Extract of unaudited interim results & cash div dec

AECI Limited - Extract of unaudited interim results & cash div dec

PR Newswire

London, July 23

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

(AECI or the Company or the Group)

Extract of unaudited interim results and cash dividend declaration for the period ended 30 June 2019 and Board changes

Revenue +14% to R11 972m

Profit from operations -9% to R826m

Underlying +9% to R992m

Interim ordinary cash dividend 156cps declared

Achieved Level 2 B-BBEE Contributor status

EBITDA +7% to R1 346m

Underlying +11% to R1 391m

HEPS -20% to 365c

Underlying +7% to 492c

Safety performance improved TRIR of 0,51

Excluding acquisitions, TRIR of 0,27

GCR rating upgraded to A+ with stable outlook

Financial performance

AECI delivered a creditable performance, achieving revenue growth of 14% to R11 972 million for the half-year ended 30 June 2019 (2018: R10 473 million). This was underpinned by contributions for the full period from the acquisitions finalised in 2018, namely Schirm (Plant and Animal Health) and Much Asphalt (Chemicals).

Pleasing revenue improvements were achieved in all of the Group's strategic pillars. The Mining Solutions segment benefited from higher sales volumes on the continent outside of South Africa as well as the weaker ZAR/US$ exchange rate. Foreign and export revenue of R4 971 million accounted for 42% of total revenue (2018: R4 139 million, 40% of total revenue).

Profit from operations was R826 million, 9% lower than 2018's R911 million. Headline earnings per share (HEPS) and earnings per share (EPS) were 365 cents and 367 cents, respectively, 20% lower than the HEPS and EPS of 458 cents in the first half of last year.

Profitability was negatively impacted by a number of factors. Key among these were:

* The costs associated with strategic realignment projects initiated in the fourth quarter of 2018 by AEL Intelligent Blasting (AEL) in the Mining Solutions segment and by ImproChem, which constitutes the Water and Process segment. Both these projects were essentially completed by 30 June 2019, at an aggregate non-recurring cost of R156 million for the period (100 cents HEPS effect). The total cost of these projects was R204 million.

* Change in significant accounting policies:

IFRS 16 Leases, adopted by the Group on 1 January 2019. The Group adopted this standard using the modified retrospective approach, under which the cumulative effect of initial application was recognised in retained earnings as at 1 January 2019 (12 cents HEPS effect).

* The initial accounting for the acquisitions had not been provisionally determined at 30 June 2018 since the necessary information to perform market valuations and other calculations for the purchase price allocation (PPA) was not yet available.

Non-cash amortisation of identifiable assets in the amount of R23 million, in aggregate, was recognised through the PPA for both Schirm and Much Asphalt in the first half of 2019 (15 cents HEPS effect).

* Power supply constraints in South Africa in the first quarter. These curtailed some of AECI's own operations and had more adverse consequences for customers in some sectors serviced by the Group.

The Board has declared an interim cash dividend of 156 cents per ordinary share, an increase of 5% from 2018's 149 cents per share. A South African dividend withholding tax of 20% will be applicable to the dividend, resulting in a net dividend of 124,8 cents per share payable to those shareholders who are not eligible for exemption or reduction.

The net asset value per share attributable to ordinary shareholders increased by 3,2% from 8 714 cents at 30 June 2018 to 8 994 cents at 30 June 2019.

Safety

The Group's Total Recordable Incident Rate (TRIR), which measures the number of incidents per 200 000 hours worked, improved to 0,51 from 0,58 in December 2018. Although progress made by Schirm and Much Asphalt was encouraging, more radical measures have been introduced to accelerate further improvement in these two acquisitions. Excluding the acquisitions, the Group's TRIR was 0,27 (0,33 in December 2018).

Directorate

As announced during the period, Graham Dempster will leave the AECI Board on 29 September 2019. The Board thanks him for his contribution during his three-year tenure as a Non-executive Director of the Company. Also announced in the period was the appointment of Fikile De Buck as a Non- executive Director of AECI, with effect from 1 June 2019. The Board welcomes her and looks forward to her input.

Godfrey Gomwe has served as Chairman of the Audit Committee (the Committee) since 2017. He will relinquish this role on 1 October 2019 but will continue to serve as a Committee member. Philisiwe Sibiya, currently a member of the Committee, will assume its chairmanship responsibilities on that same date.

Dividend

Declaration of interim ordinary cash dividend no. 171

Notice is hereby given that on Tuesday, 23 July 2019, the Directors of AECI declared a gross interim cash dividend of 156 cents per share, in respect of the six-month period ended 30 June 2019. The dividend is payable on Monday, 2 September 2019 to holders of ordinary shares recorded in the register of the Company at the close of business on the record date, being Friday, 30 August 2019.

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 124,8 cents per share 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, 27 August 2019.

The issued share capital at the declaration date is 121 829 083 listed ordinary shares, 10 117 951 unlisted redeemable convertible B 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, 27 August 2019.

The salient dates for the dividend will be as follows:

Share certificates may not be dematerialised or rematerialised from Wednesday, 28 August 2019 to Friday, 30 August 2019, both days inclusive.

By order of the Board

EN Rapoo

Group Company Secretary

Woodmead, Sandton

24 July 2019

The full long form announcement is available at

https://senspdf.jse.co.za/documents/2019/JSE/ISSE/AFE/1H19.pdf

The contents of this short form announcement are the responsibility of the Board of Directors of the Company (the Board). Shareholders and bondholders are advised that this short form announcement represents a summary of the information contained in the full announcement, also published on AECI's website https://www.aeciworld.com/pdf/investors/interim-results/2019/interim-results-2019.pdf

Any investment decisions by investors and/or shareholders and/or bondholders should be based on a consideration of the full announcement as a whole and investors, shareholders and bondholders are encouraged to review the full announcement, which is available as set out above. Copies of the full announcement may be requested by emailing [email protected] or writing to the Group Company Secretary, AECI, Private Bag X21, Gallo Manor, 2052.

Registered office

First floor, AECI Place, 24 The Woodlands, Woodlands Drive, Woodmead, Sandton

Share transfer secretaries

Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, Johannesburg, 2196

Computershare Investor Services plc, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH, England

Sponsor

Rand Merchant Bank (a division of FirstRand Bank Limited), 1 Merchant Place, cnr Fredman Drive and Rivonia Road, Sandton, 2196

Directors

KDK Mokhele (Chairman), FFT De Buck, GW Dempster, MA Dytor (Chief Executive), Z Fuphe, G Gomwe*, KM Kathan (Executive), J Molapo, AJ Morgan, R Ramashia, PG Sibiya. * Zimbabwean

AECIWORLD.COM