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)
SUMMARISED AUDITED CONSOLIDATED
FINANCIAL RESULTS AND FINAL CASH DIVIDEND DECLARATION FOR THE YEAR
ENDED 31 DECEMBER 2022
- Safety performance: TRIR of 0.15 (2021: 0.23)
- Revenue up 37% to R35 583 million
- EBITDA2 up 16% to R3 570 million
- EBIT1 flat at R2 047 million
- HEPS up 15% to 1 287 cents
- EPS down 22% to 878 cents
- Growth capex of R952 million (61% of total R1 552 million
capex)
- Working capital at 19% of revenue from 18% in 2021
- Gearing at 45% (24% in 2021)
- Final cash dividend up 15% to 580
cents per share
1 Earnings before interest and taxation is
defined as profit before interest, taxation and share of profit of
equity-accounted investees, net of taxation
2 Earnings before interest, taxation,
depreciation and amortisation calculated as profit from operations
and equity-accounted investees plus depreciation, amortisation and
impairments.
EBITDA is unaudited.
SAFETY AND SUSTAINABILITY
As at 31 December 2022, the
Group’s total recordable injury rate (TRIR) was 0.15, the lowest
recorded TRIR by the Group since we started measuring. All the
“zero milestones” were kept at zero, with no major incidents across
the areas of occupational and process safety, environment or
product transportation. We are well on track to achieve our
sustainability targets by 2025.
RESULTS OVERVIEW
The Group delivered solid results, with revenue up 37% to R35
583 million (2021: R26 053 million) in an environment of high
inflation, subdued global growth and high commodity prices. This
pleasing performance reflects the significantly improved sales in
AECI Mining, AECI Water and AECI Agri Health on the back of
increased demand. However, EBIT was flat at R2 047 million (2021:
R2 052 million) as it included a significant operating loss of R228
million, right-of-use asset and an impairment of property, plant
and equipment (PPE) of R 445 million related to the AECI Schirm
Germany business.
R million (unless
stated
otherwise)
|
2022 |
2021 |
%
change |
Revenue |
35
583 |
26
053 |
37 |
EBITDA |
3
570 |
3
091 |
16 |
EBITDA margin (%) |
10 |
12 |
-2 |
Depreciation and
amortisation |
1
026 |
1
032 |
1 |
EBIT |
2
047 |
2
052 |
0 |
EBIT margin (%) |
6 |
8 |
-2 |
Net profit after
taxation |
956 |
1
210 |
-21 |
Earnings per share
(EPS) (cents) |
878 |
1
125 |
-22 |
Headline earnings per
share (HEPS) (cents) |
1
287 |
1
116 |
15 |
Cash generated from
operations |
3
840 |
3
289 |
17 |
HEPS, therefore, increased by 15% to 1 287 cents and EPS was down 22% to 878 cents mainly impacted by Schirm Germany’s
performance.
The Group’s cash generated from operations increased by 17% to
R3 840 million (2021: R3 289 million).
Proactive actions taken by the Group to ensure security of
supply to the market following supply chain challenges and high raw
material prices during the year, resulted in elevated levels of
working capital. Inventory increased to R6 780 million (2021: R4
880 million), matched by an increase of R1 985 million (2021: R446
million) in short-term debt. Cash available from operating
activities decreased significantly to R77 million (2021: R1 467
million).
As a result, net debt for the Group increased to R5 345 million
(2021: R2 760 million), which largely explains higher net finance
costs for the year. The net gearing ratio for the year was 45%
(2021: 24%), as expected, given the working capital context
previously explained. The Group’s long-term covenants remain well
within the target cover range of 2.5 times earnings before
interest, taxation, depreciation and amortisation (EBITDA), at 1.5
times EBITDA (2021: 0.9 times EBITDA).
Capital expenditure (capex) investment of R1 552 million (2021:
R777 million) was mainly focused on organic growth.
The net asset value per share attributable to ordinary
shareholders increased by 6%, from 10 384
cents in 2021 to 11 027
cents.
The Board declared a final dividend of 580 (2021: 505) cents per
share which increased the total dividend to 774 (2021: 685) cents
per share which represents a 13% growth.
SEGMENTAL REVIEW
AECI Mining achieved a record performance by growing its
revenue by 51% on the back of strong market share gains, export
growth in mining chemicals and increased chemical commodity prices.
67% (2021: 64%) of the segment’s total revenue was generated
outside of South Africa.
Consequently, EBIT and EBITDA increased by 36% and 29%
respectively.
AECI Water grew its revenue by 31% supported by market
share gains in exports and South
Africa as well as increased sales to existing public and
industrial sector customers. Water sustainability projects
contributed 6% to revenue. EBIT was impacted by market sector sales
mix and cost impact as a result of delays in price implementations
at major customers due to contract pricing formulas.
AECI Agri Health’s revenue was up 17% to R7 067 million
from R6 020 million in 2021. The segment recorded an EBIT loss of
R297 million (2021: R179 million profit), due mainly to the impact
of the AECI Schirm business performance. Excluding AECI Schirm,
revenue was up 19% supported by sustained higher commodity prices
and continued strong demand following favourable climatic
conditions, export sales as well as an increased mix of in-house
formulated products. EBIT increased by 19% to R306 million.
AECI Schirm USA,
delivered to expectations with EBIT up 31% to R 101 million on the
back of growth in sales aligned to the continued growing demand in
agrichemicals. AECI Schirm Germany, recorded an operating
loss of R228 million which triggered a right-of-use asset and PPE
impairment of R445 million. The Board approved comprehensive
turnaround project is expected to deliver commercial recovery
including clearly defined milestones as well as details associated
with the required once-off costs. Notably, high priority actions
have been taken and we expect once-off costs to impact 2023
earnings. The Board expects positive earnings contribution within
20 to 36 months.
AECI Chemicals increased revenue significantly by 32% on
the back of increased demand and high commodity prices. EBIT was
negatively impacted by margin pressure in industrial chemicals from
high sulphur prices and pass through pricing at the customer,
foreign exchange impacts in the food and beverage business. Good
cash was delivered by the segment.
AECI Much Asphalt exhibited marked improvement in
performance for 2022 on the back higher sales volumes. Revenue
increased by 37%, while EBIT increased by 21%.
B-BBEE EMPLOYEES SHARE TRUST (EST)
The AECI EST, set up in 2012, was expected to vest on
9 February 2022. The trust held
approximately 10 million B ordinary shares in AECI (7.7% of shares
in issue) at inception.
The share price growth did not meet expectations and in
November 2021, the Board approved the
extension of the EST term by an additional 12 months. An additional
dividend of 50.5 cents per share was
paid to beneficiaries on 28 September
2022.
As at the extended vesting date of 9
February 2023, the share scheme was not value accretive to
beneficiaries and will therefore be wound up. The Group remains
committed to driving the Group B-BBEE ownership goals. The
potential opportunity of launching a new Black Ownership Scheme
that incorporates learnings and improvements from the previous
transaction is being considered.
FUTURE FOCUS AND PROSPECTS
Our strength is founded on our diversified product and service
offering to customers across a variety of markets and countries
where a strategic footprint has been established over time. This
enables us to deliver consistent value sustainably to all
stakeholders while leveraging the peaks and troughs of market
cycles. All our activities remain underpinned by our ESG
commitments and targets.
High commodity price trends are expected to continue in the
short term. This together with continued customer (new and
existing) activity is expected to drive performance across
geographies. Focus on customer centricity and the expansion of
profitable product and service offering across the segments will
enable customer retention and growth of sales in relevant products
and services. Continued focus on margin improvement and working
capital management initiatives to improve working capital release
and cash generation.
The growth in capital invested during the year has already
contributed to new revenue which is expected to accelerate in 2023.
Following the appointment of the new Group Chief Executive, we
look forward to renewed vigour to drive the transformation journey
which includes optimising returns from existing businesses.
DIVIDEND
Declaration of final ordinary cash
dividend no. 178
Notice is hereby given that on Tuesday, 28 February 2023 the Directors of AECI declared a
gross final cash dividend of 580
cents per share in respect of the financial year ended
31 December 2022. The dividend is
payable on Tuesday, 11 April 2023 to
holders of ordinary shares recorded in the register of the Company
at the close of business on the record date, being Thursday,
6 April 2023.
The last day to trade “cum” dividend will be Monday,
3 April 2023 and shares will commence
trading “ex” dividend as from the commencement of business on
Tuesday, 4 April 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
464.00000 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
Monday, 3 April 2023.
The issued share capital of the Company at the declaration date
is 105 517 780 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 Monday, 3 April
2023.
Share certificates may not be dematerialised or rematerialised
between Tuesday, 4 April 2023 and
Thursday, 6 April 2023, both days
inclusive.
By order of the Board
Cheryl Singh
Group Company Secretary
Woodmead, Sandton
DIRECTORS’ RESPONSIBILITY
STATEMENT
The Directors are responsible for the preparation and
presentation of the summarised consolidated year-end financial
statements in accordance with International Financial Reporting
Standards; the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee; the Financial Pronouncements as
issued by the Financial Reporting Standards Council; and the
requirements of the Companies Act of South Africa.
The Directors are also responsible for such internal controls as
the Directors determine to be necessary to enable the preparation
of summarised consolidated year-end financial statements that are
free from material misstatement, whether owing to fraud or
error.
AVAILABILITY OF FULL ANNOUNCEMENT AND
ANNUAL FINANCIAL STATEMENTS
The full announcement including the unmodified audit opinion of
the external auditor, Deloitte & Touche, on the summarised
consolidated financial statements, and the basis for its unmodified
opinion is available at:
https://senspdf.jse.co.za/documents/2023/JSE/ISSE/AFE/FY2022.pdf
https://www.ftp.aeciworld-online.com/pdf/annual-results/2022/2022-resultsannouncement.pdf
The annual financial statements including the audit opinion of
the external auditor, Deloitte & Touche, which sets out key
audit matters and the basis for its unmodified opinion is available
at:
https://www.ftp.aeciworld-online.com/reports/ar-2022/pdf/AECI2022fullafs.pdf
SHORT FORM ANNOUNCEMENT
The contents of this short-form announcement are the
responsibility of the Board of Directors of AECI. This short-form
announcement is only a summary of the information in the full
announcement and does not contain full or complete details. This
announcement is itself not audited but extracted from audited
results. Any investment decisions made by investors and/or
shareholders and/or noteholders should be based on consideration of
the full announcement as a whole. Investors, shareholders and
noteholders are encouraged to review the full announcement which is
available on SENS and on AECI’s website. The full announcement is
also available for inspection at the registered office of AECI.
Copies of the full announcement are available to investors,
shareholders and noteholders at no charge. These copies can also be
requested by contacting the Group Company Secretary: C Singh,
Private Bag X21, Gallo Manor, 2052,
cheryl.singh@aeciworld.com groupcommunications@aeciworld.com.
Directors: KDK Mokhele (Chairman), ST Coetzer1
(interim CE), SA Dawson2, FFT De Buck, WH
Dissinger3, G Gomwe4, KM Kathan (Executive),
P Mishic O’Brien5, AM Roets, PG Sibiya, A Takoordeen
(Executive)
1 Canadian
2 Australian
3 German
4 Zimbabwean
5 American
Group Head Investor Relations: Z Salman
Group Company Secretary: C Singh
Board sign-off date: 28 February
2023
Results released on: 1 March
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