3%

1%

1%

1% 1% 1%

6%

11%

Appliances and furniture

Construction

Steel and metals

Engineering and foundry Textiles and leather

Various other

SPECIALTY CHEMICALS 44

Revenue by market sector 2012

21% Mining

18% Agriculture

8% Food and beverage

7% Paper and packaging

6% Chemical industry

5% Detergents

5% Explosives

4% Toiletries, cosmetics

and pharmaceuticals

4% Coatings, ink and adhesives

4% Plastics and rubber

3% Automotive

11% Other

OUTLOOK AND FOCUS 45

› SA manufacturing volumes expected to track GDP growth

› Property sales for industrial end uses expected in 2013

› Strong focus on operational excellence in AEL

» cost reduction

» return AEL to acceptable profitability

» restructuring costs are expected

› AECI mining volumes 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

» significant potential for increased sales and profits from mining chemicals

› Strong focus on the strategic pillars in chemicals cluster for growth in Africa

› Acquisition activity expected locally and internationally

INVESTORS’ CALENDAR 46

› Graham Edwards retires from the Board 28 February

› Mark Dytor succeeds him as Chief Executive 1 March

› AGM 27 May

› Half-year ends 30 June

› Interim results released and JHB presentation 24 July

› CT presentation 25 July

thank you