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 UPDATE FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2023 
 
Safety 
 
The Group's Total Recordable Incident Rate (TRIR) at 30 September 2023 was 0.23 
compared to 0.15 at 31 December 2022. While we have not yet returned to the 
lower levels we reached in 2022, we are pleased to report that, since the first 
quarter of the year, no further major events have occurred across all key safety 
performance areas. As the Group has entered a period of significant change, our 
safety efforts are focussed on proactively mitigating the potential short- and 
long-term effects of the change, while we continue with our Zero Harm strategy 
journey. 
 
Overview of the Group's performance for the nine months to 30 September 2023 
 
The Group recorded strong results for the nine months to 30 September 2023 (the 
current period). Both revenue and EBIT were up on the prior period (30 September 
2022) driven by the continued solid growth in AECI Mining. This was as a result 
of an increase in mining explosives sales volumes in Southern Africa, Central 
Africa and Asia Pacific, the weaker ZAR/USD exchange rate and improved 
profitability following the fulfilment of new contracts in Asia Pacific and the 
Rest of Africa. 
 
Revenue in AECI Agri Health and AECI Water was up on the prior period driven by 
higher selling prices and moderately higher sales volumes. However, the lag in 
cost recovery affected margins and is expected to correct in the last quarter of 
this year. 
 
AECI Chemicals' performance was down on the prior period due to lower volumes 
and pricing, resulting from a general economic downturn in South Africa and 
compounded by the significant added strain of loadshedding affecting customer 
operations. AECI Much Asphalt continued its recovery with sales and EBIT above 
the prior period. 
 
The Group EBITDA and EBIT margins at 10% and 7%, respectively, were in line with 
the prior period. 
 
R million          Revenue                        EBIT 
30 Sept 23         30 Sept  % Change  30 Sept 23  30 Sept 22  % Change 
                   22 
AECI Mining        14 896   12 958    15%         1 619       1 248     30% 
AECI Water         1 542    1 503     3%          170         173       -2% 
AECI Agri Health   3 100    2 961     5%          114         148       -23% 
(excl Schirm) 
AECI Chemicals     4 167    4 600     -9%         281         342       -18% 
(excl Much 
Asphalt) 
AECI Schirm        2 045    1 579     30%         - 201       - 159     -27% 
AECI Schirm        1 534    1 188     29%         - 230       - 183     -26% 
Germany 
AECI Schirm USA    511      391       31%         52          48        8% 
AECI Much Asphalt  1 894    1 630     16%         83          89        -7% 
AECI Group         27 654   25 138    10%         1 895       1 729     10% 
 
Net working capital spend at R7 143 million (30 September 2022: R7 397 million), 
was down 3%. Both debtors and inventory reported marginal increases that were 
offset by an increase in creditors. 
 
The net finance costs at R425 million were up 92% from R221 million in the prior 
period, significantly affecting earnings. This increase was due to: 
 
  · Debt related to AECI Schirm, which continues to be loss making; 
  · Continued higher working capital level, although some improvement was 
achieved in the period; 
 
and 
 
  · Higher interest rates. 
 
The net gearing ratio of 45% at 30 September 2023 was down from the previously 
reported 47% at 30 June 2023 following improved working capital management and 
the containment of capital expenditure. Net debt of R5 608 million at 30 
September 2023 was marginally down from the R5 741 million reported on 30 June 
2023. 
 
The process to refinance the Group's long-term debt initiated during the current 
period remains underway. This includes a successful debt capital market auction 
concluded in September 2023 and a loan market syndication that will conclude in 
November 2023. Both components reference the AECI Sustainability Linked 
Financing Framework. 
 
Capital expenditure (capex) investment in the current period totalled R1 017 
million (September 2022: R1 064 million) and was down 4% as the Group's normal 
maintenance program as well as the growth program linked to recently signed 
contracts continued. The organic growth spend related to AECI Schirm USA's 
expansion project is now complete and operational. In AECI Mining the capex was 
invested in four projects in Asia Pacific, solar farms in Modderfontein and 
Sasolburg as well as the Mobile Manufacturing Units replacement programme. The 
emulsion plant destined for the Lihir project has been shipped from South Africa 
to Papau New Guinea with operations expected in the first half of 2024. 
 
AECI SCHIRM 
 
The segment's revenue was up compared to the prior period following sales volume 
growth in both AECI Schirm USA and Germany as well as price improvements in 
Germany. 
 
The EBIT loss at AECI Schirm Germany included R 138 million (EUR 6.9 million) in 
turnaround project costs which comprised of R86 million (EUR 4.3 million) in 
retrenchment costs and R52 million (EUR 2.6 million) in consulting and other 
fees. 
 
The Board approved AECI Schirm Germany comprehensive turnaround project is on 
track with all milestones achieved. However, the trading environment in the 
region has become even more strained and further impacted by high energy costs 
and a lack of chemicals demand. This has resulted in a downward outlook and 
forecast for this business, with a recovery unlikely in the short term. 
 
AECI MUCH ASPHALT 
 
Revenue was up on the back of higher sales volumes; however EBIT was down 
impacted by cost recovery delays. Extensive rains and a taxi strike negatively 
affected the performance for the period. The withdrawal of the new preferential 
procurement policy by SANRAL is likely to impact the number of tenders awarded 
going forward, thereby affecting the performance outlook of this business. 
 
2023 Capital Markets Day 
 
The Group will be hosting a Capital Markets Day today, 6 November 2023 starting 
at 08H30 (SAST), where AECI's new strategic priorities and goals for long-term 
sustainable growth will be shared. The Group Chief Executive (GCE) Holger 
Riemensperger will host the event and will be joined by the Board and members of 
the AECI Executive Team. Registrations for participation can be emailed to 
zanele.salman@aeciworld.com. The Capital Markets Day presentation is available 
on the Company website https://www.ftp.aeciworld-online.com/presentations/cmd 
-presentation-2023.pdf. 
 
Critical Skills Visa Application Update 
 
The Company, together with specialist lawyers, is supporting the GCE Holger 
Riemensperger with the process of acquiring a critical skills visa, for which he 
is eligible. The required SAQA accreditation of his qualifications has recently 
been received. The critical skills visa application will be submitted to the 
Department of Home Affairs for processing as soon as his professional 
registration, another requirement, which is currently underway, has been 
completed. A critical skills visa will allow Holger to relocate to South Africa 
for work for five years. Until this is granted, Holger will continue to lead the 
business from his base in Germany, visiting the country as needed for critical 
meetings as is allowed by South African law. 
 
Outlook 
 
In the medium term we see value unlock through the implementation of our new 
strategy that will introduce initiatives and programs aimed at driving earnings 
growth through a returns focused, streamlined and resilient portfolio. 
 
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. 
 
Forward-looking statements 
 
This update contains forward-looking statements. These statements are based on 
current estimates and projections of the Executive Team, the Board of Directors 
and currently available information. 
 
Forward-looking statements are not guarantees of the future developments and 
results outlined therein. These are dependent on a number of factors; they 
involve various risks and uncertainties; and they are based on assumptions that 
may not prove to be accurate. 
 
6 November 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 
 
 

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