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)
AUDITED
CONSOLIDATED FINANCIAL RESULTS AND FINAL CASH DIVIDEND DECLARATION
FOR THE YEAR ENDED 31 DECEMBER
2023
-
Revenue up
5.4% to R37 500 million
-
EBITDA1
up 3.2% to
R3 683 million
-
EBIT2
up 25.6%
to R2 571 million
-
HEPS down
11.7% to 1 137 cents
-
EPS up
26.7% to 1 112 cents
-
Cash
generated from operations up 4.3% to R4 004 million
-
Growth
capex of R434 million (33% of total R1 303 million
capex)
-
Working
capital at 15% of revenue, down from 19% in 2022
-
Gearing at
35% (45% in 2022)
-
Final cash
dividend down 79% to 119 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.
EBITDA
is unaudited.
2 Earnings
before interest and taxation is defined as profit before interest,
taxation and share of profit of equity-accounted investees, net of
taxation
A
YEAR OF TRANSITION
On
20 March 2024 we celebrate 100 years.
With a century of unwavering dedication and pioneering excellence
behind us, our sustained success provides a strong foundation for
our continued growth in the face of a fast-paced and ever-evolving
business landscape. With the launch of our new strategy in
November 2023, we are choosing to
secure our place in the next century by embracing change and
seizing profit enhancing opportunities while navigating market
shifts with agility.
Our
ambition:
To double
profitability of our core business (Mining and Chemicals) by
2026.
Attain a
global market position in Mining of #3 by 2030
Aligned to our strategy, are financial and non-financial targets
(KPIs) we expect to achieve by 2026. The
execution of the new strategy will be a multi-year journey driven
through our Transformation Management Office (TMO) to ensure
dedicated focus as well as the tracking of progress. We intend to
drive inorganic and organic growth by entering new markets and
developing new products to expand our customer and geographic
reach.
GROUP
RESULTS OVERVIEW
In early
in 2023, we unfortunately and regrettably had two work-related
fatalities, we wish to convey our sincere condolences to the
family, friends and colleagues of the departed. As a Group our
primary objective remains Zero Harm.
In terms
of our ESG goals, we had a progressive year towards achieving these
goals with our scope 1 and 2 emissions, water consumption and water
discharge elements decreasing. We are proud that our Board and
Executive Committee female representation has exceeded the 40%
target.
The Group
achieved strong results for the financial year ended 31 December 2023, with revenue of R37 500 million
up 5.4% from the R 35 583 million achieved for the prior year ended
31 December 2022. EBIT of R2 571
million (2023: R2 047
million) was 25.6% higher. In an environment characterised by high
inflation and interest rates, supply chain and logistics challenges
as well as declining commodity prices; the performance of AECI
Mining, our core division, steered the results. Further confirming
our chosen strategic direction and demonstrating AECI's strength
and resilience.
Profit for
the year increased by 23.4% after taking into account a 63.4%
increase in net finance costs owing to elevated debt levels related
to the turnaround of AECI Schirm, continued higher working capital
levels and increasing interest rates. Taxation expense increased by
R114 million to R917 million due to increased
profitability.
Basic
earnings per share increased by 26.7% to 1 112 cents and headline earnings per share
decreased by 150 cents to 1
137 cents. Prior year Group earnings
included a R471 million impairment on property, plant and
equipment, operational losses and a deferred tax write-off
associated with AECI Schirm Germany. Once-off impairments were
excluded from the headline earnings in the prior year. The headline
earnings per share were impacted by increased finance costs, driven
by interest rate increases and short-term funding, to accommodate
increased working capital levels during the year to support revenue
growth.
|
R million
(unless stated otherwise)
|
2023
|
2022
|
%
change
|
|
Revenue
|
37
500
|
35
583
|
5.4
|
|
EBITDA
|
3
683
|
3
570
|
3.2
|
|
EBITDA
margin (%)
|
9.8
|
10.0
|
(2.0)
|
|
Depreciation
and amortisation
|
1
053
|
1
026
|
2.6
|
|
EBIT
|
2
571
|
2
047
|
25.6
|
|
EBIT margin
(%)
|
6.9
|
5.8
|
19.0
|
|
Profit for
the year
|
1
180
|
956
|
23.4
|
|
Basic
earnings per share (EPS) (cents)
|
1
112
|
878
|
26.7
|
|
Headline
earnings per share (HEPS) (cents)
|
1
137
|
1
287
|
(11.7)
|
|
Cash
generated from operations
|
4
004
|
3
840
|
4.3
|
The
gearing ratio significantly improved to 35% (45% at 31 December 2022) and is well within the
communicated guidance range of 20% - 40%. This remains a key focus
area in line with the Group's new strategy of building a strong and
resilient balance sheet.
Net debt
improved to R4 338 million (2022: R5 345 million) driven by
stringent net working capital management in the year.
The
Group's net debt to EBITDA, as defined in covenant agreements, at
31 December 2023 was 1.2 times,
remaining well within the loan covenant threshold of 2.5 times. The
Group completed a competitive refinancing process in 2023 through a
debt capital market public auction, as well as a loan syndication,
both are linked to the AECI Sustainability Financing Framework.
These processes were oversubscribed, and favourable pricing
outcomes achieved. The loan market syndication includes Revolving
Credit Facilities available in EUR, USD and AUD.
Further
reduction in net debt as well as stringent net working capital
management remain key focus areas for management and the Board,
with operational and strategic free cash flow initiatives being
driven to strengthen the balance sheet.
Capital
expenditure amounted to R1 303 million (2022: R1 552
million) of which R869 million (2022: R600 million) was maintenance
and R434 million (2022: R952 million) growth. The shift in balance
towards maintenance capex is in support of our strategy to improve
asset utilisation in our existing assets.
Net
asset value per share attributable to ordinary shareholders
increased by 5% to 11 762 cents from prior year (2022: 11 204
cents) and 7.2% ahead of the market price of 10 969 cents as at 31
December 2023. The
Board declared a final cash dividend of 119 cents per share (2022:
580 cents per share).
SEGMENTAL
REVIEW
AECI
Mining's revenue
was up 8.4% to R19 621 million (2022: R18 096 million). This was
supported by strong volume growth in bulk explosives, initiating
systems and electronic detonators on the back of higher demand and
good market share gains following new contracts internationally.
EBIT of R2 060 million (2022: R1 743 million), a new record
achieved was up 18.2% and the EBIT margin strengthened to 10.5%
compared to 9.6% in the prior period.
AECI
Chemicals' revenue of
R8 159 million (2022: R8 529 million) was down 4.3% due to lower
demand and pricing pressure. EBIT was R515 million (2022: R562
million) down 8.5% and the EBIT margin was under pressure, at 6.3%
(2022: 6.6%). Good margin management in AECI Specialty Chemicals
and AECI Beverages contributed positively to performance in a
challenging trading environment.
AECI
Agri Health's revenue of
R7 619 million (2022: R7 067
million) was up 8%. The segment made an EBIT loss of R192 million
down from the prior year (2022: R297 million loss) impacted by AECI
Schirm performance. Strict working capital management yielded
positive results for the segment.
AECI
Water's revenue at
R2 009 million (2022: R2 018 million) was in line with the prior
year following good sales volumes in the mining and industrial
water businesses. The public water sector business, however
impacted by low sales volumes and a drop in key raw material
prices. EBIT for the segment at R139 million was down 34% (2022:
R212 million) following the impact of provisions (mainly bad debt
and stock provisions), raised in December
2023 totalling R78 million.
2024 OUTLOOK
-
AECI
Mining to continue its growth trajectory leveraging our skills,
expertise and solution focused track-record while we progress our
plans to reduce dependency on South African Ammonia
supply;
-
AECI
Chemicals performance to continue being tied to the South African
macroeconomic environment as well as commodity price shifts,
however operational excellence and commercial excellence
initiatives to contribute positively to performance;
-
Progress
our strategy execution towards achieving all 2026 targets anchored
by our principles of excellence, focus and discipline.
DIVIDEND
Declaration of final ordinary cash dividend No.
180
Notice is
hereby given that on Wednesday, 28 February
2024 the Directors of AECI declared a gross final cash
dividend of 119 cents per share in
respect of the financial year ended 31
December 2023. The dividend is payable on Monday,
8 April 2024 to holders of ordinary
shares recorded in the register of the Company at the close of
business on the record date, being Friday, 5
April 2024.
The last
day to trade "cum" dividend will be Tuesday, 2 April 2024 and shares will commence trading
"ex" dividend as from the commencement of business on Wednesday,
3 April 2024.
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 95.20 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, 2 April 2024.
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, 2 April 2024.
Share
certificates may not be dematerialised or rematerialised between
Wednesday, 3 April 2024 and Friday,
5 April 2024, both days
inclusive.
By order
of the Board
Cheryl Singh
Group
Company Secretary
Woodmead,
Sandton
AVAILABILITY
OF THE AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2023
The
Group's audited consolidated financial statements for the year
ended 31 December 2023 is available
through the JSE cloud link at:
https://senspdf.jse.co.za/documents/2024/jse/isse/AFE/AFSFY2023.pdf
and on the
Company's website at:
https://www.ftp.aeciworld-online.com/reports/ar-2023/pdf/AECI2023fullafs.pdf
AUDIT OPINION
Deloitte
& Touche, the Group's independent auditor has audited the
consolidated and separate annual financial statements of the Group
and has expressed an unmodified audit opinion thereon.
In
accordance with the auditors' responsibilities in terms of sections
44(2) and 44(3) of the Auditing Profession Act, the auditors
reported that, during 2023, a reportable irregularity was
identified in terms of the Auditing Profession Act. The matter was
reported to the Independent Regulatory Board for Auditors. Further
details on the matter pertaining to the reportable irregularity, is
described in note 38 of the 2023 annual financial statements,
available on the Company's website.
The
contents of this results announcement are the responsibility of the
Board of Directors of AECI and is only a summary of the information
in the annual financial statements and does not contain full or
complete details. This results announcement is itself not audited
but extracted from audited results.
Any
investment decisions by shareholders and/or investors should be
based on a consideration of the annual financial statements as a
whole and shareholders and/or investors are encouraged to review
the audited annual financial statements, which is available for
viewing on the links set out above, as this announcement does not
provide all the details.
Directors:
KDK
Mokhele (Chairman), H Riemensperger1
(Group
CE), R Gabriels (Group CFO), ST Coetzer2,
SA Dawson3,
FFT De Buck, WH Dissinger1,
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: 27 February
2024
Results
released on: 28 February
2024
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