AECI Ltd (AFE) Earnings Call Transcript & Summary

Okay. Good morning, everybody, from a frosty Gauteng. I'd like to welcome everybody to the presentation of our interim results for 2021. Obviously, up until 30th of June, we have a presentation for you. And obviously, we're quite pleased to announce the results this morning. We'll look at the COVID update. I'll give you a sense of where we are with that. I'll also talk about the performance. And then, of course, we'll go into other business drivers, earnings analyzed, performance by segment and strategic progress, outlook and focus. What I would like to also welcome on to this call is our non-execs and also a particular welcome to the first time for Patty O'Brien; and our [ 4 ] Chair, who is also here with us; Dr. Khotso Mokhele, who's also -- and welcome to you all. We obviously just come out of the Board meeting yesterday, where the results were verified and ratified by the Board. And of course, we have put the announcement on SENS this morning. Also joining me that's going to help me with the presentation are the non-execs. We all are here. We have myself, of course, Mark, Edwin, the 2 Deans and Candice. So welcome to them, and thank you for the help and the preparation of the slides. I'm going to go into the results now, but I think it would be a miss for me to start off the results without talking about the recent civil unrest in South Africa. And of course, the lawlessness and the violence was extreme concern to us. Safety of our people is definitely a priority #1 and their families and especially in the Gauteng areas and also the KwaZulu-Natal, where people were most affected. We have -- obviously, what happened was very sad. And we did actually have, fortunately, no damage to operations or to, most importantly, to our people. However, we were disrupted in the areas of KwaZulu-Natal in terms of those production sites. We do have -- as you know, they are national key points, so they are well safeguarded. And we are able to make sure that we were able to start running a week later. The big concern was, of course, the N3 and the ports that were being closed. And of course, I will talk a little bit later about the problems around supply chain, and of course, last week, this was heightened. However, we have collaboration with customers and our teams, and we brought into place our BCM, our business continuity plan. We were able to supply all our customers that were actually running. They were obviously bigger customers in KwaZulu-Natal. Obviously, Sappi, Mondi and even the SAPREF refinery were actually taken out for the week. But I'm very happy to report that we are back to normal in terms of supply chain and also in terms of production. We haven't really quantified the business impact because obviously, there would be some under recoveries on the factories where they're not running. Big emphasis now for us is really providing food and support to our people and local communities in that area. And on the weekend, straight after the violence, we were able to distribute and send food down to those areas. So that was well welcomed by our employees and, obviously, the people in that area. I'm moving on now to -- and of course, you've probably all seen this, but it has a devastating effect on our economy in terms of shopping centers, malls, ATMs, liquor outlets, et cetera, and those are some of the stats that we have. But the big concern is really on a very fragile economy to have a ZAR 50 billion impact on the GDP is actually devastating for us right now. And there will be, obviously, percussions from that. Moving on to the COVID update. COVID-19 is still with us. We are into our third wave. This wave seems a lot more aggressive. It's had a bigger toll on our employees without a doubt, both here and internationally. We're still tracking this on a daily basis. We still have our executive who are focused on the COVID and, obviously, making sure that our people are remaining safe, and obviously, that our operations are continuing. What is from here, this is probably as of the 26. This has already come down. We've pulled this under 79 in total people that are still infected, and we have 7 people in hospitalized -- who are actually hospitalized. Unfortunately, we have 10 members of our family, the AECI family. They have passed through these 3 waves. And really, our condolences and prayers go out to them and their families in these difficult times. We do monitor those in hospital. As I said, we have 7 of our employees currently in hospital. So every day, I do get a report back on their well-being. And I think the challenge for us around the world is how we roll out vaccinations. So we -- I have started. And of course, what does help us in terms of the age profile of our staff is that government has opened, especially in South Africa, to 35 and above. And on the 1st of September, they'll welcome from 18 and above. So we are sending out a lot of information actually endorsing vaccinations. Obviously, there are certain areas of operations that vaccinations will be mandatory, which is actually allowed by the Department of Labour. So for us to get back to some kind of normality around the world is for people to be vaccinated. And I think that's our biggest priority is how we help that. And we have our medical aid schemes and support structures that are enabling people to be vaccinated. So we are tracking it. And just to give you an idea, we know by area, by the profile of the businesses exactly where we have the infections, and we're able to isolate. And also, you can see from the waves that South Africa is on the way down in terms of the third wave. So a lot of focus on this, not just in South Africa, but internationally. Concerns, obviously, in South America; still for us is a concern, but also Indonesia because you've seen infection rates and escalations in that area. But we do get feedback on that. So still a big priority. But I really like to thank our human capital exec, Candice, who has really helped us mobilize the relief initiatives. And from the start of COVID, we've invested over ZAR 22 million in various forms of relief in terms of sanitizers, water plants, food parcels, et cetera. And we've now embarked on another campaign in terms of the iPledge scheme in terms of additional food parcels and blankets, et cetera, over the winter period. So a lot of effort is going into this, impacting a lot of people, not just our employees, but the families and the communities around our factories and the areas that we operate, so a continued push on this. I think for me, most importantly, is -- and what's happened, obviously, in KwaZulu-Natal and Gauteng, I think food relief is going to be probably the focus for us for the remaining months of this year, and we're still doing a lot around schools in terms of sanitizers and water. Just to give you an idea, this is where we've been touching on the people that we've been focusing on, and we're actually receiving lots of feedback from communities and our own staff of where we've touched their lives and made a difference. And of course, AECI will continue to do so. So that's really from a social point of view and especially around COVID and, of course, the social unrest that we've had. Moving on to performance after that introduction. So again, we have quite a few of our shareholders. We also have a lot of our bankers and our staff that's watching right now. So I'm always going to be asking them for more performance, especially our staff. And of course, the executive here will know we'll continually pushing throughout the remainder of this year. To say COVID is behind us is probably the last thing I can say here, and vaccinations and rollouts throughout the world, infections throughout the world has been very different and across different economies and having different effects of economies. And of course, this Delta variant is extremely aggressive. And I think we've lost the twice amount of people that we have just in the third wave in this Delta variant than we had on the prior 2 waves. So very concerning for us, has had a lot of uncertainty in certain markets that we operate, especially on the continent and also South America and, obviously, Asia. So a big focus on that, big worry still at night because we just seem to be moving from one wave into the other. And of course, we are predicting fourth wave towards the end of the year as well. But what I can say, it is causing disruption in the market. We are seeing major supply chain disruptions still to this day, delays in shipping, delays in sourcing of raw materials, delays in getting containers. Also, prices of raw materials are escalating throughout the world. We've been put on allocation in some areas, and in some areas, we've been forced to pay for raw materials upfront. However, that is our commitment to the customers to keep them going. And we have a fantastic team in place in terms of business continuity. And I'm quite proud that we haven't let any of our customers down and especially in those essential services in the water, agri and, of course, mining in this country. So a lot of good work is going on, on that, but there is going to be cost for us relative to pricing and also, obviously, in terms of working capital management because we are paying for them. And we are being forced to bring in extra strategic stocks wherever we need to. Customers have also been affected, as you know. Automotive industry is one of those areas that sort of is an example of waiting for chips from the East. And of course, we're not seeing cars being delivered. And we see these disruptions remaining for the continued -- for the remainder for the rest of the year. Mark will talk about the insurance claim, has been submitted. And when Mark talks in his part of the presentation, I'll ask him just to comment on the insurance claim. So revenue up 5% to ZAR 11.8 billion. And obviously, foreign export revenue, 43% of total revenue. That has come down a little. And one of the obvious reasons for that is the stronger rand, which we've seen in this last 6 to 8 months. And I'll show you those in the graph as they come. EBITDA up to ZAR 1.453 billion, and profit from operations up 70% to ZAR 948 million. And Mark will help unpack and actually have a look in terms of those numbers of the impact of COVID, obviously, but the impact of some of the markets and customers not coming back to full capacity or some of them not even coming back at all. And Engen is a case that -- and PetroSA, our 2 large customers that have announced that they won't be coming back. So concerning that our market and the industrial sector is shrinking even further. HEPS up 120% to ZAR 5.29. Gearing a little bit higher than we closed on at the end of the year by 27%, but we do see this effect as you -- in the first half of the year, and we claw back in the second half, and we expect to do the same this year. The interim cash dividend of ZAR 1.80, still quite progressive with our dividend. And I know that a lot of shareholders have already given me feedback. Quite happy with those dividends that we are giving back. Safety performance has improved. My concern was last year that the safety had waned a bit. And I think with the dynamics of COVID and stresses, mental health in operations, et cetera, that we felt we did have some areas of concern in our environment. But we have been able, throughout the first 6 months of this year, clawed it back, and we are putting through a lot of new initiatives in the safety and health and environmental area. B-BBEE contributor at level 3. It was expected, and I did give indication at the end of last year, it would be difficult to hold on to level 2 because, obviously, learnerships had to be canceled in terms of bringing people back. And obviously, some of the courses through the GIBS of this world had to be pulled back as well. So the spend in terms of education, development amongst our people was pulled back, which obviously pulled us down a couple of points. We are, however, pushing that, and we are getting ourselves back to normal in terms of development that we will actually get to a level 2 come the end of this year. And the GCR rating, a good A+ and with stable outlook maintained for us. Mark will also look at the borrowings and how we've paid back, which is always a good thing. And so group in really good, stable condition, still generating cash. However, probably from the messaging from today, you will see we've actually spent cash on some working capital. But importantly, we are spending cash on capital, not just for mandatory or statutory shutdowns, et cetera, but we are now starting to see CapEx be moved into expansion and new projects and opportunities. And my colleagues will talk about those in the next few slides. And that gives you a graphical indication at 0.36 is probably the best over the last number of years. So we're going to try and claw that down even more towards year-end, a big priority for us. The business drivers, obviously, these are the drivers that affect our business the most. So rand-dollar, and you're going to hear it probably throughout the -- and I know Edwin will come back on this one, but especially on our foreign entities, an average of ZAR 16.46 to the rand to the dollar last year. And if we compare the first half, we're comparing ZAR 16.65 and this first half of this year, ZAR 14.54. So that does have a big impact on, obviously, pricing but also profits and revenues from our offshore and global ventures. Good news is -- and we're all talking about it right now. It's on everybody's lips. And obviously, pre-close when we had some sessions together with you, we did talk about the commodity cycle. And obviously, everybody is talking about boom, and I'll show you some of the data around that. And yes, I think now is the time to take the opportunity, and we probably haven't seen the full impact of this coming through in terms of volumes. And the reason why I say that is new projects, new mines take a while to come back. But we are seeing that the mining houses are taking -- starting to take advantage of more the low-hanging fruit, reopening of shafts, et cetera, and obviously, opening up new pits that are close to their current operations. We're starting to see that coming through. And we are also hearing that mines are on care and maintenance were also starting to reopen and come back. My prediction, and I will repeat a little bit later, is we'll still see a lot of this impact in terms of volumes, which affects our business, most probably towards the latter half of this year and definitely into the new year. But you can see, gold, PGMs, up; cobalt, copper and nickel, all going in the right direction, and coal and iron ore. So actually, you can see all the commodity prices are starting to move in the direction, which is good news for us in the long term. Mining volumes did come back with a V. As you can see, these are the South African mining volumes. And what I can see -- if you unpack those volumes, you've got platinum that's probably made the biggest comeback in terms of volumes and gold. However, coal is actually negative year-on-year. And I guess, that's also a pull from Eskom. And obviously, the exporting coal through the terminals has been a challenge. So we definitely have seen coal coming back compared to the first half of last year. And I guess, this slide you can see now, this is the total value of monthly South African mineral sales. So you can actually look, even though the rand has strengthened still has gone up to ZAR 80 billion a month. So some of you would have noted some fantastic results in the paper the last 24 hours, and a lot of this is actually from that impact. We need now the volumes to go with that, and that will actually help us because obviously, the more volumes treated, the more volumes blasted, the better for us. Brent crude also going up. And I guess, this means that a lot of the chemical inputs, ammonia, et cetera, will go up in dollar terms. It's probably a little bit sort of negated relative to the current strengthening of the rand in terms of imports. But where we are right now at prices will be set to be moving up and especially when there are shortages in the market. We've gained allocation from the really some of the big guns out there in terms of global suppliers, and you can start seeing these giving us prices and take it or leave it at actually towards us. The manufacturing in terms of the South African manufacturing volumes definitely came back with a V but obviously still in that level no increase as we were pre-COVID. And that was really a symptom of the South African economy, which has been struggling over the last 5 years. What I can say, I am hoping that a lot of our manufacturing sector does supply into mining, and we should start hopefully to see some pull coming through. However, with big customers like PetroSA, Engen, Astron that hasn't come back, this is creating quite a big challenge for us at the moment. And of course, I did say in terms of COVID, this is just from a global scheduling, and you can see decline in 2020 and, obviously, all-time low. In global schedule, this is shipping in terms of on a global basis, has -- the reliability has fallen to all-time low. And of course, as we know, some of the ships are just passing our ports and not stopping. And of course, part of this is also delays with getting containers and containers in the right areas in the world. And of course, these are later ravel. So that just gives you some sort of background to some of the challenges that we are seeing, COVID and, obviously, our 18 months or so in on COVID pandemic throughout the world. I'm going to ask Mark now to look at the performance analyzed. I'm sure he's quite excited to see you all again, although we can't see you, but at least you can see him. But Mark, over to you.

Thanks, Mark. And hopefully, one day, we will have this presentation face-to-face again and after we've all been vaccinated. So at this point in time, we have to do this remotely. So good morning, everyone. I will take this opportunity just to go through the results, and then later on today after the presentation, we can take some questions. I think what's quite important is that we've actually put up this slide really to go back to what we put up last year when we first had the COVID impacts coming through and the restructuring process that we had in the chemicals business. So just to highlight what we have done is we have taken what we've reported from a revenue point of view, EBITDA going through to profit from operations and HEPS and how that has actually been impacted through our accounts this year. Now as you would notice, this year, there are no funnies in our accounts. We have done no restructuring in the first half of the year. There is no impairments taken. It's a straightforward set of accounts. But last year, we did, and I feel that it was important for us just to reconcile where we were last year, where we are this year. So just to take you straight into the numbers, you'd see that this year, we delivered a profit from operations which was about 70% up on a reported basis, sitting at about ZAR 948 million. But last year, those numbers were impacted by restructuring that we took in the Chemicals segment, which is, give or take, ZAR 92 million. We also had impairments on some of the businesses that we were not operating any longer, and we impaired some of the plants like the oleochemical plant in Durban in Mobeni. And we also impaired some of the Afoodable business that we eventually disposed of in the second half in Cape Town. Then we sold the paper business, and we had ZAR 108 million that we secured as a profit in that amount. And that -- if you add all of that back, it would have taken our operating profit to about ZAR 611 million. And then along came the COVID impact. And on the COVID impact, it hits our numbers by ZAR 454 million in the first half. And if we recall, the big impact of COVID was really coming through on -- in the first -- in that second quarter of last year. So in summary, if we look at -- after you've taken the COVID impact and the one-offs into account, you'd see that our revenue would be down about 4%; our EBITDA, about 10%; and our profit from operations and HEPS, give or take, 10% and 11%. So we haven't really caught up to where we were from a pre-COVID level. And that was -- and that's for various reasons. As Mark went into it, some of the industry hasn't come back. Some of the mines on the African continent also hasn't come back. And then furthermore, what's exacerbated everything else, and someone did ask me the question last year was what's going to happen with the stronger rand. Yes, the stronger rand has impacted revenue, and it's also had an impact on our profitability going forward. So if I take you into just -- so if I have to analyze the earnings, our EBITDA was up about 23%. Profit from operations, as I said earlier, 70% up; and HEPS, 120% up to ZAR 5.29. We had an improved trading margin of 8%, knowing that our trading margin target is always going to be 10%. So we've got a little bit of a way to go. But what was pleasing, and if you exclude the impairments out of the numbers, we have about 14.4% now on RONA, and we obviously like to see that improve as we go through to the end of the year. The tax rate has remained unchanged at 32%. And that was large -- and that's really -- that's taking into account some of the foreign dividends that we've repatriated that does push the tax rate a little bit higher. Mark did ask me to talk about the insurance claim that we put in. We have put an insurance claim into our underwriters via our insurance captive. And that was done on really good legal advice that we have done it. And it's early days. We are -- and I will keep you abreast of what's going on there in July. The insurers have appointed their own loss adjusters or forensic accountants. So have we. So we are still going through a process in that. If I look at the COVID-19, how we've actually managed our cash through the process, we have started spending money on CapEx. ZAR 75 million of that was spent on expansion CapEx, and that was largely on some of our CapExs in the agri market, and Dean can go through some of that later on. And then Edwin's also spent some CapEx on some of his growth that he's seeing in Australia and also in parts of the continent. The sustenance CapEx was largely spent on -- in Edwin's business in mining on the shutdown that we had, the No. 11 shutdown that I said that we had postponed last year. We've now been able to do that in the first quarter. In our numbers, and if you look at the back of the numbers, you'd see that our future capital commitments is about ZAR 1.1 billion. And I think what's important that, that's not a 12-month commitment profile. It runs over a 24 month and a little bit beyond that period, where we have approved some capital expenditure. And you'd see that 50% -- just over 50% of that is going to be on expansion CapEx. And a lot of that expansion is sitting in the mining business, some sitting in water, in our agri business and also in Schirm. I would also talk about that later on when I get to the Schirm slides, and each exec will go through it. The net working capital, pleasing at 16.9%. And what you would see on the right-hand side of the graph is that our debt did go out from 22% to 27%, albeit lower than last year's level. A lot of that was spent on working capital, about ZAR 750 million that we put into working capital. And when the question was asked of me last year, is our cash gain sustainable? I said no, it wasn't. We would have to plow some back into working capital as business did come back. And business did come back. However, there are 2 aspects in working capital. Number one, we've experienced some supply chain issues, especially during the course late last year and this year. And we had to invest in some level of inventory. And you'd also see our creditors have come down. And the reason for that is we had to pay some of our creditors upfront in order to get stock delivered into SA. So hence, our gearing has gone out a little bit. But overall, our net working capital pleasingly had improved versus last year by almost 2%. So I've spoken through borrowings. I just wanted to say for the bankers out there listening to me, our cash interest is a healthy 14.5. We have got foreign dividends and cash that we've brought back from our foreign subsidiaries, $17 million that we brought back versus $8 million of last year. We declared an interim dividend of ZAR 1.80. It is at a dividend cover of about 2.9x, a little bit higher than where we were at the full year. We tend to pay a higher dividend in the second half of the year because what we are doing is we're following our earnings profile. Our earnings profile has typically been, in AECI, 43% in the first half, 57% in the second half. So hopefully, towards the end of the year, we would see a more normalized dividend type profile coming through. Just to look at our cash utilization. We have spent some cash, and as you can see, the ZAR 749 million was spent in working capital. We have paid taxes of ZAR 270-ish million. And what you can see importantly is that we have paid dividends of ZAR 522 million. Last year, this time, we actually postponed or deferred the dividend. This year, we have caught up with all of that, and we're now on track. If I just look at the debt analysis. I think what's important about this is that we did settle ZAR 1.1 billion to one of the banks during the course in April this year. And then we've run up our profile on our covenants. And you can see our most sensitive covenant is meant to be net debt to EBITDA, we're tracking that at 0.9, which is very healthy as to where we are right now. And we've put in some threshold breaches. And those breaches are really if we had to increase our borrowings from where we are right now by ZAR 5.3 billion or if our EBITDA dropped by ZAR 2.1 billion, that's when we'll breach these covenants. So I've left that in for good transparency, so you can at least see where we are. If I go into the segments, what we can see, these are reported numbers. I have been through this, but strong growth in all our segments other than agri. And agri was really down to Schirm, and I'll go through those results later. So at this stage, I'd like to invite Edwin to come and talk about the mining performance.

Thank you, Mark, and good morning to everybody. I must say, Mark has spoken about the people we've lost in the business due to COVID, 6 of those people coming out of the mining business, and I want to use this opportunity also just my condolences to everybody we've lost in our business. This COVID has really hit us hard. And across the world, we see it's a really terrible disease. So we're doing everything we can from a business point of view to safeguard our people. So let me go into the results of the mining business. Our revenue is up by 3.2% to ZAR 5.571 billion. The EBITDA is up by 30% to ZAR 902 million. Trading profit is up by 64.4% to ZAR 646 million. Trading margin is pleasingly up to 11.6%. And where we're very happy with is our trade working capital, we are running at 14.7%. A lot of work went into that. We've seen a strong recovery on -- from the COVID, but we've seen Central Africa still not recovering as we were hoping it would recover. It's done well, but it's not recovered because there's still some mines shut in Central Africa and in East Africa. Our revenue was affected by ZAR 72 million positive with the ammonia price, and I'll explain to you in the ammonia graph when I get to it later. Foreign revenue, 62%, and it's down from the previous year. And of course, it's on the back of a stronger rand that Mark has spoken to earlier. Our margin improved, and it was assisted by a continuous process of us looking at our cost, and we're running projects on a regular basis looking at cost. Our first half had 2 distinct quarters. Our first quarter was really weak relative to the second quarter, where we really saw now mining picking up. So the second quarter was a really pleasing quarter, and we hope that this continues throughout the year. We still generated very good cash, which was very pleasing for us. And as I said, our working capital, we're very happy with our working capital, the way we manage that, even though we kept additional stock to mitigate some supply chain risks that we realized as a result of COVID is around us. CapEx, Mark has mentioned. We've spent the CapEx on our business for No. 11. And we're busy with some of the air abatement. And we've done No. 9 in the -- fully completed No. 9 on the air abatement process. And in August, we'll finish off No. 11 on the air abatement process. So we're just about there. And then there's some significant business gain during the period, which I'll talk about later. If we look at this pie graph that I normally show, we can clearly see how the recovery came in, in the PGMs. Gold is sort of there or thereabout because West Africa is quite big in gold, and it wasn't that affected by COVID, as you can remember last year. But the PGMs were really affected, and you can see the recovery of the PGMs. Coal is sort of there and thereabout. Copper, we see a little bit of recovery. Diamonds, it's similar, but -- and we also see the iron ore loss of business we have there. So all in all, you can see the recovery, and the split is now looking healthy again. I spoke about the ammonia, and you can see the ammonia price, what it's done. So of course, that adds to your turnover, but the important thing, it doesn't really add to your profit. It actually affects your percentage margin negatively because we make sure that we keep our absolute profit intact, but we passed through the ammonia move. So our percentage margin is actually affected negatively by this. So if we look at explosives alone, the overall bulk explosive volumes are down 9.6%. So we've started replacing some of the SA bulk volumes that we've lost that I've announced previously, but we're not fully recovered on that space. We had lower offtake in the coal sector, as Mark has mentioned, and our numbers are actually aligned with what we've seen in the SA numbers. And then lower volumes in Indonesia, and I'll talk about it a little bit later. The Southern Africa territory, we had limited COVID impact in the first half in that area. We also saw initiating systems really picking up and which is, of course, our underground business, and you've seen in the PGMs what has happened. The initiating systems picking up by 33%. Solid results in Zimbabwe, Botswana. We've managed to get a sizable 7-year contract in Botswana, which we'll be rolling out soon, and I'll talk about it a little bit later. Automated bagging plant fully operational now, and there will be further rollout on the underground. Just a picture there, you see our vertical drop, which is in Zambia. In our view, we think this is most probably the deepest one we've seen around. And subsequent to this, we've had lots of requests for -- and tenders coming our way for vertical drop in mines asking us to help. And our product that we designed relative to the vertical drop is very unique in terms of its safety features for these vertical drops. If we look at Central and East Africa, there was good growth on that region. But some of the mines are still shut, and there are a number of mines still shut, and we're not seeing the growth we expected after COVID. West Africa volumes, there was a mixed bag in West Africa, but on average, it was -- it remained robust because we really had a very robust first half last year, and the volumes are the same for this year. So we didn't see any change there. Some of our nice MMUs traveling there, delivering some of our explosives into some of our mines. Asia Pacific had a best-ever result in Australia. The Thiess contract, we're pleased to say that our partners there, Thiess, we rolled out another 5-year contract. And we secured a substantial contract in New South Wales, which will be rolling out in the fourth quarter '21. Our plant that we will put up there is on the water and on its way to Australia. Recovery in Indonesia happened in the sort of second quarter of that half. First quarter, we really struggled with extreme weather conditions, mining contractors having some of the equipment breaking down, and there was some free-digging. So we didn't have a real good first quarter in Indonesia. Lat Am, we've gained some small explosive contracts there. We started selling some initiating systems into Peru, and we are working our EIA. The basics of our EIA been approved. We're just waiting for input from community on it. And we're planning to -- with the construction early in '22 in that region. If we now go to our Chemical business, our liquid xanthates, there was really good recovery, and you saw it in our [ PGA ] numbers as well for the first half. And it came through as well as our depressants, really good recovery in that. We had lower sales in our solid xanthates, and that is on the back of a planned shutdown. So what we typically do is when we have a shutdown in that part of our plant, we would reduce our solid sales and export sales to keep liquids going for our local market. And that's how we do it. So you always see a little reduction in our solid sales when that happens. For flocculants, we had a similar situation where we had a plant shutdown. So that was one of the reasons why we're down, but also a significant customer is still not back for us in that region. So we're hoping to see that coming through shortly. We've been told that there was a start-up, and they will start ordering soon. And you can see we're reflecting it in our presentation here. Emulsifiers and coatings, we've seen increased volumes on the SA underground mining sector, and you see it in our results there when I showed it in the pie chart. But our volumes on the explosives for surface is down, and therefore, our emulsifiers that we also use in that is down. So that was affecting our emulsifiers as well. If we look and we look at it forward -- going forward. So South Africa ramp-up on underground bagged emulsion system, we will continue to drive that and get more and more of our products converted to bagged emulsion for underground. We've launched the process of looking of improved asset utilization. This is really working well for us. You also saw our working capital, in line with our working capital. And asset utilization is really working for us, and we're seeing it in our EVA. We will continue to mitigate the supply chain risks, and we've got a weekly check on this as an executive team to make sure that we stay abreast of our problems. We're preparing to mobilize for the new contract in Botswana, which will kick off the first quarter '22. Mining chemical volumes to normalize after the plant shutdown, so we'll start our exports. They are there. The orders are in the book. We can now start just sending it. Australia, the mobilization of the New South Wales contract, we are in process of doing it and spending the money on it. Indonesia, we -- at our BBRI facility, which is a JV, we started -- we're progressing with our granulator plant. And this facility will be completed soon, and we'll see benefit from that. Because in Indonesia, there's a lot of restriction on imports of ammonium nitrate, and we'll see benefit to ourselves, but we could even sell to others in terms of our granular because there is capacity in our plant, and we can utilize our plant truly now. Lat Am, progress on the emulsifier blending facility that we're looking at in Brazil, and the Chile bulk emulsion plant will be operational in '22. We will continue to look at better mining options in terms of technology development. And for example, we're looking at PowerBoost as a replacement for some of our boosters in the market. And there's a lot of work on our digitalization process in the industry. That is mining, and I'm going to hand over to Dean Mulqueeny to talk to us about the water business. Thank you very much.

Thanks, Edwin. Good morning to everybody. So water, I think, has been a pleasing result, especially on the revenue line, growing 12.6%, over ZAR 100 million year-on-year. But I think the disappointing side has been the private sector with the refineries and industrials going off. This has kind of wiped out all our gains that we try to recover with COVID last year. But the very pleasing part of our results has been the continued growth of our public water segment, which is now 40% -- 48% year-on-year. And I will show a chart, which I have not previously shown, showing the difference in the spectrum of our business. Our COVID impact, especially on the mining side, has been a bit slower, but I'm pleased to say that from June, July, this has certainly been much more substantial, and I will allude to the improved performance in H2. Trading profit, up 6%. The margins are pressurized, mainly becoming as a tough market. Everybody is fighting for survival, so pricing is under pressure. But more importantly, with the change to public water in our business, this is at a lower margin than our traditional mining or refinery business. There has been extreme good focus on cost control efforts, and it's become more of a discipline, and this is certainly helping our results today. I'm also pleased to say that the structural savings from the Ripple project continues and has been maintained. There's been really good working capital progress this year, and I must compliment, again, my finance team for the excellent cash generation for this period. If I just unpack it and knowing that the water business is mainly an African play. South Africa, mixed performance, as I've alluded to earlier. Public water continues to go from strength to strength. The refining section has played a negative impact. The mining sector, we have quite a few projects, but it was quite slow, but these are moving now going forward into H2. Overall, from exports, 26% of our total revenue. The ForEx has played -- if we equate the ForEx, we're about 27%, 28% overall. Our target is to get that over the next few years up to 40%. So in revenue, we still grew 4%. On exports, public water, 5%. Mining sector was up, but again, oil and gas extremely slow. This graph is something for the first time. But just to show what's happened and if I actually take it a year back, public water in 2019 was 15% of our business. It's now 35%. In the inverse, oil and refining was something like 40% of our business, and it's drifted all the way down as refineries have shut or taken maintenance or following some business interruption. It's only 18%. And generally speaking, the oil and refining segment plays a much better and higher margin business than our public sector. The other industrial is mostly what we would term previously our middle markets. These are food and beverage, chemicals, pulp and paper. But there, too, as Mark Dytor has alluded to, that's the manufacturing segment, which is suffering and is not as booming as it was 3, 4, 5 years ago. So Project Purpose, just to give you an update on that. And I think the important part is part of the group's sustainability goals, the water component is one of them, but one of the key ones. And while we started looking internally at our sites, it once said, we must remember that most of our sites or all of our sites, we either pay for incoming water or we pay for discharging effluent to either sewer or to sea. And in so doing that is cash that's leaving the group. So with these reuse projects that we are working on, this will be -- play a significant role in cash retention within the business, either coming from one of the sister companies to water and from one of the major sites into the water. So phase 1 projects, which we did talk about earlier, we did have some interruptions on the raw water supply, which then didn't let the project run at the steam [indiscernible], but this has now been resolved, and we're expecting these challenges to be abated. So within H2, there will be an uptick there. Our Zero Liquid Discharge project at our Modderfontein site is making very good progress. We are anticipating commissioning this facility in -- early in the new year. We are pushing the team for this year, but there has been challenges with supply of certain parts of equipment coming from our technology partners. At our other major site in Sasolburg, we first tackled this problem on the chemical process. So we needed to first reduce the chemical oxygen demand or COD. And this can have a negative impact on further downstream physical separation. So we have completed these trials, was successful, and we're now moving into the second phase of water reuse and reducing our discharge. At our property services down in Umbogintwini, we've initiated this project, and the trials already have started to commence. And we're expecting that as part of our journey of Zero Liquid Discharge to expedite that project early in the new year. On the other front, in -- as our customer base in the mining sector, as we know, mining, reuse is a big thing. So we are working with 3 major mining houses. I'm pleased to say I was hoping to be able to say that we've signed the contract. But as it does, we've signed the MOU. The commercial terms from the client has been accepted. The actual contract signing should be happening imminently, and we're expecting this equipment to be either completed end of this year or Q1 next year. And then we will have a maintain, operate and manage contract for 3 to 5 years with one of these mining houses. The pictures I showed you in February with the pilot trial at one of the other mining houses, we must say, was very successful. So we're busy with the MOU and the hazard study for the full-scale plant going forward. In terms of public water, we have signed a wastewater treatment with a major wastewater treatment entity in Gauteng. This is part of our journey for the public-private partnerships. And we are developing technical programs to assist with this -- the challenges with the infrastructure as well as the efficiencies and operations of certain of our wastewater treatment plants. So we're quite excited about this project going forward. The Lesotho project, which we were awarded late last year, we are in the final terms of completion. So those -- that sale will materialize in quarter 3, and we should see it impacting positively H2 results. As part as of our CSI project, within the group, we've also completed the Goza School -- Primary School in Soweto, and this has really been one of pleasing projects that we've done, and we are working on quite a few other projects as we speak. The water treatment plant that I also announced earlier is nearing completion, and we also expect that to be completed in quarter 3. In terms of other projects that we're working on, in the Free State, there's a desalination and water reuse. And KZN, there's a couple of other projects for water reuse. Key part people may ask, what is this actually going to contribute? We envisage in 2021 that these projects will contribute a further 10% to our trading profit and up to 15% in 2022. So the outlook for water is going to be quite positive. As I said, the mining sector had a slow start, but we have been awarded quite a few contracts in Central and West Africa. So they have already kicked in. Some of them have kicked in, in July, some kicked in, in June. So we're expecting very positive numbers from that area in H2. Also pleasing, the public water continues to grow in new areas. Central and West Africa is now a region that we seem to be making quite thing. And the key part with -- when you're converting to a new technology, it takes more than a year before the client signs of. So we have got more than a year's trial, which the client is paying for the product as we speak. The delays that we spoke about in H1 were Project Purpose. We can see that has now -- we wouldn't say totally passed, but it's certainly going to have a -- nowhere near the impact that it had on our first half performance. Pricing improvements. This is, as I said earlier, a very competitive environment. Customers' clients are putting pressure on us, but we've managed to overcome some of these challenges, and most of our major clients have accepted the price reviews effective June or July this year. So we're expecting that to improve the profit ratios as well. In terms of our green technologies and better water, we're also pleased that we have launched 2 of these trials, and these will also move us away from this competitiveness but also allow us to grow in certain spaces and segments that we previously weren't so privy to. I think the only 2 major things that we have to keep worrying, the impact of COVID still remains a risk, and as Mark and Edwin has also expressed, supply chain and raw material risk and risk mitigation. But I'm very pleased with what our team has done thus far. So that is for water. And with that, I will hand over to my colleague, Mr. Kathan.

Thanks, Dean. I'm just going to take you through AECI Agri Health. Yes. And the overall Agri Health is actually down year-on-year, and it's really been -- the reason why we're down is largely due to Schirm. But the South African business has actually had a stellar performance, and Dean will take you through that shortly. If I go forward and just reflect on what happened to Schirm in the first half of the year is that largely, we were still in Germany in the first quarter. And even towards May, we're still very much into the impact of COVID. And what we did see was from a supply chain point of view, the automotive sector where there was a global shortage of electronic components coming into Germany, and we had intermittent stops and starts with our chemical producer because of automotive. We also had disrupted raw material chemical supply chains, and that was not only coming out of China, but also coming out of various spots of Europe where we need these raw materials in our final product that we manufacture for our customers. Furthermore, our synthesis plant that we built specifically for the sugar beet herbicide, we did not get any orders out of them, and that was largely due to high inventory levels from 2020 that they were still stuck with. And as you would know, in production, we need to keep these plants going to absorb the overheads, which we are unable to do at Schirm. Last year, our results were really exaggerated by the -- and it's a good thing that we had the once-off order from the German Department of Interior where that impacted our revenue of about ZAR 190 million and EBITDA of ZAR 93 million. So this was fairly significant impact on our accounts that did not actually repeat itself this year. The U.S.A. on the other hand was really a different tale. They had a fantastic, strong performance, strong growth, unaffected by COVID. There is really strong momentum in the market. And the super concentrate plant, the herbicide plant that we put up in November last year, that has just continued to produce fantastically well for the market, and that plant has been totally sold out until June next year. Just Schirm, the outlook of Schirm, we were awarded quite a large tender, 8 million liters, and that's really from 2022 onwards. We will benefit some of that in the last quarter, but not material. And that tender has -- is for 3 years, but I think it could extend because in agri chemicals, those plants of Schirm have been registered for those products. So that -- and then the further tender that I did speak about in February this year, we've been shortlisted. We're 1 of 2 possible suppliers into that, and we're waiting for the outcome of that tender. That will be in the third quarter. It is a significant tender. We are looking at 14 million liters for that. Furthermore, we've also got a very strong platform of products that we're looking at, give or take, 30 to 40 opportunities that is sitting on our sales platform, so our tenders that we have entered into, but they are smaller than the current tender that we are looking at. So I haven't highlighted that. The restructuring of the production facility of Lübeck, that was completed, and we're starting to see some cost benefits coming. Furthermore, from a CapEx point of view, we are investing in the Schonebeck warehouse. It's a complex that does exist as part of the acquisition that we had 3 years ago that we would buy the warehouse complex. So that would come through to us in January next year, and we're looking at good returns coming out of that. And then in the U.S.A., we are looking at expanding that facility from Texas. We are looking at the facility, and that's the photograph that you see there. It's a facility that we found in Illinois, near St. Louis, and we're looking to invest in that facility and thereby be able to support some of our major customers from Texas. We anticipate that, that facility will be totally completed. We'll put in a herbicide -- we'll start with the herbicide plant, looking at a fungicide plant. And eventually, we will invest in an insecticide plant in that facility. And we're looking at the herbicide plant coming up operational in the third quarter of 2022. I'd now like to call up Dean that will take us through the AECI plant health in SA.

All right. Good afternoon, everybody. All right. So I think just to give you some background on the first half of our plant health business in South Africa. The strong demand that we saw in last year continued through this year, which was very good for us. There were some challenges with working capital, as we've alluded to in a number of the other chats as well. And it's really around raw material shortages and shipping delays, which impacted us. But I think the team did really well to manage that under the circumstances. I think the other important thing is that we had a strong focus on R&D and registrations, particularly in our green chemistry business, which we've been talking about for now, and that really encompasses the biostimulants and our biological product range. And what's really exciting for us now is that our biostimulants make up 20% of our in-house product sales, which are our key focus in this business. And then, of course, we've been working on new registrations as well, both in the local and the international markets. And I'm proud to say the team were very successful in the, let's say, in the last 6 to 8 months with 23 new registrations in 6 states in the United States. And then, of course, FOL. Our Malawi business delivered another excellent result, which we're very thankful for as well. And then further progress with regards to our Biocult biological range, which we've talked about in the past. We've undergone a capital expansion there in our Somerset West plant, and we hope to have that sorted out before the first quarter of next year. Right. Just a bit of an outlook for the plant health business. Again, the momentum into the second half of the year we expect to continue. We've had some good winter rainfall as well, which is good for the business. And then I'm also excited to tell you that we've actually expanded our [indiscernible] plant in Gauteng as well, which is really there to support our in-house products again, and that will increase the capacity by about 50%, which is exciting. I think it will also give us the opportunity to support our export market as well. And then again, we will continue to focus on more registrations in the U.S. and other countries as well. As I mentioned before, the Biocult expansion. And more importantly, we will increase the capacity there by 70%, which will help us to meet the requirements for the South African market, but also to supply the international market as well. And then on our Khula app, which we've talked about in the past as well, our Better Food Systems project. That's starting to gain momentum. We've seen a good uptick in the media exposure, and there's 2 of the awards that the -- that this particular app was given last year. It was the Private Enterprise Tech award, a KPMG finalist. And then, of course, with Google, it was a top 15 in Startups Accelerator. So we're looking forward to see what this will bring for us going forward as we really try and target that emerging market -- the emerging pharma market in South Africa. Right. On to our Chemicals business, there you are. So you can see there, I think we -- a lot of work was done in the Chemicals business last year. And I think, first of all, revenue at ZAR 2.97 billion, up 26.3%. Our EBITDA of ZAR 348 million, up 94%. And again, we've had a good increase in our trading profit up to ZAR 252 million. And importantly, you can see the trading margin again was quite healthy. These businesses are still very highly cash generative, which is good for us. The business realignment project, which I talked about last year, that was our Project Optimum. [indiscernible], I'm pleased to say that the ZAR 100 million structural and sustainable annualized benefits were achieved. And also, very importantly, the quality of earnings in this business improved significantly. And we are very close to achieving that TP margin of 10%, which is one of the key targets in that project. The business sector and the -- sorry, the business in the South African manufacturer space is -- it has improved, but it's still not at the pre-COVID levels yet. So we need to make sure that we focus on making sure our customers are supplied property, which we have done. And of course, as mentioned before, some real challenges in the supply of raw materials in this particular market. We've had to buy a lot of raw materials upfront, but I think we've done it successfully, and we haven't let a customer down at the moment, which I'm very happy to say. Just a little bit more insight on the businesses. If we look at our Specialty Chemicals business, very strong performance. We had good volume and margin improvement in, really, all of the industries, personal care, polymers, coatings and construction. We had a good notable volume growth increase in our oleochemicals business, and I'm very happy that we actually signed a new major contract there for another 3 years. And then, of course, in our can coatings business as well, we renewed another 3-year contract there as well. So I think our Specialty Chemicals business, the restructuring, it's in a good space. It's a focused business now, and I think we've got some good quality of earnings in that business. On the AECI Industrial Chemicals, here, we had a good recovery year-on-year with what we're seeing is a bit of a more normalized market position on sulfuric acid and sulfur. And of course, we've seen the sulfur price has increased quite dramatically. And of course, this is a benefit of the selling prices as well. The home care volumes, I'm glad to say that's our sulfonic acid and [indiscernible] plant. That business really had a good start to the year as well. Not only do we pick up major -- new business at a major international detergent manufacturer, but we also got some very good market gains as well. Then of course, as part of our restructuring -- our Optimum Project, we decided to really start building our bulk traded business. And of course, this grew significantly in the first half of this year, which has been a good add-on for the business and give us a nice additional basket of goods to our customers as well. Foundry and timber business, the business -- the volumes are steady there, and I think we've started to start getting closer to the contract volumes that we wanted to see prior to the COVID pandemic. And then, of course, the phosphoric acid sales, those are still a little bit low at the moment. This product is used in the manufacture of a fuel catalyst. And of course, as we've seen the demand for fuel has been lower, we've -- it had some impact on the business, but we're starting to see signs of recovery there as well. Right. On to our Food & Beverage business. Again, with the restructuring process, the portfolio is focused on high-growth product categories now as well. We've had excellent momentum in our traded food ingredient product range. And on the beverage side, we've had a consistent year-on-year improvement in our operational efficiencies, cost management and also some pricing interventions, which were necessary, and I think they've been successful in that regard. And then, of course, we've appointed some new distributors in the Middle East, West Africa and North Africa to grow our exports for our juice business as well. And then as part as our Better Food Systems, there's a real strong focus on products that go into digestive health, alternative proteins and also making more healthier products affordable for lower income groups as well. And then lastly, on our SANS Fibers business, excellent performance there, strong automotive and apparel demand in the U.S., which we were able to benefit from. And again, excellent working capital management in the business. Right. Just an outlook for Chemicals. The SA manufacturing sector, it is recovering off a low base, but we're starting to see these improvements. The demand trend in the key customer industries is expected to continue. We should see the benefits of our market gains that we've had in the first half of the year. The mining commodity price boom will also provide impetus in certain manufacturing sectors, which we should benefit from. And then, of course, a -- there is focus on the export volumes, particularly in our beverage business and our Specialty Chemicals business. And again, the challenge will be to really manage the supply chain disruptions in the raw material availability. But again, I think we rely quite heavily on our China office for good procurement as well. And I think we've got some very good, well-experienced people in our supply chain and logistics in AECI. Right. I'm going to call up my colleague, Mr. Mulqueeny, to talk about Much Asphalt. Thank you.

Thanks, Dean. So Much Asphalt, I think this was one of the area that were highly affected by the COVID and the lockdown. We have certainly seen the return, especially in quarter 2 this year. May, June were the best 2 months that we've had since pre-COVID, and July, August also looks good. There was a negative, which we have alluded to in our Chemicals and Water business, but the bitumen supply interruptions into the 2 refineries in the Western Cape and KZN had an impact on Much's bitumen supplies. And the strategic inventory stocks were of a concern. So we did bring to a bulk shipment into Cape Town, and they are further shipments that will be planned for the end of this year. Being a major supplier in the bitumen and asphalt business, we have to ensure that there is continued share of product supply, but also the importance that the bitumen plays in the reconnecting of South African and upliftment of South African's roads as well as the economy. We certainly have seen quite a lot of activity at the metros and the Department of Transport, especially in the Western KZN, and the Eastern Cape is really having a strong performance this year. Gauteng, still a little bit of a concern, but there has been quite a bit of momentum now in provincial work. Much Asphalt itself also went through an alignment project -- realignment project, and the benefits we are pleased to say are meeting expectations. This ZAR 30 million annualized benefits in asphalt businesses more than 100,000 tons that the breakeven point has been reduced by. Our investment last year, which we made into the rubber bitumen plant, which is the pictures on the right-hand side, we're pleased to say that the demand and uptake of this has been a really good investment, and we are already above 80% of the plant capacity. We are evaluating -- expanding this. The nice part about this, the unit itself, as you can see, is actually potable. So we can move it, and we can move it to other regions if the area currently is placed in the Western Cape, but we can move it to other regions if the bitumen rubber work grows. The advantage of bitumen rubber is that it has some impact on noise reduction as well as flexibility of the asphalt. SANRAL, there's a lot of stories in the news, a lot of stories in the media, but the actual awarding of certain tenders has been, to somewhat extent, delayed. So what is the outlook this year? I think Much Asphalt, key thing is the way we've designed the business, we -- the capabilities that we have within the team and within our manufacturing facilities, we are still geared up to deliver once the market returns. I have mentioned about the infrastructure projects and the announcement of government, but one should also know that usually, a new product project that the asphalt business will follow 18 months to 24 months after the announcement or the beginning of the construction work. When it comes to maintenance and repair, that's about up to 6 months. So generally speaking, our major customers are indicating they're quite buoyant, and we've seen the activity level certainly now since May coming back. Mobile work is where we don't have a static asphalt or a permanent asphalt plant. There's a lot of work inquiries on that one. One of those that we have been awarded is the Mkhondo area in Mpumalanga. And we're also seeing that we've just been awarded quite a major contract in the East London region. So just for the future, the Wild Coast project. These projects are progressing well, and we're expecting some parts of the roads to start in quarter 4 next year. The rubber bitumen applications, the momentum is good. The inquires are good. We have brought in world-class facilities. So we're expecting continued growth for this application. On the other major announcements on the N2/N3 packages, some have been awarded, others are expected to be at the end of the year. From our perspective, the bituminous and the asphalt work we're expecting from mid-2022 moving more strongly into '23, '24. So I think overall, Much Asphalt is still very well positioned for any upturn in the South African infrastructure arena. Thanks. I'll now hand over to Mark Dytor.

Okay. Thank you, Dean. Thank you for the members of the executive that help with the presentation. Probably, I'm going to bring it to a close now and summary. In terms of strategic progress, we did show you our journey and, obviously, to 2025 and really the core of that is One AECI and for a better world, bringing a lot of ESG sustainability into that as core to this. And what we will be doing as soon as the Board has signed off on the final presentation of this to the Board, we plan to give you all an in-depth look in terms of the strategy and where we're taking this business. And in terms of market expansion, I wish there are many. And we hope to do that at the end of October. So dates will be forwarded to you and how we're going to do that. Sustainability as part -- pretty -- very core to that strategy. We have set goals. We put the first sustainability report out to you. We're working on the second one. There's lots of really good themes around that. It's obviously the water theme but also energy and emissions. And in terms of energy, the projects around solar for sites such as Modderfontein and our Sasolburg sites. They are -- they have made good progress. So I'm happy to report back that we will be able to look at in terms of sustainability. Our electricity going forward will be probably -- a lot will be in-house. So good progress with that as a group, and a lot of key areas. So in our report back on our strategy, we'll actually bring in, in terms of the KPIs we've set ourselves and the progress thereof. Origin, you would have seen that in the press. They obviously have rolled out their strategy in terms of the listing in the U.S. Obviously, our smaller investment is worth a lot more now. But I think really, what this is, is really a ticket to the game, enabling us to give us options in terms of distribution, manufacturing, et cetera. So we've got a great relationship with this business. It does fit in terms of going green and better chemistry for us. So all I can say is watch the space. The pioneer plant is due next year, and we will be getting some offtake from that plant that we can actually roll out to customers in the various markets that we serve. The other area we will be probably talking to you about another one in the next month or so that we're very interested in, in terms of recycling of plastics, I think that's areas that our innovation office is looking at. We have a number of great projects, which our office is obviously looking at evaluating. And I guess we're really looking at where we can play a role in terms of management, operations or distribution. We're not a bystander. We want to be part of this unique technologies and opportunities. So we will be announcing probably something in the next few weeks to you all. Quite excited in this area for us in terms of our strategy. Outlook. And I think I can't go on with this presentation without saying COVID is still a concern for us. The future waves and, of course, the rollout of mass vaccinations is going to be key in terms of getting back to some normality. And I guess it depends where you are in the world of how the economy is going to be coming back. The supply chain, and you've heard it from all my executive, really key to them in terms of their business continuity plans and risk mitigation. So that is at the forefront. However, I think really from what we are picking up as a group that North America is really starting, and of course, China, those markets are really sort of pumping at the moment. Lots of money around infrastructure spend there, and our businesses up there are really battling to keep up in terms of demand. So I think North America kicking in. We're expecting Europe to be kicking in, in the 6 months is the guidelines that we've been given as some sort of supply chain normality comes into that region. And then they are talking around the Southern Hemisphere emerging markets probably be in the first half of next year. So that's how we see the world coming back. There's still great demand for the products and the services. Great people, great technologies in our business, great service that we provide. But I'm really excited. And probably some of my colleagues have downplayed those opportunities that we have, but -- and the mining ones will really kick in. The Australian one is substantial. It kicks in, in the last quarter of this year, and of course, the Botswana one thereafter, and there's other contracts that we're currently working on. And then, of course, in agriculture, water, chemicals, we have quite a nice number of contracts that are kicking in or new business opportunities. And that's where I think you'll start to see that capital would be starting to allocate it more to expansion, which is actually pleasing for us as a group. And we've also seen the benefits of the price -- the realignment of projects in terms of cost reduction, those are kicked in quite nicely now. And you can't underestimate the commodity prices, have made an impact on that mining and commodity sector. So I think we need to take full advantage of that on a global basis, and we are looking to do so. So focus, Zero Harm, top COVID vaccinations amongst all our employees, families and communities is where we can assist with that. It's probably second to that. Progress with achievement of goals and targets aligned with you in terms of the sustainability goals, which I've spoken about. Cash has continued to be [ king ]. And working capital management, cost management is high on everybody's agenda throughout the group. We will see, not to repeat myself, but obviously, mining, water, agri and chemicals, in some areas, we will have capital expansion investment going through, especially in the next 18 months. And obviously, we have opportunities, especially around mining, is where do we put plants down and actually branch out. And you can imagine there are certain markets that we're already in where we think we can expand our mining business, which are really growing. So I think that's really going to be focused in terms of the mining, in terms of geographic footprints. And then bolt-on acquisitions. And I think really, to put shareholders' minds at rest, we're not going into total new businesses, but we are getting a lot of calls and a lot of opportunities coming in our way now relative to -- in our sweet spot in businesses that we're in where we can actually bolt on and give us a little bit more market share or products or technology. And of course, innovation is really driving our growth strategy and our focus for the next 18 months. With that, thank you. Thank you for your attendance. Appreciate the opportunity to talk to you all. As Mark did say, I hope that we can see you face-to-face in the very near future and hopefully getting back to some sort of normality. And I look forward to have interaction with you all again. And from -- I think from our side now, there has been some questions that are being put on. Hopefully, we'll be able to answer them if they're not too difficult. But we'll take questions for the next few minutes.

I think first, we're going to go to the conference call.

Thank you. At this point, there are no questions on the lines.

As we have no questions on the line at the moment, Fulvia, do you want to take us through some of the questions?

The first question is from David Fraser of Peregrine Capital who's asking if you could please explain the bulk chemicals trading business and the risks associated with this.

I think, first of all, if you look at the industrial chemical business, we have quite a broad customer base already. We are in bulk chemicals and any event. And what we really decided to do was to just increase the basket offering to some of our existing customers as well as some new customers and really utilize the China procurement office, which we do have. From a risk point of view, what we are doing is that before we do bring in products, we do obviously have the products verified and approved by the customers and bring them really in on back-to-back orders. So I think we manage it very carefully. I hope that answers your question.

Thank you. The next question is from [indiscernible] who's asking, can you talk about succession plans for AECI mining?

Okay. All right. I did say we have fantastic people, and we have lots of them. But I think, most importantly, Edwin has announced his departure into retirement. Probably, early retirement is not that old, but we wish him all the best. But I think Edwin has a fantastic team. He's really got some talent in his team, and we also have talent within the business. So we are currently going through a process, both inside and outside the organization. And I'll be pleased to announce probably something in the next few months for -- so that we have a really good handover. But Edwin has been supported really by a fantastic team of talented people. So yes, we will definitely miss Edwin. But in our talent and hypo strategy, which we have as a group, which is obviously spearheaded by Candice, we have got a lot of great talented people that could actually fit into that role.

[indiscernible]. Sorry, that disappeared. Warren Riley of Bateleur Capital. There seems to be a disconnect between AECI's prospects, which appear good, and the market's rating of the company, which is trading near book value. How are you thinking about share buybacks in terms of capital allocation priorities?

Yes. So that's a very good question. It's something that we are discussing with our Board. And so capital allocation is key, looking at dividends, looking at share buybacks. And also at the same time, we also have to look at potentially how we grow our business going forward. So it is something that is addressed by the Board as well as by the Executive Committee as AECI.

Thanks, Mark. Charl de Villiers of Sanlam. Can you give an indication of the volume of the new Australian New South Wales contract relative to the current baseline from a tons per annum perspective?

I'll answer that. Yes. The -- I'm not going to answer relative to volumes. I'd rather answer it relative to what it means to the Australian business. So the returns of the Australian business will virtually double with this project that we're now taking on. So it's quite a large project, and we're very excited. It's directly with a customer. And if I say that project, plus a few little products. Well, projects will help us to virtually now double our Australian venture.

Given the period of that contract?

We've got a 5-year period for the contract. So it's quite a substantial contract. And then, of course, with the option to look at rollovers.

Paul Carter, ClucasGray Management. How many shares do you own in [indiscernible] Capital post the merger with Origin?

Yes. So post the merger, we are around the 1% from our original investment into Origin. As an individual business, we were at 2.8%. So post the merger, it's just around 1%.

Anthony Sedgwick, Abax Investments. Can you give an estimate on timing of the settlement of your insurance -- COVID insurance claim and the quantum?

Anthony, hope you're doing well. That's a very difficult question as it's very hard to give an indication. We -- if you look at what we've put in as a claim, I think there's a lot of work that has to be done, and I do not foresee the timing before the end of this year.

Thanks, Mark. That brings us to the end of our time and the questions. So over to you, Mark.

Yes. So some interesting questions. I'm sure in the next few days as we interact with some of you, and we do have scheduled meetings planned. But all I can say is that, look, thank you for your attendance. The results are -- and I think we put it as resilient. And I think in these difficult times, with the challenges thrown at us, we've managed to achieve good results. But the most exciting thing for me is also that we're actually looking and still have lots of opportunities within the business. So for me, very excited looking for the next 6 months, especially, obviously in the mining and some of the sectors, agri, chemicals and, obviously, water. So opportunity is all there. It's just for the quality of people and the management we have to go and actually get them and bring them in and obviously put us in a nice space for 2022. So I look forward to interacting with you all in the next few days. And obviously, we do see each other quite often in formal get-togethers, and we'll continue to do that, continue to communicate with you all. And thank you for your support. Thank you. Bye now.