87FZ Aeci 5 1/2% Prf

 
TIDM87FZ 
 
AECI LIMITED 
 
(Incorporated in the Republic of South Africa) 
 
(Registration No. 1924/002590/06) 
 
Share code: AFE ISIN: ZAE000000220 
 
Hybrid code: AFEP ISIN: ZAE000000238 
 
Bond company code: AECI 
 
LEI: 3789008641F1D3D90E85 
 
(AECI or the Company or the Group) 
 
UNAUDITED CONSOLIDATED INTERIM FINANCIAL RESULTS AND CASH DIVID DECLARATION 
FOR THE HALF-YEARED 30 JUNE 2023 
 
  · Revenue up 19% to R18 404 million 
  · EBITDA1 up 18% to R1 826 million 
  · EBIT2 up 20% to R1 269 million 
  · HEPS up 5% to 603 cents 
  · EPS up 5% to 600 cents 
  · Growth capex of R360 million (55% of total R652 million capex) 
  · Cash dividend down 48% to 100 cents per share 
 
1 Earnings before interest, taxation, depreciation and amortisation calculated 
as profit from operations and equity-accounted investees, plus depreciation, 
amortisation and impairments. 
 
2 Earnings before interest and taxation is defined as profit before interest, 
taxation and share of profit of equity-accounted investees, net of taxation. 
 
SAFETY 
 
The Group's Total Recordable Incident Rate (TRIR) at 30 June 2023 was 0.24 
compared to 0.15 at 31 December 2022. During the first four months of this year, 
the Group had an unfortunate rise in recordable incidents, which regrettably 
included two work-related fatalities. 
 
A Safety Improvement Initiative was launched in May 2023 to re-ignite the focus 
on safety. It prioritises two of the Group's Zero Harm fundamentals, namely 
accountable leadership and risk-based safety with a clear expectation of 
leadership action and targeted attention on four major safety risks identified 
from the incidents. Early indicators have shown a reduction in both the severity 
and frequency of incidents and no significant incidents have occurred since 
April. 
 
Management's focus remains steadfast on addressing the root causes and improving 
safety performance across AECI. 
 
RESULTS OVERVIEW 
 
The Group achieved strong results in the first six months of the 2023 financial 
year (the current period), with revenue reaching R18 404 million, up 19% 
compared to the six months ended 30 June 2022 (the prior period). EBIT of R1 269 
million (H1 2022: R1 056 million) was 20% higher, notwithstanding the R180 
million loss (H1 2022: R86 million loss) incurred by AECI Schirm Germany. EBITDA 
and EBIT margins remained stable at 10% and 7%, respectively, demonstrating the 
resilience of the Group's core businesses in an operating environment 
characterised by ongoing volatility and change. 
 
However, EPS of 600 cents (H1 2022: 573 cents) and HEPS of 603 cents (H1 2022: 
573 cents) were up by only 5% due to higher finance costs and an effective tax 
rate increase as a result of the AECI Schirm Germany losses. 
 
R million (unless stated                               H1     H1 2022  % change 
otherwise)                                             2023 
Revenue                                                18     15 505   19 
                                                       404 
EBITDA                                                 1 826  1 545    18 
 
EBITDA margin (%)                                      10     10       - 
Depreciation and amortisation                          537    486      10 
EBIT                                                   1 269  1 056    20 
 
EBIT margin (%)                                        7      7        - 
Net profit after taxation                              650    626      4 
Earnings per share (EPS) (cents)                       600    573      5 
Headline earnings per share (HEPS) (cents)             603    573      5 
Cash generated from operations                         2 063  1 720    20 
 
The net gearing ratio of 47% (45% at 31 December 2022) was within the previously 
communicated guidance range of 40% - 60%. This level is considered high in the 
current interest rate cycle. 
 
Net debt of R5 741 million (FY 2022: R5 345 million) was driven in part by net 
working capital spend for the period of R351 million (FY 2022: R2 570 million) 
to support increased sales volumes in certain businesses and counter potential 
supply chain interruptions (namely, potential work stoppages and ammonia supply 
challenges). 
 
The net finance costs of R274 million (H1 2022: R124 million) were 121% higher 
due to: 
 
  · Debt related to AECI Schirm, which is loss making. 
  · Continued higher working capital levels. 
  · Higher interest rates. 
 
The Group's net debt to EBITDA, as defined in covenant agreements, at 30 June 
2023 was 1.6 times, remaining well within the loan covenant threshold of 2.5 
times. 
 
In view of the above, 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 to further strengthen the balance sheet. 
 
The process to refinance the Group's long-term debt was initiated during the 
current period, with a single coordinator appointed across all the phases of the 
refinancing. These include a sustainability-linked framework, a refreshed 
Domestic Medium Term Note Programme and public auction targeted for Q3 2023. A 
loan market syndication is expected to follow in early Q4 2023. 
 
Capital expenditure (capex) in the current period amounted to R652 million, in 
line with expectations. This included the organic growth spend related to AECI 
Schirm USA's expansion project as well as AECI Mining Explosives' solar projects 
and its mobile manufacturing units (MMUs) replacement programme. 
 
The net asset value per share attributable to ordinary shareholders increased by 
7% to 11 024 cents (H1 2022: 10 343 cents). 
 
The Board declared an interim cash dividend of 100 cents per share (H1 2022: 194 
cents per share). 
 
SEGMENTAL REVIEW 
 
AECI Mining's revenue was up 29% to R10 004 million (H1 2022: R7 749 million). 
This was driven primarily by strong volume growth in bulk explosives and 
initiating systems. The segment's total revenue generated outside of South 
Africa increased to 69% (H1 2022: 64%). EBIT of R1 038 million (H1 2022: R713 
million) was up 46% and the EBIT margin strengthened to 10% compared to 9% in 
the prior period. 
 
AECI Water's revenue at R1 061 million (H1 2022: R979 million) was up 8% 
following market expansion in the mining industry in Central and West Africa and 
increased sales in the industrial sector. EBIT for the segment at R126 million, 
was up 26% (H1 2022: R100 million) and the EBIT margin improved to 12% (H1 2022: 
10%). 
 
AECI Agri Health's revenue of R3 375 million (H1 2022: R2 889 million) was up 
17%. An operating loss of R57 million was incurred (H1 2022: R11 million 
profit), inclusive of AECI Schirm Germany's loss. Excluding AECI Schirm, revenue 
for the segment of R1 939 million (H1 2022: R1 826 million) was up 6%, EBIT of 
R79 million (H1 2022: R77 million) was up 3% and the EBIT margin was unchanged 
at 4%. 
 
AECI Schirm's revenue of R1 436 million (H1 2022: R1 063 million) was up 35% 
following sales volume growth in AECI Schirm USA and higher selling prices in 
AECI Schirm Germany. The EBIT loss of R136 million (H1 2022: R66 million loss) 
reflects AECI Schirm Germany's loss of R180 million (H1 2022: R86 million loss) 
which included R89 million (EUR 4.3 million) in severance costs and R30 million 
in consulting fees. AECI Schirm USA's EBIT was R58 million (H1 2022: R36 
million). The plant capacity upgrade at the Ennis, Texas, facility was completed 
and the plant in Benton, Illinois is expected to be fully operational by the end 
of July 2023. 
 
The Board approved comprehensive turnaround project for AECI Schirm Germany is 
progressing well and is on track to deliver in line with previous guidance. 
Additional measures were also introduced in the current period, aimed at 
improving profitability further. 
 
AECI Chemicals' revenue of R3 943 million (H1 2022: R3 921 million) was up 1%. 
EBIT was R209 million (H1 2022: R314 million) and the EBIT margin was under 
pressure, at 5% (H1 2022: 8%). Several factors contributed to this performance, 
including a decline in certain commodity chemical input prices and lower sales 
volumes in AECI Food & Beverage and AECI SANS Fibers. 
 
AECI Much Asphalt's revenue of R1 154 million (H1 2022: R1 028 million) was up 
12% and EBIT of R22 million (H1 2022: R61 million) was down 64% due to margin 
pressure. Sales volumes continue to improve. 
 
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 net dividends of R35 million over the prescribed 
period. 
 
In an effort to preserve employee goodwill and ensure continued productivity, 
the Board and the AECI Executive Committee approved an ex gratia payment 
totalling R106 million to all eligible employees. 
 
AECI remains unequivocally committed to furthering the Company's B-BBEE 
Ownership goals and continues to look for meaningful ways to enable this. 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 Company and tangible empowerment for employees. 
Any proposal remains subject to approval by the Board and shareholders. 
 
FUTURE FOCUS AND PROSPECTS 
 
The priorities for the next six to 12 months include the following: 
 
  · Delivery of the AECI Schirm Germany turnaround project. 
  · Operational interventions and programmes aimed at further strengthening the 
balance sheet, expected to reduce working capital and gearing. 
  · Value unlock driven through continued focus on improving returns from 
existing businesses, organic growth as well as targeted portfolio optimisation. 
Clear policies and processes will drive decision making. 
 
A process to revise the Group strategy has commenced and Board approval is 

expected towards the end of the year. 
 
DIVIDEND 
 
Declaration of interim ordinary cash dividend No. 179 
 
Notice is hereby given that on Tuesday, 25 July 2023 the Directors of AECI 
declared a gross interim cash dividend of 100 cents per share in respect of the 
six months ended 30 June 2023. The dividend is payable on Monday, 4 September 
2023 to holders of ordinary shares recorded in the register of the Company at 
the close of business on the record date, being Friday, 1 September 2023. 
 
The last day to trade "cum" dividend will be Tuesday, 29 August 2023 and shares 
will commence trading "ex" dividend as from the commencement of business on 
Wednesday, 30 August 2023. 
 
A South African dividend withholding tax of 20% will be applicable to all 
shareholders who are not either exempt or entitled to a reduction of the 
withholding tax rate in terms of a relevant Double Taxation Agreement, resulting 
in a net dividend of 80 cents per share payable to those shareholders who are 
not eligible for exemption or reduction. Application forms for exemption or 
reduction may be obtained from the Transfer Secretaries and must be returned to 
them on or before Tuesday, 29 August 2023. 
 
The issued share capital of the Company at the declaration date is 105 517 780 
listed ordinary shares and 3 000 000 listed cumulative preference shares. The 
dividend has been declared from the income reserves of the Company. 
 
Any change of address or dividend instruction must be received on or before 
Tuesday, 29 August 2023. 
 
Share certificates may not be dematerialised or rematerialised between 
Wednesday, 30 August 2023 and Friday, 1 September 2023, both days inclusive. 
 
By order of the Board 
 
Cheryl Singh 
 
Group Company Secretary 
 
Woodmead, Sandton 
 
AVAILABILITY OF THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE 
HALF-YEAR ENDED 30 JUNE 2023 
 
The unaudited consolidated interim financial results for the half-year ended 30 
June 2023 are available at: 
 
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/AFE/Interim23.pdf 
 
https://www.ftp.aeciworld-online.com/pdf/investors/interim-results/2023/interim 
-results-2023.pdf 
 
Any investment decisions made by investors and/or shareholders and/or 
noteholders should be based on consideration of the unaudited consolidated 
interim financial results for the half-year ended 30 June 2023. 
 
Directors: 
 
KDK Mokhele (Chairman), H Riemensperger1 (Group CE), ST Coetzer2, SA Dawson3, 
FFT De Buck, WH Dissinger1, KM Kathan (Executive), P Mishic O'Brien4, AM Roets, 
PG Sibiya 
 
1 German 2 Canadian 3 Australian 4 American 
 
Group Head Investor Relations: Z Salman 
 
Group Company Secretary: C Singh 
 
Board sign-off date: 25 July 2023 
 
Results released on: 26 July 2023 
 
Equity Sponsor and Debt Sponsor 
 
Rand Merchant Bank (A division of FirstRand Bank Limited) 
 
1 Merchant Place, Cnr Fredman Drive and Rivonia Road, Sandton, 2196 
 
Registered office 
 
First floor, AECI Place, 24 The Woodlands, Woodlands Drive, Woodmead, Sandton 
 
Share transfer secretaries 
 
Computershare Investor Services Pty Limited, Rosebank Towers, 
 
15 Biermann Avenue, Rosebank, 2196 
 
And Computershare Investor Services PLC, PO Box 82, The Pavilions, 
 
Bridgwater Road, Bristol BS 99 7NH, England 
 
 
This information was brought to you by Cision http://news.cision.com 
 
 
END 
 
 

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July 26, 2023 02:00 ET (06:00 GMT)

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