87FZ Aeci 5 1/2% Prf

 
TIDM87FZ 
 
AECI LIMITED 
(Incorporated in the Republic of South Africa) 
(Registration Number 1924/002590/06) 
Tax reference number: 9000008608 
Share code: AFE ISIN: ZAE000000220 
Hybrid code: AFEP ISIN: ZAE000000238 
Bond company code: AECI 
LEI: 3789008641F1D3D90E85 
(AECI or the Company or the Group) 
 
VOLUNTARY PRE-CLOSE PERIOD UPDATE FOR THE FIVE MONTHS ENDED 31 MAY 2023 
 
Safety and sustainability statement 
 
As at 31 May 2023, the Group's total recordable injury rate (TRIR) was 0.23. 
Safety is a priority and we are committed to our goal of Zero Harm. This means 
that employees and management fully support all Zero Harm initiatives and 
believe Zero is possible. 
 
In 2022, we achieved our best-ever health and safety performance since we began 
tracking the related metrics. In 2023, however, there has been an increase in 
the number of recordable incidents including, and regrettably, two work-related 
fatalities. As part of our response we launched a safety improvement plan 
focusing on two of our Zero Harm fundamentals: accountable leadership; and our 
risk-based approach. 
 
As a Board and the Executive Team, we extend our deepest condolences to the 
families, friends and co-workers of our deceased colleagues. It is imperative 
that we reverse this deterioration. These events are a sober reminder of the 
importance of being laser-focused on creating a safe working environment for all 
our people at all times. 
 
Overview of the Group's performance for the five months to 31 May 2023 
 
The Group recorded strong results in the first five months of the 2023 financial 
year (the current period). Group revenue, at R15 351 million, increased by 22% 
compared to the five months ended 31 May 2022 (the prior period). EBIT was 25% 
higher at R 1 008 million, notwithstanding the R 154 million loss (31 May 2022: 
R 57 million loss) incurred by AECI Schirm Germany. EBITDA and EBIT margins at 
10% and 7%, respectively, were in line with the prior period, demonstrating the 
Group's resilience in an operating environment characterised by ongoing 
volatility and change. 
 
Net working capital spend for the year to 31 May 2023, at R 1 076 million, was 
in part driven by increased sales volumes in certain businesses. The higher than 
usual debtors, as well as elevated inventory levels necessary to support sales 
volume growth in some regions, also contributed to high working capital levels. 
 
The net gearing ratio of 50% at 31 May 2023 (45% at 31 December 2022) was in 
line with previous guidance and driven by relatively higher net debt, which 
contributed to higher finance costs on the back of rising interest rates. The 
current levels of working capital also contributed to this increase. The Group's 
net debt to EBITDA at 31 May 2023 was 1.7 times, remaining well within the loan 
covenant threshold of 2.5 times. The reduction of net debt as well as net 
working capital remain key focus areas for management and the Board, with 
operational initiatives and programmes introduced targeted at restoring balance 
sheet strength. 
 
The process to refinance the Group's long-term debt was initiated during the 
period, with a single coordinator appointed for all three phases of the 
refinancing. These include the refreshment of the existing Domestic Medium Term 
Note Programme targeted for Q3 2023. The loan market syndication is expected in 
Q4 2023. 
 
Capital expenditure (capex) investment in the current period totalled R 511 
million, in line with expectations. This included the organic growth spend 
related to AECI Schirm USA's expansion project as well as the AECI Mining 
Explosives solar project and MMU replacement programme. 
 
Operational review for the five months to 31 May 2023 
 
AECI MINING 
 
AECI Mining maintained its pleasing momentum, with an improvement in overall 
sales volumes and margins. Revenue of R 8 354 million was up 35% compared to the 
prior period on the back of further market share gains in South Africa, Central 
Africa, East Africa and Asia Pacific. EBIT for the segment increased by 45% to R 
809 million and an EBIT margin of 10% was achieved. Lower ammonia input prices 
during the period as well as the weaker ZAR/USD exchange rate at the end of the 
period also contributed to performance. 
 
AECI WATER 
 
Revenue at R 865 million was up 15% on the prior period as sales to public water 
customers grew further and demand from existing customers in the industrial 
sector improved. EBIT at R 99 million was significantly up from the R 44 million 
achieved in the prior period following the cost recovery lag experienced in 
2022. 
 
AECI AGRI HEALTH (AECI SCHIRM, AECI PLANT HEALTH AND AECI ANIMAL HEALTH) 
 
Revenue at R 2 879 million was up 15% on the prior period, with improved sales 
in all businesses. EBIT posted a loss of R 43 million impacted by AECI Schirm 
Germany's performance. AECI Plant Health maintained the growth trend of in-house 
formulated product sales volumes (including bulk nutrition), which are at higher 
margins than those for third-party traded products. 
 
Excluding AECI Schirm Germany, segmental revenue at R 1 993 million was 10% 
higher compared to the prior period and EBIT increased by 24% to R 110 million. 
 
AECI SCHIRM 
 
The revenue of R 1 194 million was up 31% on the prior period following sales 
volume growth in AECI Schirm USA. The EBIT loss of R118 million reflects AECI 
Schirm Germany's loss of R 154 million which included an R 89 million (EUR 4.3 
million) in retrenchment costs. Overall, the EUR and USD exchange rate 
translation to a weaker ZAR at the end of the period boosted performance 
somewhat. 
 
The Board approved comprehensive turnaround project for AECI Schirm Germany is 
ongoing and further updates will be provided when the Group announces the 
interim final results for the six months ending 30 June 2023. 
 
AECI CHEMICALS 
 
Revenue for the segment at R 3 237 million was in line with the prior period. 
This South Africa focused segment was affected by lower demand from customers 
impacted by loadshedding. Consequently, EBIT at R 151 million was 39% below the 
prior period due to margin pressures as well as foreign exchange losses related 
to product imports. EBIT margin was at 5% and cash generation by businesses in 
the segment remained strong. 
 
Commitment to B-BBEE ownership goals 
 
As previously communicated, the AECI Employees Share Trust (EST) implemented in 
2012 vested on 9 February 2023 with no value and was wound up. The beneficiaries 
did benefit from receiving dividends over the prescribed period. 
 
In an effort to preserve employee goodwill and ensure continued productivity, 
the Board and the Executive Team approved an ex gratia payment to all eligible 
employees to honour the spirit of the EST. The final details as well as the 
impact of this will be communicated in due course. 
 
The Group remains unequivocally committed to furthering AECI's B-BBEE ownership 
goals and continues to look for meaningful ways that will enable this 
achievement. One option remains a relevant employee scheme that takes into 
consideration key learnings from the previous EST. In line with this, a new 
scheme to replace the EST is being considered. This new scheme will aim to 
deliver sustainable Black ownership shareholding in the Group and tangible 
empowerment for employees. Any proposal remains subject to approval by our Board 
and shareholders. 
 
Conclusion 
 
We expect to release the Group's interim final results for the six months ending 
30 June 2023 on or about Wednesday, 26 July 2023. 
 
Shareholders and noteholders are advised that the information contained in this 
voluntary announcement has not been audited, reviewed, or reported on by the 
Group's external auditor. This update does not constitute a forecast. 
 
Management will host a conference call at 15:00 CAT today to answer any 
questions from investors. 
 
29 June 2023 
 
Equity and Debt Sponsor 
Rand Merchant Bank (A division of FirstRand Bank Limited) 
 
Contact details 
 
Group Investor Relations 
 
zanele.salman@aeciworld.com 
 
Groupcommunications@aeciworld.com 
 
Telephone: +27 (0)11 806 8700 
 
About AECI 
 
AECI is a diversified chemicals solutions company employing 7 168 people at more 
than 100 sites. We have a presence in 22 countries on six continents. Founded in 
1896 to service South Africa's burgeoning gold and diamond mining industries, 
the company was formally established in 1924. AECI was listed on the 
Johannesburg Stock Exchange in 1966. A mainstay of the economy in South Africa, 
over the years we have expanded our presence and evolved our product and service 
offering to a broad base of customers. Our products and services include mine-to 
-mineral solutions; water treatment solutions; chemical raw materials and 
related services; asphalt and bitumen for road construction; food and beverage 
ingredients and commodities; vitamin and mineral animal feed premixes; crop 
protection products and plant nutrients; as well as property leasing and the 
provision of utilities. Our operating businesses are structured into four key 
operating business segments - AECI Mining, AECI Water, AECI Agri Health and AECI 
Chemicals. 
 
 
This information was brought to you by Cision http://news.cision.com 
 
 
END 
 
 

(END) Dow Jones Newswires

June 29, 2023 07:41 ET (11:41 GMT)

Aeci 5 1/2% Prf (LSE:87FZ)
Historical Stock Chart
From Mar 2024 to Apr 2024

Aeci 5 1/2% Prf (LSE:87FZ)
Historical Stock Chart
From Apr 2023 to Apr 2024