AECI Ltd (AFE) Earnings Call Transcript & Summary

Okay. All right. We're ready to start. Good morning, everyone, and welcome to AECI's Capital Markets Day for 2024. I would like to apologize for a slightly late start today. We -- yes, if you can give us some grace on that one. My name is Zanele Salman, and I'm the Vice President for Investor Relations at AECI. It's a pleasure to have you with us, those who are in the room and some of you who are online. This is the usual cautionary statement, so you can read through it at your leisure if you can. On top of the tables, we do have QR codes. You can scan that. It will take you straight through to our presentation that is available also on our website. The program for the day, so I will do the welcome now, an introduction. Thereafter, we will go straight into highlights for the year. And then give an update on the performance year-to-date for the group. And then after that, we'll have a Q&A session and then lunch. Strategy updates will be after that. So I hope everyone will still be energetic and awake for the Strategy section -- session. At the end, we'll have some networking and general Q&A. Our ExCo will stay behind. Then if anyone wants to have a discussion or chat through and get clarity on any of the things that will be presented today, you're welcome to do that. This is our group executive team at AECI. So we have a full team that will be presenting to you today. So just before we start, if we can start with the safety video? Please pay attention. [Presentation]

Just to remind you of what we presented to the market in November last year. So our goal today is to provide a clear and transparent view of how we're delivering value and how we're maneuvering the dynamic environment in which we operate as AECI. So everything you will hear today will link back to the strategy that we shared with you last year and particularly the ambitions that we've set for ourselves. So on that note, I'd like to give over to Holger to kick start us today.

Good morning. Welcome, everybody, to the 2024 Capital Markets Day of AECI. It is almost exactly on the day when 12 months ago, we presented our new strategy and restructuring of the business. Many, and many of you, actually questioned or challenged our ambition that we have called out for 2026, doubling our profitability measured in EBITDA. Today, we will show you that we have already made a big step. 2024 has been a year of transition, probably the largest transformation that this organization went through ever. It was a difficult year so far, but it was also a very fulfilling one. I also acknowledge that 2024 was a difficult year for our shareholders. The cleanup we are doing comes not only with hard work, it also comes with a lot of investment. However, we are on a good track, and we'll present to you today where we are in our process. We have meanwhile implemented our new operating model and are currently institutional, come on. I go back to school. Okay. We have hired great talent from outside, which we could attract because of our new strategy. This skill build is very important to make AECI future-fit. However, we are also aware that change creates an anxiety, and therefore, the management is putting a lot of energy engaging with our people. The employee surveys and the awards, which we are proud about, that we have received, proof that we are on the right track. Looking to the internal value unlock. We promised ZAR 400 million for 2024 into the P&L to pay for the cost, specifically the high consultancy cost that we have incurred. And remember, I said if we go into it, we go really into it 100% in or 100% out, but we wanted to work with Tier 1 consultants. We also promised ZAR 800 million run rate into 2025, and we will deliver that. We also promised that we work on a skill build and a skill transfer together with our consultants, enabling our teams to execute the strategy going forward without or very minimal external support, and we will deliver that. Looking to our managed businesses and our divestment process. For the first time since long, being in the process of preparing for a sale, our managed businesses received the management attention that they deserve. And the good performance, I'm almost sure you will be surprised, that this business have delivered so far confirmed what we always said that we are not selling these businesses because of performance issues, but because they do not fit into AECI's new strategy. Despite a very muted M&A market, and I'll go into details later in my part of the presentation, a market where you almost find no strategic bias and only very few private equity, we have been able to find good homes at fair valuations for 2 of the businesses. Our Chemicals business, and Dean will present later, it's a big highlight, really, is starting to show its full potential and has clearly outperformed the market. Key to this success was a strong focus on efficiency and cost, pushing our EBITDA up. We have repurposed and rightsized some of our assets, as we announced, enabling us to leverage our chemical skills and know-how. Now in the new operating model, this business is poised for success by integrating more into our Mining business. Talking about the Mining business, a very important focus this year was catching up on maintenance to ensure a healthy asset base for our core business. You remember what we presented in half year and what we have done specifically in the first 2 quarters. We have stabilized our key product supply chains, including ammonia and ammonia nitrate. We have further grown our business in Australia, which is now almost as large as our South Africa business. This makes us #3 down under today, and together with our #4 position in Indonesia, this provides a great base to further strengthen the #3 position in the entire region. Also, we defended our #1 position on the African continent, and with our new operating model, leveraging our full potential into our African footprint. I really expect this business -- our business on the African continent will greatly outperform the market going forward. Not everything was good and not everything was perfect. And we still have to go a long way. But remember, we are only 12 months in. Today, we will be fully transparent on all the upsides and the downsides. And I'm looking forward to engage with you. Okay. So whatever we do, safety remains our #1 priority. And again and again, I go back to what happened early '23 where we lost 2 colleagues. And I know I said it often enough, but losing lives, it's still hard. And it's still in our minds and in our memory. So this is not going away for us. But I'm very happy that this year, we not need to report any fatality again. I give it now to Khabonina, talking a bit more to the details of our culture transformation.

Good morning, everyone. All right. So Holger has taken you through what we've gone through the year, the ambitions that we have set ourselves as a company, and those are great ambitions. And those are performed by people. And the people are the ones that turn things around in our company. And with that, with people, we've made sure that culture becomes one of our strategic drivers. We have seen studies, we've heard that culture eats strategy for breakfast, lunch, supper, snack and so on. And we have seen it in our company that culture drives business, the growth and the success. Hence, we've made it an important part of what we do alongside our people. So the studies have told us that highly engaged employees will give you discretionary efforts, specifically 17% more productive and you get more sales out of engaged people. And we've taken that and informed what we now need to do in terms of looking at ourselves, at the people and the culture. And for us, our goal is to ensure that we have a high performance culture, where people understand what they need to do, how they need to do together as teams as we also drive and are on a journey on a -- to a one AECI. We know we have different companies, and we're trying to integrate and consolidate. And thus far, since we've launched the culture journey, what we have achieved, and which we spoke to you about as part of our strategy, is we have all our key leadership and management changes that have taken place, and we've appointed people. We've worked at our N-minus-2. Also, we have appointed. We've ensured that we understand what capabilities that we need for the future, and we are working on also closing some of the gaps that we have. We've implemented the new operating model, and Holger spoke to the anxiety, the fears that our people have gone through. And through change management, through intentionally ensuring that we listen to our people, creating a strategy where we listen in and rechange things. We hear our people. We allow them to contribute. We engage them on the things that impact them because that is important, and that is the culture that we want as AECI. And to this end, we've started the journey. We've told ourselves that we are going on a 2-year journey. 1 year down the line, we have a leadership compact, which we are busy rolling out. And we continue to engage our people on the desired behaviors that will ensure that we deliver on our strategy. We have in the small room there, as you go -- came into the room, we've got interactive screens where you can go there at lunch time and see what this journey has been and what it entails for us. Thank you. Next. Again. [Presentation]

Welcome back, everybody. Like Holger said about a year ago, we all convened here and gathered and we shared our strategy with you and our ambition, to double the EBITDA of AECI off 2022's baseline and really focusing on our core business, Mining and Chemicals. That was quite a significant ambition that we put forward in terms of ZAR 3.2 billion EBITDA uplift by 2026. You will see on the slide that Asia would have grown in terms of its historical CAGR of about 8% when you measure it over a 4-year period of about ZAR 800 million. So the real focus is how do we deliver the ZAR 2.4 billion over the next 3 years. So how do we get certainty in terms of the execution? As you know, strategy is nothing without execution, and execution is nothing without people. And one of the first things we did, and Holger pointed that out, we incurred a significant transformation cost, transformation investment with our consultants. We wanted to work with the top tier. And we also established a transformation office to ensure that we have continuity beyond just this year. The transformation office was provided with the necessary tools, methodologies, techniques to really unleash that value and work with the business during the course of this year. And through the transformation office, we provided visibility to the organization. We had over 600 initiatives making up the ZAR 2.4 billion. And making that visibility through the organization, we could engage with business and work with initiative owners to help drive those ideas to implementation. So the ZAR 2.4 billion is significant, but you break it down. So effectively, we need to deliver about ZAR 800 million run rate per annum. And that was made possible through the initiative owners that participated and with the business support that I can now proudly say that we've moved about 200 initiatives of that 600 to the P&L, putting us in a very good position to deliver the ZAR 800 million run rate as well as the ZAR 400 million EBITDA. And as Holger pointed out, the ZAR 400 million EBITDA was quite important for us so that we could cover our transformation investment cost. I want to take an opportunity to thank the 160 initiative owners that participated as well as the businesses who made it possible. When you start at the beginning of the year, it's very ambitious and everyone stood up to the plate. It also stands to the point that Khabonina shared earlier in terms of our leadership compact to unleash the full human potential in the organization to create a high-performance culture of engaged and passionate people. Through the year, we made positive progress. And had this session been 2, 3 weeks later, I'd have told you we delivered it. We've achieved it. But one of the other key focus areas was about skills transfer and skills build as part of our journey during the course of this year. And we've done that quite well. We are now in a good position to go into next year, keep that pace and momentum going and effectively reduce our dependency on consultants. So we've taken that decision not to make use of consultants for next year and only reengage them when new opportunities present themselves for next year. So we're there in terms of covering our transformation investment cost for this year, and we have set ourselves up to continue that momentum into next year. So how do we build ZAR 800 million pipeline during the course of this year? It's a significant task, and it really comes down to how do you eat an elephant at a bite at a time. So we've broken up our work streams into several areas that's shown on screen that supports the buildup of ZAR 800 million. And like I said, we're pretty much there. We have commercial excellence, really focusing not just on the basics of looking at low margins or negative margins, but looking at cross-selling opportunities. As mentioned, we're focusing on the core business, Mining and Chemicals. And looking at those products that's within Chemicals and seeing the cross-selling opportunity within Mining. And also utilizing the techniques that's been developed with the support of our consultants and how to set pricing depending on the market, the product that you're dealing with and the customer. We move over to growth projects. That work stream has also picked up very nicely during the course of this year and really about expanding our value proposition in terms of focusing on new geographies, new customers and new products. In terms of manufacturing excellence, we've made good inroads there, really focusing on optimizing our plants and utilization. And we made good inroads in our operations here at Modderfontein, specifically at our nitrates plant together at Sasolburg at our metallurgy plant as well as at Umbogintwini. In terms of physical supply chain, we're really focusing on the optimizing our route planning, minimizing handling. And it's different to that of procurement, where we really focus on optimizing and collaborating, consolidating our spend and engaging with our suppliers and using various vehicles and techniques in the journey, so setting up supplier days to help accelerate the delivery of that value during the course of this year. And as part of our operating model, we have centralized procurement, and that also bolstered the delivery in terms of delivering the value that you now see on screen. So through those various work streams, we've effectively converted 200 initiatives, implemented, supporting the ZAR 800 million. And we will see that full financial benefit in 2025. But before I step off, like I said, we've put the skills build in place, we have the capability in the organization and we have the momentum to take us into the next year.

Holger was a bit eager to present on some of our successes in operations. Well, good morning, everyone. Good to address you this morning. I think this side of the business is probably one of the most exciting parts of the business being in operations, being in supply chain and having to put up with some of the headwinds that most of the global operations face, and I think we're no different. We've seen some of those headwinds hit AECI during the course of the year and in 2023. And as we entered into 2024, we did speak about some of the changes that we would like to bring about in the organization, predominantly around manufacturing excellence. And one of the key things that we have started to drive in the organization is really looking at our asset base and how do we rightsize that asset base. In some cases, how do we consolidate our footprint? How do we reduce that? How do we also look at optimizing our current assets and repurposing them to be able to manufacture cross commodities within the organization? And a lot of effort has gone in from some of the operational teams across the group. And you would have heard earlier this year, we did present to you that we took quite a few of our statutory shuts in the first half of this year as a group across Chemicals as well as in the Explosives business, but that has really, really paid off through the course of this year. And we've really seen some good improvements in our overall equipment efficiency. We have really seen those plants being uplifted by 28%. So we really got some good outcomes from having those shuts being done early in the year to be able to really support the business and drive to gain volume. One of the key notable things, like we mentioned, our nitrates complex in Modderfontein has also seen a lot of progress. And a facility that has been inundated with lots of issues operationally has seen a great turnaround. And in fact, we've got an 85% plant availability of that complex at the moment. And a lot of the investment we did say we're going to put and increase our spend in maintenance and CapEx, and we have done exactly that to be able to get into that space of operating and having plants available for 85%. One of the other notable projects that we had actually undertaken during the course of the year was rightsizing our sulfuric acid plant down in Durban. In a sense, we were overproducing, and that's the way the plant was designed to produce, but market has changed, and the demand has changed. So we had to come up with some innovative ways and -- of changing that around and coming up with engineering solutions basically. And like they say, the coin is in the fish's mouth. The ideas did not come from consultants. The ideas did not come from the outside. The ideas came from our people. And that's part of the capability build that was part of the unleashing of the full human potential that Rafael referenced, and it was other people that came to the party to be able to come up with engineering solutions to turn down that plant to meet market demand. But with that, they've also optimized the output of a high-margin downstream product by over 40%, and that's now enabling our go-to-market to have access to more high-margin product to be able to take out there. One of the key projects that we've also undertaken, we used to -- well, we imported quite a bit of our strategic raw materials for our Surfactant business that supports mining. Due to some of the optimization that we've had with our reactors, we are able to displace over 50% of key raw materials that we generally would import into South Africa by producing them locally in South Africa and just deploying the techniques of onshoring and decoupling shipping risks that we had seen plague us during the course of the year. Our Oleochemicals business as well been repositioned to support the Mining Chemicals growth that we've seen. They've already diversified some of their production to support that growth, and we've already started to export out of the facility in -- out of Jacobs. Just some of the production at Modderfontein. You would have seen, I did mention about the technology that we've also employed in that business. At this point in time, we are able to increase our capacity of nitric acid. If we look at our #11 train that we rely on, production has increased 5% out of that facility. And we've deployed new greener technology to enable us to get to that space. Just looking at some of our initiatives around creating resilience in our operations that has been key for us. Looking at some of the issues we've been faced with regarding electricity and having to be plagued with some of our facilities being curtailed with power dips, et cetera. We have embarked on a solar project. And thanks to [indiscernible] and his team for pulling this also over the line and helping us to deploy this and bring this into full commissioning. During the course of this year, we commissioned 3 of our solar parks, giving us just over 6 megawatts. Whilst it delivers just 5% of our total energy consumption, displaces 5% energy consumption coming out of primary sources. So that is a significant win for us. We spent ZAR 140 million, but you can see the return is really, really good. It's a ZAR 30 million saving per annum just on the solar initiative that we've been driving in the group. Just with regards to the supply chain itself. I know a lot of questions were raised in the last Capital Markets Day around the supply of ammonia. But I believe that in the supply chain itself, we've done a lot of work, not just locally in South Africa, but we've also looked at our global supply chain to readdress all ammonium nitrate or ammonia-based products. And we've relooked at contracts, we've relooked at sourcing strategies to be able to support the growth in some of our key markets. And that execution is currently on the go. And coming closer to home, of course, we've been dogged with lots of issues on rail in South Africa. And in the last Capital Markets Day, we did indicate to you that we were in the process of signing an MOU for the refurbishment of ammonia wagons or ammonia bullets to be able to move ammonia from Secunda through to Modderfontein. Happy to report this morning that we have over 100 of these bullets now in circulation in our fleet, moving ammonia between Secunda and Modderfontein. So that has largely improved our supply profile into LP5 and brought about some of the online and availability time that we're currently seeing as well in Modderfontein, emanating out of some of these strategies that we've deployed. Also with that, we're not just resting back and saying that we would rely on these 100 wagons. We've also managed to secure 30 additional wagons to facilitate the movement of product that can be imported via [ RAM ] facility. And that has been earmarked to do that should the need arise to move imported product via RAM. Just part of the diversification, like I mentioned, all ammonia-based products, we've relooked at some of the strategies around sourcing of ammonia-based products with some of the geopolitical tensions that we've had. We don't have access to some of the markets, but we've rechanneled all of that and successfully managed to secure additional tonnes for our global markets. On the longer term of things looking at where ammonia is going, we did indicate that we had signed a letter of intent with a local partner in South Africa for the offtake of green ammonia. Happy to say that those have progressed into signing an MoU in quarter 3 this year. And it is progressing very, very well on the green ammonia front, and we should be able to see that kicking into action into late 2024 -- 2027 going into 2028. So on the ammonia front, we're very, very confident that we've done a lot of strategic work that is paying off. We're starting to see the uptick on our plants across the board, not just on the explosive side, repurposing of our assets. So it's really, really looking good. It does not -- it's not easy. It sounds easy when you present it. It comes with a lot of pain, a lot of tears. But kudos to the team, they've all come to the party. They have come with the ideas. They have come with the initiatives, and we're quite confident that with the capability build that we are driving and the performance excellence that we're looking for, that operations excellence is possible at AECI. So hopefully, this just gives you some insights on where we are, and we're really proud of the team. So thank you.

Okay. Now, I am allowed. Fine. So talking to our divestment process and to the managed businesses, I will combine that because it goes together. I already mentioned that we do see a very muted M&A market. Not a surprise that comes as a combination of a slow macroeconomic situation as well as still elevated interest rates. The way I look to it is now there were some questions around which way the U.S. will go, that was also slowing down stuff. We see interest rates still coming down, so there is light at the end of the tunnel. So we are on with all these processes. That is very important to mention. But remember, we did not just promise to sell 6 businesses. That's pretty easy. You just throw it at the right price and/or at the price somebody wants to buy, and this is it, which we would call the fire sale. And we don't want to do that. We want to sell these businesses at a fair value and to ensure -- to create value for you. So we are not taking your money and throw it into the fire. To the managed business, so that's the combined business. As I already mentioned, very nice improvements overall. And I said, this is really, I strongly believe, an outcome of the fact that we were managing this business in a different way, preparing it also for a future sale. So in all those goods, and we'll get into the detail, probably not a surprise for you, there's one business that is still not performing as we want, and that's Schirm. And there's 2 elements to it. It is one, the U.S., which is doing okay, but the U.S. agro market is -- was very flat. Remember, there was an investment sometime back into additional capacity. We have not been able yet to really utilize that capacity in full. We will see where the market goes, but the outlook still is flat. So that means we need to push taking market share. And we will also look in the U.S. into improving the cost structure. The German market, remember last year, and again, I don't want to jump the gun, but actually, even before I arrived, there was a project approved to turn around the business, mostly focusing by closing down one of the factories, the Wolfenbuttel site, which we have done. And there was positive effects, you will see that. Unfortunately, in September '23, the chemicals market in Germany completely collapsed. You know that from the news. That's public. That impacted Schirm a lot. As a toll manufacturer, you're depending on the swing capacities of the producers, and they had no business actually. Then they internalized some of what they typically provide to the tollers. So the impact of the market was much, much higher. You will see the numbers. And then the second hit came about midyear. It was big in the news. You have seen that one of the largest automotive producers in the world, Volkswagen, is in bigger problems, but it's not only them, it's others. And consequently, all the suppliers to them. And at the end of the chain, again, you find Schirm that goes chemicals even into tires and all kinds of electronics and so on. So that was the second impact. But let me tell more details later. I want just to move first to our divestment of Much. And I want to make the comparison from when we bought that versus where we are at. Again, we have signed. We have not closed. So in 2018, AECI bought Much for about ZAR 2 billion. 3/4 of that was goodwill. And it was debt financed. So in '22, we had ZAR 821 million impairment. But as you know, generally, the business continued to underperform. So we have now been able to come to and sign an SPA with Old Mutual as we announced. So the purchase consideration will be approximately ZAR 1.1 billion. And I say approximately because it's a lockbox structure, which is based on the 2024 year-end results. But being in November, I can say there is not anything that we would expect going wrong, so that ZAR 1.1 billion should very likely be the landing point. Again, you see that we have ZAR 1.6 billion almost sitting in the NAV and that reflects the goodwill that was acquired. So that sale comes in the end with an expected impairment. Just to benchmark. So the multiples we see, and also compared to what we have seen in the last years, is always swinging anywhere between 4 to 6 for construction business like this. So that gives you a sense of when we want to benchmark, why we say this is a fair value. To Schirm, so this is the group view. Actually, not really want to spend too much time on the total view because I want to show you the individual businesses and where they are at. So if you look to the U.S. first, on the right side, already mentioned that we have added capacity. We have started to build business, but not fully utilized that. So you see, therefore, that in total the EBITDA is -- well, it's still the same, basically, but slightly improving. But our profit is down, and that's as a result of the underutilization of the new asset that was built. So what we will do there? Again, I do not really want to spend too much of time here and also not too much of money here. But really looking into rightsizing the cost structure in a moment because we actually rather expect a continued rather flat market. So that is a project that will kick in now. Germany, I think the revenue development is self-speaking. And remember, we transferred business successfully from one site that we have closed. So reality is that the total revenue as a result of the market circumstances was almost down 40%. So now even if you look into that rightsizing or the plant closure, that didn't help for what happened in this year. So actually, when we started the process, we were looking into a positive development. We had no line of sight what happened in the chemicals industry because that was really mostly related to the change of the energy politics in the country. And in the end, automotive, basically, is the same thing. So let's be honest, that comes in the same way. So self-made problems in the country, and that affects then the business. Now if you have a business performing like this in a muted M&A market, we tried hard, really. We tried -- we battled hard. We are not able, at this moment, in the combination. Again, I think the combination is important to understand. So it's the business performance and the M&A market. It's not the either/or. We are not getting to offers that would satisfy us and that would satisfy you. And, therefore, we want to wait that to improve, but of course, not wait -- just wait, we will go into a second turnaround. So, in -- when in 2022, so that is the performance of the business from 2018. And there is an error, so 4 plus 4, at least in my world, is 8. So that -- it started actually at an 8. The upside you see in 2020, and I want to explain that. So when many companies and businesses did suffer substantially from COVID-19, the Germany Schirm side was having a nice upside because producing solvents for vaccine and the like, which at the time were short. So that was a specific effect there. So that was not a sustainable upside just to say that. And then you see the business actually never really recovered after COVID. There was an impact. I'm not looking for excuses, but there was an impact from the Ukraine situation. And the biggest impact came from the energy transformation, the way it was dealt within Germany. So that leaves us at a situation where we now want to look into another turnaround, which we will kick in as we speak. I was at Germany last week. So we have a concept on the table. We have a plan that will start again now. And the idea is a 12-month project. It's going to come with hard cuts. So it will be not as simple. It will be a very complex project, but we need to invest another approximately EUR 10 million, but I'm very confident that by end of '25, we can get then the Germany business EBITDA breakeven. In my intro, I said we want to be very transparent. So I'm not now just promising blue sky. And as I said, just there is a complication, and I want to show you the complication, and that's the complication. So again, going back to the acquisition, the business was bought at ZAR 134 million. There was, I'd say, a reasonable compared to what I presented earlier, reasonable goodwill recognition. Going through the years, we have invested in the U.S., just mentioned the capacity expansion. There was an option pulled for a warehouse in Germany. And it was in '22 decided to go in a turnaround, which I just mentioned that was the closure of the Wolfenbuttel site. That was another ZAR 20 million. So that comes with another ZAR 20 million investment. The external debt then did land at ZAR 128 million. There was impairments underway, ZAR 26 million. And as I have just shown you, there was -- and we always said that very openly, there was cash burn. So there was a need to fund that business, and here's the complication. We are sitting on a net asset value of ZAR 120 million and an external debt of ZAR 130 million. If you want to make that a nil impact, you can make the math, it's about a ZAR 250 million that you would need to have no impact. You would definitely need, at least the debts of ZAR 130 million. That would leave you with an impairment of the NAV. Now the combined, Much and Schirm, made about 1/3 of the total group NAV. And that is really the complication. So we are going in this program. I would love now to tell you what the concept is, but I cannot because there's many stakeholders that we need to manage. I can only say it's going to be a hard ride. It's going to be a deep cut. And it also will -- well, we will also consider to go into, let me call it, a slice and dice, meaning selling the businesses individually, even down to assets, even down to the warehouse, which we actually not need. Let's move to the call. I promise you it's coming better news now.

All right. Good morning, everybody. Okay. So I'm going to talk to you about Chemicals. And as Holger said, I think the Chemicals team, and I need to thank them as well is that they put a lot of hard effort in this year. And I'll just give you a little bit of an overview of the year-to-date. So again, from a revenue point of view, we've seen our revenue is still down, and you'll see it on the financial slide a bit later. And that's really the chemical market in South Africa is still soft and subdued. Also, from an agri point of view, we had a late start to the season. Very good when it comes to agri excuses these days, and Holger and I always talk about it. And I even sent my team there with a song from Creedence Clearwater Revival, Have You Ever Seen the Rain. But the rain has been good in certain parts of South Africa. But with the start of the -- what we noticed is that the agri season normally kicks in end of August, beginning September. But fortunately, in October, somebody switched the light on, and I must say the agri team have been doing a splendid job, but it did impact our revenue nevertheless. But I think what the teams did exceptionally well was managing the EBITDA performance in the business. And we had a solid performance year-to-date, really on the back of vigorous cost management in the businesses as well as our margin management at the customers. And then, of course, with the hard work that Denvor and the operations team did, we had some very much improved efficiencies, particularly on our sulfur plant, on our resin plant as well, I think, and we've been able to take advantage of that as we've gone through the year. The other key focus for this year has been our debtor management. And you'll recall that last year, we had some really big challenges in the Water business. And I'm glad to say that team really put their heads down and had a very good performance in terms of collecting debt this year as well. The other thing, of course, is inventory. It's a key point in our Chemical businesses. You will see that our working cap sits at about 23%, and that's really on the back of the fact that we have quite a bit of trading that takes place in our agri businesses. So you're having to sit with stock and planning for the season ahead. Of course, also the agri season being a little bit late, our stock levels were obviously a little bit elevated at the end of September, but I'm glad to say that they are really starting to come down now as well. And then last year, again, I had a tough time presenting the Water business last year. But again, if you have a look at the recovery in water this year, I think well done to that team. I think, first of all, the -- if you look at the recovery or the improvement in the Industrial Water business, I think the team did a fantastic job. Obviously, the Astron Refinery came back. But I mean, nevertheless, I think the team pulled out all the stops. Even the Mining business has started to recover, and of course, our Public Water business as well. Okay. And then most importantly, the cash generation in the business, and you can see the numbers there. So for the year-to-date, you can see the EBITDA up, up to ZAR 813 million as well as the profit from operations as well. And I think the key focus going forward will be on the working capital, which we monitor very carefully. And in terms of the way forward and the strategy and how we work in the Chemicals business is that we continue to drive cash generation. But I think there's some fantastic opportunities when it comes to the products that we produce for the mining industry. And I think we're working very close with the Mining teams to use their footprint to sell our products that are really produced in the oleochemical business. And [indiscernible] and his team have done some great development work there as well, but also on the mining water treatment side and our sulfur-based side as well. So good start, as I said to Holger for the first 3 quarters. There's still a quarter left, and I think we are confident that we shall continue this through to the year-end. Thank you. Stuart?

It's good to be here. Everybody, the AECI family has been very, very welcoming. It feels like I've been here for a couple of years by now, which is wonderful. So it's a great pleasure to present on the Mining business, and we'll cover quite a bit today. Just wanted to start off by highlighting the success of AECI's globalization strategy, which showcases our breadth now in more than 20 countries and -- which is supported by our diversified commodity portfolio. As a business, we are committed to driving cross-selling opportunities across the footprint that we have, which is made up of our #1 position in Africa, a #3 position in Australia and our #4 position in Indonesia. While South Africa does remain our largest volume contribution to the business, the Australian business really has been delivering remarkable results, growing at a CAGR of 18% and now contributing comparable volumes as a South African business. With low sovereign risk, this region will continue to be a key growth driver of the Mining business. And we look forward to the new business in Papua New Guinea beginning in January 2025. The Asia region represents a stable contributor, and there are meaningful opportunities across that region in years to come. And Latin America, whilst currently a smaller contributor, remains an attractive, fast-growing, future-facing commodities market, underscoring our commitment to this region with the acquisition of [ IGT ] earlier in the year. As Holger has alluded to earlier, we will continue to leverage opportunities across Africa by focusing on operational excellence and establishing strategic partnerships. Whilst we have seen some cyclical declines across Africa, we have the expertise to manage those risks and the profitability accordingly. We do see our long-standing experience in Africa as a key differentiator for AECI and a substantive barrier to entry for a lot of our peers in the industry. Our well-diversified product portfolio reflects our strategic alignment with global commodity trends. Whilst coal remains a large contributor at 28%, PGM comes in at 18% and gold and copper at 16%, providing a good commodity spread. This diversification obviously minimizes our dependency on a single commodity, mitigating our risks and creating new opportunities across other sectors, and we look to take advantage of this exposure with cross-selling opportunities, particularly with our met-chem portfolio across copper, gold, nickel and zinc. Denvor's covered off very nicely a lot of the hard work that has occurred in the operations team. And we are starting to see some of the benefits of that. But nonetheless, the Mining business has been exposed to several one-offs and headwinds across H1 and quarter 3. But we are happy to share that these are broadly behind us, and we've seen a recovery as we have entered Q4 on an EBITDA basis. And we believe this trend will continue through to the end of the year, bridging the gap. In South Africa, we were committed to share -- to ensuring security of supply for our customers during H1 and the remediation works that Denvor alluded to before were resolved quicker than expected. This resulted in us being left with a higher than requirements -- demand requirements for ammonium nitrate, which lagged into quarter 3, increasing our costs. Additionally, we experienced some technical and operational constraints in our [ IS ] facility, and this impacted our plant recoveries and resulted in some buy-ins, increasing our costs in Q3. In APAC, we saw some raw material costs decoupling from indices. And this is primarily driven by supply constraints resulting from the Ukraine conflict. These risks are being addressed bidirectionally with engagements with vendors and suppliers. And good progress has been made with the team in APAC. We aren't expecting these to carry forward into FY '25. With the underlying business activity, and the normalization of one-offs and headwinds, we do expect to bridge the gap and to establish a strong EBITDA run rate into FY '25. Based on the information provided on the previous slide, on a normalized basis, excluding the headwinds I've just outlined, the EBITDA is down 9% year-on-year. And as I said, we remain confident in closing the gap through to the end of the financial year and to set a strong run rate into '25. Revenue variances are predominantly driven by commodity movements, primarily ammonia. And cash management remains a key priority for us, which can be seen by the fact that our year-on-year performance concerning trade working capital is marginally ahead. We remain committed to the disciplined cash management, and we are confident to improve on this trade working capital position further as we close the year.

So good morning, everyone. Good to have you all with us today. I'm going to focus firstly on just sharing with you some of the key focus areas in finance over the last few months. Balance sheet optimization has been one of them. It sits also as part of our transformation. It's a work stream within our -- excuse me, it sits within our transformation program. And the team has made some good progress with regards to this particular work stream. Working capital management has been a key focus area here, and we've seen some good efforts from our physical supply chain team, specifically driving optimal stock levels within all our core businesses. Our accounts receivable team driving disciplined collections. We've also heard it from our Chemicals business. So good collections coming through from a net working capital perspective. We also spoke around our central procurement team that has now been put in place and really keeping our suppliers honest around pricing as well as pushing around extending our terms with our suppliers. We do expect to improve our net working capital days year-on-year within our core business. We're also driving our capital allocation process seriously to maintain our existing assets, thereby ensuring asset health and the efficiencies of our plants. Cost optimization has been a top priority for all our businesses, and we are on track to deliver our FY '25 target as well as our EBITDA run rate for FY '25. The effective tax rate from a group perspective is receiving our ongoing attention, and I'll share further on this in a later slide. We recognize our group results reflect a year of transition. It's noisy with executing our strategy and delivering on our business as usual. You'll see our year-to-date reported profit numbers show the necessary investment spend on strategy execution, which are once-off in nature, resulting in an EBITDA decline of 18% year-on-year. Albeit our reported numbers are down, pleasing to note our gearing percentage has improved year-on-year, and a continuous focus remains in reducing our net debt levels. Our working capital percentage is flat year-on-year. You've seen our Mining performance showed an improvement year-on-year from that perspective. Our Chemicals was flat year-on-year on net working capital percentage. And our managed businesses, we're still seeing high levels of net working capital. This will improve our overall group working capital percentage once we divest of our managed businesses. If we go into some of the once-off costs that are driving our EBITDA, we started 2023. We've normalized our 2023 EBITDA for 2 one-off items being the EST costs that we incurred last year as we closed off the employee share scheme, and the Schirm turnaround. You'll see the Schirm turnaround plan of the Wolfenbuttel closure did span over into FY '24, resulting in a spillover of cost into this year of ZAR 32 million. We shared at half year, you've also seen in the Mining slide, that we did incur a once-off of ZAR 204 million during half year 1 that was related to ANS buy-ins, which we could not pass through contractually to our customers. We also experienced production variances during this time when we had the necessary statutory shutdowns in a number of our plants. The transformation costs of ZAR 409 million mainly relates to the external consultant support we brought on board, both to help project manage the transformation as well as from a change management perspective for delivery of our strategy. We've also incurred some severance costs within that transformation number as a result of executing on our new and implementing our new operating model. These costs, specifically on the transformation, will continue into Q4 albeit at a much lower spend rate. Divestment costs of ZAR 110 million relates to adviser support we have brought on board to deliver on the portfolio optimization. We expect minimal cost to come through the rest of Q4 as a substantial part of the adviser work has been completed. So overall, in terms of once-off costs, we've incurred in the period that ZAR 755 million. If we then translate that into a normalized P&L view, based on the items I've just presented, also considering the challenging operating environments we operated within this period and the execution of our strategy, a flat year-on-year underlying EBITDA performance with margins stable, we believe, is a pleasing outcome for the year-to-date. Our effective tax rate has demanded a significant amount of our focus. And it also reflects delivery of our strategy execution. We have done a deep dive to look into our segments to determine the drivers of the effective tax rate. If you look at the first block, which refers to our core business, and that includes our Mining, Chemicals, Property and Corporate segments, which is our end state of the group, we expect to finish the year in a range of 40% to 43%. This, we recognize, is still high and is impacted by the lower profitability due to the strategy execution and the once-off costs we've incurred there and an interest paid on a tax audit that -- tax audit assessment that happened in half year 1. We expect the ETR for our core business going forward to be at a range of 35% to 37% within the next 12 to 24 months. If we then move to the AECI Group ETR, which then combines the managed businesses, we do expect the ETR to be higher than what we've reported at half year 1. And there are a number of drivers contributing to this. Firstly, we do expect an overall lower profitability from the group, and that's due to the execution or the spend related to the execution on our strategy, divestment costs related to the portfolio optimization and the expected impairments in the managed businesses and the continued losses in Schirm, Germany. The managed businesses have a significant impact on our group ETR and will persist going forward until they are disposed of. However, to reiterate, our core business ETR, we are heading in the right direction. I think further, just to share, that we've filled all our critical roles within our tax department and we are in the process of identifying tax opportunities, which we can implement in the short to medium term. If we then had to look forward and give you a view of our outlook guidance for the full year, on a group profitability, we expect to achieve similar levels as FY '23 on a normalized basis. We are still confident as we look to FY '26 from an EBITDA perspective that we are on track to achieve our target range, albeit still a work in progress by the team. We expect our free cash flow conversion ratio to be in line with our 2026 target ratio and recognizing that our free cash flow this year has been impacted by the necessary strategic investment spend during the year. Our ROIC percentage, we expect to be in line with H1 '24 at 10%, understanding that with the execution of our portfolio optimization and disciplined capital allocation, we believe our target of 2026 is still achievable. Our gearing percentage outlook for the full year is the midpoint of our 2026 target. Our priority remains to reduce debts with our disposal proceeds that we expect in FY '25, and we will continue to assess capital allocation for growth opportunities that enhances profitability and NAV at the right returns. We have and will continue to invest in the maintenance of our asset base and expect to be in line with -- by the end of the year within our target -- 2026 target range of 0.8 to 1.2x. We do expect to end the year well within our covenant levels. On the dividend, we remain committed to paying a dividend to our shareholders with our free cash flow generation and at the guided lower end of the dividend yield range. Overall, we have made good progress this year, and we are still confident that we are on track to achieving our 2026 strategic targets. Thank you. Zanele?

Okay. Thanks. Thanks, Rochelle. We're going to go on to the next section at the moment. So, Holger, please come up and give us a strategy update. Thank you.

Yes. Sorry for that, but I thought we are going pretty quickly, so do not make the break now, but just jump into our strategy update. What is important for me to structure a little bit the 3 years, so '24, '25 and '26. As we have shown to you, we have delivered the first ZAR 800 million. Well, delivered is end of year, but we are very, very certain. That was, I would say, without making the hard work any smaller. It was focusing on optimization of mainly processes, structures, realizing quicker wins. And it was important for us, and we wanted that for 2 reasons. The one was we did know that we needed external support, as I said, so we brought in the consultants. And it was an absolute important goal for us to stand up at the end of the year and say, those guys have paid for itself. And I think we can say that. And the other element was we needed to get into the flow of the transformation program. And that comes mostly with people and setting the culture up. And I always referred to it and covered it, what Peter Ducker said. But I just not believe that one can build transformation without changing the culture. That has to fail. And that investment is necessary. So that was really a focus, '24. Now going into '25, we are looking, I would say, more towards the hard cost savings. We're starting to look more towards topline. And that means there's 2 things. So hard cost savings, hard cost reduction. There will be investments required and preparing for growth, which then come in '26, that means we also need to invest into growth. And then '26 will be more on the topline end of the growth, which makes me at least sense to say you're sorting out your stuff, then you're getting your cost right and then you pull and grow and not just talk, I'm growing here and there. So that's the setup. That's important. So actually also important to say, of course, then you come to a normalization. So there is an investment upfront in that growth, which we expect. We do that individual by product. And of course, as we save, our capital allocation policy is absolutely in the center of this. So where does that leave us? I want to give a bit more context to it using the same slide. So focusing now on some key initiatives for '25. This is not everything. I just want to give you a sense. So I know Rafael will tell us another 600 initiatives coming in. But for me, there is a few that are really stand out and will address also legacy, in a sense, things cleaning up. So we will look into our headcounts, comparing ourselves with a peer benchmark. And I can give you the peer benchmark based on a revenue comparable. AECI is in the moment operating at more than 1.5x of peers. I see your faces. I understand that. So we need to address that, and we will address that. But we will address it in the way that our values and cultures are set up as well. So historically, we have 3 head offices. I remember there was a larger company a long time ago, Unilever. They had 2 head offices, one in the Netherlands and -- or Rotterdam and one in London, which I never understood, then they consolidated. And I also think there is something we can do and will do looking into whether or not we would really require 3 head offices. And as I also mentioned already, it is continuing investing into our cost per unit. Maybe the reason why I wanted to jump on to the operations was that I was very happy that we have started to rightsize some of our assets. Remember, I said, and it was -- we were focusing a bit on the Chemicals side now, but we said we want to look into the Chemicals, which are structurally underutilized assets. See if there is a market, yes or no. We came to the conclusion there is some we can do, but we cannot utilize those plants. So that's why we made a combination of rightsizing and repurposing. And I'm really sure that it will come to fruition next year. Now the same is true in the Mining area. There is also assets that are structurally underutilized since long, and we will address that as well. And that is, for me, key highlights into -- looking into '25. The '26 one, as I already said that, that really focuses on the topline side more. I want to again make a step back, for me, the few is always -- on the cost side, you manage. You have 100% control. If you look to top line, that also requires somebody to buy. So that is not 100% control. So -- but what we're going to do really to use the full potential of the offering we have. And when I arrived, one of the first things I was looking to and thinking of was like then we have such a great chemical skill set and knowledge, and we need to use that to internationalize more and leverage into our footprint. And I can say that basically the same comment come after 2 weeks from Stuart. So that is the plan, leveraging that, leveraging that mostly going into Africa -- into our African operations. Because it's close, it's our market. As Stuart said, the -- it is a market where others struggle to operate. But we really believe we know how. We also look more into the electronics and see where we could turn markets. And the second and very important few for us, and I'm jumping the gun a little bit on strategy, we come back there, but it is strategy, so it is our Asia Pacific business. As we said, we are actually #3. We want to strengthen the position. And the goal for us now is to really build that out as a business that is self-sufficient and can grow. So from a strategic view, so Africa, build, actually leverage what we have. Continue to build APAC. So I wasn't sure if that was always clear what steps we do. And then we also said LatAm. And the reason why LatAm is not only the fact that it is an attractive Mining market, as Stuart rightfully say, but it's also a market that from a how to manage is similar to Africa, which gives us the confidence that we can grow in that market where others have failed. Where does that leave us? This is how we look to '25. So based on where we land in '24, which actually should be flat, as we said, then we add the organic growth that we have seen historically. And then we continue to unlock value through the TMO. Now sometimes it's just wording, and forgive me, I'm not a native speaker. So the ZAR 800 million, what we refer to -- you call it [ MD5 ]. We call it run rate. What does that mean concretely? So those ZAR 800 million, which include the ZAR 400 million that has been delivered to P&L. So those ZAR 800 million, they are ready to go in '25 into the P&L. That means where we land in the end of December, actually, then we have the ZAR 800 million, and that goes into '25. And we are very, very, very sure that this is the case. There will be leakages, and we know that. We are not naive. But we continue the process. So -- and as it was this year, so remember, we delivered ZAR 800 million run rate, which then is the next ZAR 800 million run rate goal in '25. But I can tell you, it will not be like this year, where we add another ZAR 400 million. So that would not be realistic. So that's why that was quicker wins. So -- but we will -- we are very, very sure that we will deliver the other ZAR 800 million, so then you are ZAR 1.6 billion. And the same continues into '26. Just to reemphasize, we said always that is a run rate, and I've shown that differently in -- also in the half year. So that is fully affected '27. That's what we talk about. I just really want to avoid any type of a confusion here. Right, this looks like -- now I have an EVP, Mining. I can save that part. That's you.

All right. To be fair to the Chemicals business, I think I actually said we had a great Chemicals business after the first week, not the second. So I just want to spend a little bit of time talking about the product portfolio and our regional growth strategy. Holger has touched on some of that. But we really do have a market-leading position in both Mining Chemicals and Mining Explosives. And our Mining Chemicals portfolio, in particular, is tailored to meet the evolving needs of the mining sector, ensuring high demands and alignment with sustainability goals. We are a clear leader in the Mining Chemicals sector in South Africa and in the highly complex PGM sector. The knowledge and capability that we have organizationally in our teams related to PGM, the PGM sector is directly transferable into other sectors such as copper, nickel, zinc, lithium and gold. Bulk explosives remain a cornerstone of our business, providing revenue and margins. And our technical expertise in emulsion chemistry positions AECI to win in the most challenging operating environments, as is supported by the recent contract win in Papua New Guinea. We have leading technologies with respect to initiating systems, such as our wired and wireless electronic detonators in IntelliShot and CyberDet. And we will continue to drive solutions-based offerings across all of our operating markets. Our investments in digital position us well for continued innovation, and our focus will remain on the core mining cycles and metallurgical processes that our core products are facing. As the #1 in Africa, our strategy is to defend that privileged position. And as Holger said, and I've expressed earlier, we have over 100 years of experience operating in this environment. And this positions us to be the logical business partner for our valued customers across the region. We will continue to respond to their trust by driving productivity improvements in drill and blast and mineral processing. Asia Pacific represents a significant growth opportunity, and we will focus on strategic partnerships and capacity expansion. We aim to strengthen our position as #3 across the Asia Pacific region. Our low-capital, intense offerings in APAC have proven to be very successful and a differentiator that has separated us from some of our peers. And we see this as a key lever in diversifying our commodity exposure across the region. Latin America will be a future growth driver for us, as Holger has expressed. And with substantial ramp-up efforts underway to meet the demand in many countries such as Brazil, Chile and Peru. Our core mining products comprising Mining Chemicals and Mining Explosives are in high demand across the region. And our strength in met-chem, in particular, strategically support -- position us to support the mining sector across LatAm, particularly with respect to copper, nickel and zinc. Our strategy, as Rochelle has highlighted, is to remain focused on value creation and responsible capital deployment in the process. Our strategy is supported by a balanced product portfolio, and it does align with specific market needs. This will enable us to continue to grow and defend our leadership in established markets, and more importantly, deliver consistent value propositions across all geographies. This slide is really to illustrate where AECI plays across the mining value chain, from the mine to the mill. And by leveraging our strong and well-established manufacturing capabilities, extensive supply chain and efficient -- and international footprint, we can deliver innovative, efficient and sustainable solutions tailored to the modern mining operations. A key pillar of this strategy is developing and enabling digital environment to support our core product offerings, from the mine to the mill. By integrating our predictive technologies, we will enable real-time insights to optimize operations for ourselves and our customers whilst improving safety. These investments will focus on tools that directly influence the core, primarily drill and blast and mineral processing. We will remain agile in the pursuit of this vision by balancing in-house technology development with strategic partnerships to deliver smarter and more productive solutions. AECI touches and influences critical mining cycles such as drill and blast, where we have advanced solutions that optimize outcomes and drive operational efficiencies. And we do this with our market-leading explosives such as CyberDet, as mentioned before, our wireless electronic detonators and PowerBoost, our new PETN and TNT-free cast boosters. Coupled with our digital solutions, this will ensure, as I said before, safer, more productive mining operations. Beyond blasting, our capabilities extend into mineral processing, where we play an active role in optimizing all recoveries for our customers. This includes ore processing with flotation agents, flocculants, depressants, amongst others, but also a very innovative water management solutions offering that enables and enhances water reclamation and water recycling. And by integrating these solutions, we will help our customers achieve compliance with their ESG standards as well as reducing their environmental impacts and enhancing overall efficiency. As we look to the future, our success will rely on several key enablers. One will be strengthening our supply chain to support our global expansion. The second is collaborating with industry leaders to enhance our solutions suite. And the third is expanding our Mining Chemicals offering, focusing on cross-selling opportunities across our international footprint. Our solutions basket contains the products and services that we need to win, and we are winning today with this basket of solutions. I just wanted to touch on a couple of examples. As previously communicated, we won -- we were awarded a 5-year contract with Newmont at the Lihir Gold Mine in Papua New Guinea, and we're expected to commence supply in January 2025. This partnership was secured through a competitive tender process that was awarded on the basis that our products were considered more technically suitable to the mining conditions than those of our competitors. Lihir is an epithermal gold deposit, characterized by intense geothermal activity with very high ground conditions. These extreme conditions pose significant challenges for miners and particularly in the drill and blast cycle. During the technical evaluation, AECI was recognized for our ability to deliver a bulk explosive solution that was capable of operating in temperatures in excess of 165 degrees. Additionally, to the high temperatures that we can provide our -- and deploy our products into, the thermal stability of our products would enable the customers to increase their sleep times in the blast holes, further enhancing safety, simplifying the drill and blast cycle and delivering measurable direct cost savings for Newmont. Another example I'd like to share relates to our Mining Chemicals division, which has established itself as a leader in metallurgical innovation, particularly here in South Africa. We have a proven track record in processing run-of-mine ore and optimizing recoveries from tailings. Our expertise extends to world-class solutions for tailings scavenging and the ability to dry stack filtered tailings. Dry stacking is the safest and most sustainable method used for storing filtered tailings. Aided by the use of our leading Mining Chemicals products, we are able to enhance the mineral recoveries and the water release from the tailings. This enables them to be dry stacked, which directly eliminates the risks associated with managing tailings dams, such as wall failures that some people experience throughout the industry. Building on our success in South Africa, we are expanding our impact across the broader African continent today, and we are seeing good uptake and growth rates. And by leveraging this expertise in sulfide ore processing, we are perfectly positioned to take advantage of our opportunities across our international footprint in copper, gold, nickel, zinc and lithium, and we look forward to doing so in the upcoming future. So thank you. I think back to you, Holger.

Yes. Before going to the key takeaways, actually, just building on what Stuart just said, AECI is very unique in our market, and in that sense, outstanding. And why I'm saying that, we just were referring to our operating -- or our operation model, business model. Stuart was, again, talking about the capabilities we have in Chemicals and the capabilities we have in electronic detonators building towards digital. There is no other player in this industry that has the same capabilities. I'm not sure if that is clear for everybody, but there is no one, no one. So Orica, I can say Orica, fine, respect them, they have moved into chemicals just now. They made a big investment, a big acquisition, but they are in one commodity. They're in gold and cyanide. We have a broad portfolio. We have a broad know-how that we can translate into different commodities. No one has that. And we are Tier 1 player if it comes to electronic detonators. And I think there's little more we can do to prove than the [indiscernible] case, what our technical capabilities in the bulk side are. So I'm really, really convinced that, that combination makes us very unique. Okay. The key takeaway, at least for me, so again, we said it, it is a transitional year. It comes with a lot of cleanup. There are impairments, and it comes with transformation costs to support us in the heavy lifting. But we still see a resilient and healthy underlying business, delivering even slight growth. If you compare what we are doing with what other companies do and have done, I think I cannot mention or emphasize enough the achievement of actually being flat year-over-year in the first transformation year or I haven't seen that often. In executing the strategy, we deliver the ZAR 400 million EBITDA P&L impact. We promised the ZAR 800 million EBITDA run rate into '25, and we are ready to deliver the next ZAR 800 million and meet our goal for 2026. We are prepared. We are ready to move selling our managed businesses when the right offer is on the table. Going forward, we are taking our full portfolio to market, leveraging our chemicals know-how on our mining footprint. And our Chemicals business was always delivering cash. But now using the skills and the know-how, it also supports the internationalization of our Mining segment. Our Mining asset base is now in a much better health, shape to support growth, both in South Africa and international. And Stuart has shown how October looks. We know October, 1 month, doesn't make a trend, but we are very confident that it will be a trend. And we remain fully committed to our capital allocation policy and to letting our shareholders participate in our success. Thank you very much for your valuable time, and we can, if you choose, go into Q&A.

Okay. I hope everyone is still awake. Maybe I should make everyone do squats so that we can wake up. No, it's fine. So it's time for Q&A. So those online, if you've got a question, if you can type it in, in the chat box for us, and then, we'll address that. For this session, I'd like to ask the whole of ExCo to come up please on the stage.

So we'll start in the room. If you can please raise your hand if you'd like to ask a question. Please introduce yourself and the company you represent and then ask your question.

[ Dagan Sachs ] from [ Elite & Co ]. Just I wasn't sure I understood you correctly on Schirm. You're going to need more money to put in. And you just saw EUR 10 million, but ZAR 250 million. What is it I'm missing there? How much are you actually going to have to put into Schirm, is what I'm trying to get to?

Yes. So for -- if I understand, right, so for the next trends -- sorry, turnaround program that is going into '25, it's going to be EUR 10 million. And that should bring us to a breakeven, hopefully, more, but I don't want to overpromise, the breakeven by end of '25. And that's not -- it's mostly related to the cost cut. So there is no investments in steel and concrete. It's the opposite. I cannot be clearer.

It's [ Rowan Garlow ] from [ Cronix Research ]. You talk about extra CapEx required in 2025. Can you maybe just expand a little bit on that, please?

You have. No? The investment next year.

Yes. So I think he's referring to the growth initiatives, specific around the TMO, right? I think that's what I'm understanding your question is here. So I think there are various initiatives that's been identified, specifically in the regions where we want to grow, specifically on the Mining side, related to new customers in those particular regions. We are currently assessing those opportunities and specifically applying the capital allocation lens around the various returns and the payback periods that we need to achieve before we invest further from a growth perspective. I don't know, Stuart, do you want to add specifically around the Mining CapEx growth with more detail in terms of the color of the initiative part?

Yes. I think you summed it up nicely. We will look at the returns of each opportunity in isolation. But more importantly, we will look at the capital intensity and look at ways to optimize that. So we do very much see the value in our low capital intense strategy that we've put in place in APAC, in particular, and we'll be looking to leverage that into other markets outside of South Africa.

Were you specifically asking for a number? Or were you -- yes. Okay. All right. So I think what we're prioritizing are initiatives with a very short payback period and the highest sort of returns. And what we've identified thus far, we're looking at about a ZAR 500 million CapEx additional in next year, specifically related to growth initiatives.

Wessel Joubert from Oyster Catcher Investments. I've got 2 questions -- 3 questions, actually. I'll start with the easier one. Your EBITDA targets, there's no per share targets in there. So can you just confirm that there's not going to be kind of big dilutions and -- in the per share numbers, so, i.e., just acquiring big businesses with equity? And then your targets lower the free cash flow conversion, which is a bit contrary to kind of our understanding of increasing margins and all of that. Can you just touch on why the free cash flow generation will decrease as you grow EBITDA? And then a little bit of a tough one. On your Mining business, we have seen some of your competition entering South Africa with -- in a space that they haven't played in before, i.e., underground mining and on the water chemical space. Any competition is usually bad. How do you kind of -- how are you going to defend that market share while focusing on everything else?

I like competition if it's good competition. But I will take the first one, and you and then you can talk to competition. So the '26 target that we have called out excludes any type of an acquisition -- major acquisition. There might be small stuff that I always call is not M&A. It's operations in the end. So there is no dilution, in no way expected. So that's pure organic and out of the TMO.

So on the free cash flow conversion percentage, I mentioned that we're going to end the year between -- in the target range of 2026. We have -- if we look at our various businesses, from a Chemicals perspective, we'll see strong free cash flow generation in this year. Mining will be impacted due to the EBITDA performance, specifically around the once-offs and the headwinds we've experienced in Q3. On the corporate side is where all the investment sits, investment spend on the strategy execution. And that has an impact. Those once-off spends in this year has an impact on the free cash flow generation for this year. However, going forward, we do expect to generate a much higher free cash flow conversion to sort of normal levels, which we've seen in the past.

Yes. And I guess just on the competition side, I'm with Holger, I think competition is good. I think it keeps us honest, but more importantly is it drives innovation. So I welcome competition. In the South African context, you would almost consider our market share in Mining Chemicals is potentially almost being unsustainable. It is high. And the reason it is high is because of the technical value add that our Mining Chemicals team offers. We have a lot of metallurgists and technical expertise in supporting our customers drive mineral recoveries, which is extremely valuable to them. So we do think we're in a good position to protect that market. However, more fundamentally, we do see a bit of uncertainty with respect to PGMs in general. So acknowledging that, we really want to take that expertise in PGMs, which is the most complex metallurgical chemistry in the market and take that into other markets, primarily copper, zinc, nickel, gold and lithium. And we have the solutions for that, and we'll be looking to take that beyond South Africa to future-proof that side of the business.

[ Gama ] from Zenith Bank. So I think Holger mentioned that there's a lot of divestment and muted M&A activity. But my question is around how does AECI plan to balance debt reduction with growth investments.

Actually, again, I'm just going back to our capital allocation policy. So -- but before that, on the divestment side, the M&A market is what it is. So we cannot even say when is the right moment to sell because again, we want the right price. And as you can see for some of the businesses, the chance to come from a price to proceeds is difficult at best. But then to the investments, we were very clear that actually we want to use our free cash flow we generate, and we really, really believe, as Rochelle say, that's going to improve to invest. So we always said maintenance -- still for us, maintenance is extremely important. We still need to catch up. We are not where we want to be. We have done major steps, so we set the guidance between 0.8, 1.2x depreciation. So we still want to be in the midpoint and then use cash to invest into growth. And also, we always said, if we would not be able to find the right projects, which I not believe, then we would not waste any cash into that, then we would bring it back to the shareholders. That is actually exactly what our capital policy says.

Okay. We'll take the ones online. So first question from Warren Riley from Bateleur Capital. Please, can you talk to the news flow overnight that AECI is planning to build an emulsion production plant in Kamoa copper mine in DRC? What does this mean for AECI volumes going forward? That's for you, Stuart. John Arron from SBG Securities. It looks like your timeframe for asset sales is being pushed out. Can you please confirm timeframes again and likely disposal proceeds? Thank you. That's for Holger. Charl Gous has asked from Bateleur Capital, what is the absolute rand value of CapEx for 2025. That's for Rochelle. Charl de Villiers from Ashburton. Regarding Schirm again, when do you pull the trigger on the breakup sale option versus trying to sell the assets wholesale? And in your opinion, based on your recent experience trying to sell per unit, will this dramatically improve the odds of exits in the next 12 months to 18 months? That's for Holger. So we can take those questions. We'll start with Holger. Start with Stuart. Okay.

Okay. Kamoa, so I won't talk specifically to Kamoa. I'll speak more broadly to the DRC. But before doing that, talk a little bit about Africa. And it's one of the more exciting regions for, I think, the mining sector. I think there's a lot of people looking at Africa. It's one of the reasons I've come and joined the team is to get some exposure to Africa. I think it is going to be the African decade. And a lot of that comes from the future-facing commodities and how rich Africa is. One of the other dynamics here out in the industry is the fact that it's the gestation period to take deposits from exploration to operation, around the world at the moment are averaging 10 to 15 years. It is a slow, slow burn to bring new projects on board. And I think all of this, sort of coalesces and sort of leads to believe or suggest that we'll probably see a lot more investment to meet global demand for commodities like copper coming out of brownfields investments into existing operations. The DRC is a big, big producer of copper in particular. We believe in that market. We already have one manufacturing plant in the country, and we are evaluating seriously putting in a second. So we will do that to ensure that we have the necessary security of supply for our customers in that area. But yes, we see the DRC as a potential growth engine for the African economy amongst others.

Just to perhaps add on to what Stuart also mentioned. Regarding the project as well, it's -- there's a couple of facets to it. One is, yes, putting up a production -- emulsion production plant, but it's also about the engineering capability, it's about the digital capability as well as the product capability in being able to deploy what we term our vertical drop. And I believe that AECI is at the forefront of it. We are the best at the vertical drop and being able to provide that end-to-end solution to a customer, and that's being demonstrated at the Kamoa site with a second vertical drop going in. So that's a really good win for us, coupled with an emulsion plant.

Okay, to the investments timelines and what we have said about possible outcomes, I'll start with my usual one, M&A is casino. You never know which color comes, which number comes. If you hang in long enough, the color and the number come. So the -- we said that by mid-'25, we -- or our ambition is -- and it's important, really, our ambition is to have all the 6 potential divestments signed. We also always said that we are not going to do fire sales. So I will definitely, definitely not drive this to the timeline, but to the value. And basically, that's it. And with regards to the values, look, we have shown more details on the SPA that we signed with Much. You can see that number. You can try to add up where that leaves us. And as I said, M&A market is not where we would like to have it. That's a reality. So I will not commit now a new number. The biggest chunk of what we expected -- or higher price we expected for Much does not materialize at this point in time. And actually, that, also, I take as a leeway, but can you please repeat the Much question exactly, so I not forget anything? And I always want to be just transparent. So sometimes, I'm calling numbers to give you a sense. So then allow me when I say, don't nail me down. When I say it's showing an ambition, it's not a commitment necessarily.

So okay, the timeline one was whether we're pushing it out, can we please confirm the time frames and likely the disposal proceeds? So you've dealt with that. Schirm, again, when do you pull the trigger on the breakup sale option versus trying to sell the asset wholesale? And in your opinion, based on your recent experience trying to sell the business, will this dramatically improve the odds of exit in the next 12 to 18 months?

I don't want to go too deep into the concept because I said there's a lot of alignment that is required. The short answer is yes. We definitely believe that we see -- we'll see an improvement -- I'm starting with the U.S., so that we should receive better offers for the U.S. than what we have seen by now. And the turnaround in Germany leading, as I said, at a minimum to a breakeven EBITDA will allow us then also to find buyers, hopefully, and again, it is M&A, what can I say, but either for the combined or individual businesses or assets. So that's the plan. And I would definitely not try to make the effort going into that because it is a complex story, if it would be an easy sell as a combined one. So the answer is we expect that this makes an impact. Is that in the next 12 months, 18 months? I do believe that in the next 12 to 18 months, we will see substantial progress. If we land it completely, I don't know.

Paul Whitburn from Rozendal. A couple of questions around AEL Africa specifically. You pulled up a chart about CAGR volume growth. The CAGR volume growth over the last 5 years for Africa looks pretty low, sort of low single digits. I mean, have you been losing market share across the African continent? What is the reason for those like? I guess not a fair question to you, but -- I mean the reasoning for that low volume growth. And then I guess the follow-on is, you talk about having a unique business there, globally unique, but that doesn't bear out in terms of margins and returns of that business versus the peers. It looks bog average. So I just want to understand what's going wrong there in your opinion.

Yes. Let me start with the latter part, and then, I'll give you the first part. But I'm 100% convinced we are unique. And yes, this did not translate into the margins in the past. Now there's 2 elements to it. The one is that is why we are driving the transformation part. But that will bring our margins, and we have shown our goals. So if you compare that, we will be above average -- average, above average. So that's one. And we definitely have not leveraged our capabilities in the past. That's why we now talk a lot about Chemicals, we talk a lot about -- more about the electronic detonators. And again, not to make our competitor smarter, they're smart enough, but I can rest assure you that if you would compare the Chemicals versus the bulk explosion margins, that's a substantial difference. So leveraging that will support higher profitability. That's 2 elements. And I agree, yes, we have not played that in the past or not good enough. That's the reality. And that's also why we are optimistic on the upside. I would not stand up and say we delivered double if there would not be something we -- concrete that we can do in that part of it.

And was the question specifically about Africa or South Africa?

Specifically, Africa.

Africa. Yes. So we've been very successful retaining all of our contracts in a lot of the countries in Africa, and Ghana is a good example of that, that the whole contract book turned there this year, and we retained 100%. There has been some cyclical movements just with some geopolitical tensions where the industry softened, so Francophone West Africa, and we're seeing that come back as an example of that. And obviously, Mali is quite challenging at the moment. In South Africa, there's been a few dynamics. I think we've seen the PGM market is under strain, and there's a lot of uncertainty there. So we have been seeing some volumes decline. In the coal sector, last year, it took a hit primarily due to some of the reasons we took a hit with respect to logistics. That actually came back this year and balanced. And I think, generally speaking, the belief is that the coal space is probably stable for the midterm. We don't have a 100% hit rate on all of our contracts. We do have some swings and roundabouts. We haven't retained 100% of all of our contracts this year, but we have picked up some new ones, and that does apply for South Africa. Across the board, in the explosive industry, in particular, you tend to talk to AN equivalents as the benchmark. And in -- from our business perspective, we've seen a couple of percentage points growth year-on-year. And in South Africa, a marginal decline just due to timing.

I would just like to add and build on that. I signaled also that we are looking to rightsizing some of our assets in the Mining business. I talked about unstructured underutilization. And before somebody misunderstands what I'm saying, Africa, in any case, this is our home turf, and we will defend that to the last moment. And South Africa is our home, and we will defend that as well and not walk away. But we also not necessarily want every business going forward. So we want to be more selective, and rightsizing our assets is going to help. So this is not -- I always said that, we are not in a revenue business. I'm looking to free cash flow. I want to make money and not topline. I'm happy if that goes together, but -- so that should be seen also in that vein.

Okay. We just need to go back to Charl's question on CapEx for 2025. Rochelle?

Thanks, Charl, for the question. But unfortunately, I'm not going to be giving absolute numbers. I think just to take you back to our guidance specifically around maintenance CapEx, that portion that we guided around 0.8 to 1.2x of depreciation. So we'll continue to spend in that range with regards to maintenance CapEx. On the growth CapEx side, we did speak around the approximate additional ZAR 500 million related to growth projects, specifically on the TMO initiatives. And on top of that, you would see what we've spent historically around the growth projects will still be -- or growth CapEx will still be in line with that.

Thanks, Rochelle. Back to the floor. Yes, you can go.

John Williams from Rezco Asset Management. In terms of ammonia sourcing, what happens when Sasol runs out of gas in a few years' time from Mozambique?

Thanks. I was waiting for that question. You have it.

Perfect. Thanks, Holger. Well, I think we've already demonstrated that we've already been proactive. In fact, we've seen that gas lift coming well over 5 years ago. And we've started preparing for that. And one of the key initiatives is getting the green ammonia project off the ground. And that's been timed very, very well with regard to it. And we've made really, really good inroads with regard to it. The green ammonia project is not backed by gas. So we don't see a risk in that. It is solely of renewable energies, and we see us leveraging off that as well. Most of our operations as well, like we've mentioned, as part of even the closure, consolidation of our operations is also around becoming resilient around the fact that gas is a question mark in South Africa. Becoming more energy conscious, consolidating our operations to that effect, getting into new technology spaces, having to look at recovery of heat, energy, steam, condensate, that's all part of the project that we've got on the go to be able to address some of those issues. And not all of our operations are exposed to that. So we're not too concerned about all of our operations being impacted. So the ones that we've risk assessed is the ones that we are actively working on.

And again, just one from my side. So I just referred to rightsizing of assets, that is also looking towards that development. We have developed an asset-light business model outside of South Africa. So the only place where we actually really produce ammonia nitrate is Modderfontein. We not necessarily need that. And if the numbers that are hanging around on potential gas price comes -- becomes true, that's what Denvor said, so we are also preparing ourselves on an asset side to say, which of the energy-intensive assets would we need and can we replace that with a different strategy. So -- and specifically for ammonia nitrate, that's part of the decision we made.

Green ammonia is very encouraging and exciting. But in terms of scale, does it compare? So would you expect the green ammonia to plug the gap? So if Sasol went down, would you fill that entire requirement with green ammonia?

I think there's 2 elements to it. One is what does the market require in South Africa and can the first phase of this plug the market gap? No, it cannot. Can it plug the gap for our requirement? Most definitely, but not everything. So there will be a phase in and a phase out. And there are 2 phases to the project, but the second phase will see us plugging the gap if we do end of -- down the road of not having anything from Sasol.

Okay. So for your own ammonium nitrate production, you'd be square, you'd be producing all the ammonia that you need.

For sure.

Okay. Another question from the floor? Okay. I'll take online. So from [ Zea ] from RMB FirstRand. We note that you were able to implement good cost management practices in Chemicals. Are these practices something you can implement on the rest of the group? Maybe Dean and Holger can take that. As part of the group ambition to double EBITDA, you mentioned unlocking headcount efficiency as part of our 2025 opportunities. What does unlocking headcount efficiency mean? Does it include retrenchments?

Let me take it. So the first part, the reason why the Chemicals business has really outperformed this year was that the team led by Dean was the first that really adopted all the new ideas and measures and implemented it immediately. All the other businesses will do the same, but they come in a little later because there was different focus. And also we were staging it. So the answer is yes, everything what we have done there, we are actually doing in the other businesses. It's part of the ZAR 400 million and the ZAR 800 million and it's going to come. And again, just to not make a mistake the second question on -- okay. Look, I mean...

Do you want me to read it?

No. I want to give you an answer. Look, again, you need to make a comparison, look to peers. And we talk about peers, I say we are different. So there is no one-to-one comparison. It's not existing, and that's important. Then -- but you still have an indication where you stand. We made a deep dive. We looked in different functions, in areas and said, where do we have room to improve that's identified, and we will start executing that. And I'm sure that we will see the results coming in the end of '25.

Okay. Good enough. Any other questions from the floor? Yes.

It's [indiscernible] Capital. Just a question I think on -- referring to Slide 41 around additional consulting costs. I think you say the range is about ZAR 50 million to ZAR 100 million. I just want to get a sense if these costs are part of the initial -- initiatives that you guys took this year? Or is it at the tail end of projects? Or is it different projects? I know it's over the 2 years, but just what do they actually relate to, if you can give us more color?

Rafael can give more details, but what we are doing here is we want to give a sense of we will use -- one, we said we have transferred the capability. So that refers to everything that Rafael and his team are doing in what we call the transformation office. So this is ongoing with internal people going forward. Now we are looking into specific other projects where we may need external support. So that's kind of call it a provision for that. Anything to add?

No, you correctly answered it, Holger. So to the extent that there are opportunities where we can progress and we need support, we'll bring them in. If the opportunity is not worthwhile pursuing, we won't bring them in.

Okay. Any other questions? Okay. I think that's it. We don't have any online. So if you can please sit.

Thank you.

Thank you. Thank you, everyone, for spending the few hours with us this morning. As we go out and have -- we've got lunch outside, please help yourself to the lunch. Please remember, we've got our culture journey roadmap set up on the side here. So if you can spend some time to just get to see what we've been doing in the past 12 months in terms of culture, you can actually deep dive into some of the projects that took place and see who's been involved and how everything has worked out to bring us to where we are. So thank you very much, everybody. If there's any more questions, you can obviously e-mail, and that's it. Have a good afternoon.