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A E C I LIMITED - Reviewed condensed consolidated financial results and cash dividend declaration for the year ended 31 December 2015

Release Date: 23/02/2016 07:05:00      Code(s): AFE     
for the year ended 31 December 2015

AECI Limited
(Incorporated in the Republic of South Africa) Registration number 1924/002590/06
Tax reference number 9000008608 (?AECI? or ?the Company?)
Share code: AFE ISIN: ZAE000000220

Reviewed condensed consolidated financial results and final cash dividend declaration 
for the year ended 31 December 2015

Revenue +9% to R18,4bn
Profit from operations +7% to R1 703m
HEPS +6% to 894c
Strong volume growth from operating businesses
R400m bulk land sale at Somerset West 
R563m for share repurchase programme 
Cash of R1,4bn returned to shareholders
Final ordinary cash dividend of 260cps declared

Income statement
                                                                       2015     2014
R millions                                                % change Reviewed  Audited
Revenue??(2)                                                    +9   18 446   16 903
Net operating costs                                                 (16 743) (15 307) 
Profit from operations                                          +7    1 703    1 596
Interest expense                                                       (253)    (204) 
Interest received                                                        66       54
Share of profit of equity-accounted investees, net of tax                28       31
Impairment of equity-accounted investees??(3)                           (51)       ? 
Profit before tax                                                     1 493    1 477
Tax expense                                                            (464)    (368) 
Profit for the year                                                   1 029    1 109
Profit for the year attributable to:
? Ordinary shareholders                                               1 007    1 096
? Preference shareholders                                                 3        3
? Non-controlling interest                                               19       10
                                                                      1 029    1 109
Headline earnings are derived from: 
Profit attributable to ordinary shareholders                          1 007    1 096
Impairment of goodwill                                                    4        * 
Impairment of property, plant and equipment                              19        3
Impairment of assets classified as held for sale                          ?       21
Impairment of equity-accounted investees??(3)                            51        ? 
Gain on bargain purchase??(4)                                           (23)       ? 
Surplus on disposal of property, plant and equipment                    (26)      (3)
Surplus on disposal of assets classified as held for sale??(11)         (48)    (202)
Tax effects of the above items                                            4       28
Headline earnings                                                       988      943
Per ordinary share (cents):
Headline earnings                                               +6      894      842
Diluted headline earnings                                               870      800
Basic earnings                                                  -7      911      979
Diluted basic earnings                                                  886      929
Ordinary dividends declared                                    +16      260      225
Ordinary dividends paid                                                 350      325
Special dividend paid                                                   375        ?
* Nominal amount.

Statement of comprehensive income
                                                                       2015     2014
R millions                                                         Reviewed  Audited
Profit for the year                                                   1 029    1 109
Other comprehensive income net of tax:
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences                                808      164
Items that may not be reclassified subsequently to profit or loss:
Remeasurement of defined-benefit obligations                            820      (65) 
Total comprehensive income for the year                               2 657    1 208
Total comprehensive income attributable to:
? Ordinary shareholders                                               2 619    1 194
? Preference shareholders                                                 3        3
? Non-controlling interest                                               35       11
                                                                      2 657    1 208
Statement of changes in equity
                                                                       2015     2014
R millions                                                         Reviewed  Audited
Total comprehensive income for the year                               2 657    1 208
Dividends paid                                                         (838)    (378) 
Business combinations and change in ownership percentage                  ?        5
Share-based payment reserve                                             (17)      91
Shares repurchased                                                     (563)       ? 
Equity at the beginning of the year                                   7 803    6 877
Equity at the end of the year                                         9 042    7 803
Made up as follows:
Ordinary share capital                                                  110      116
Share premium                                                             ?      496
Reserves                                                              1 606      830
Foreign currency translation reserve                                  1 456      663
Share-based payment reserve                                             150      167
Retained earnings                                                     7 216    6 284
Non-controlling interest                                                104       71
Preference share capital                                                  6        6
                                                                      9 042    7 803

Reconciliation of weighted average number of shares
                                                                       2015     2014
Millions                                                           Reviewed  Audited
Weighted average number of ordinary shares at the
beginning of the year                                                 138,3    138,3
Weighted average number of unlisted ordinary shares
held by consolidated EST                                              (10,1)   (10,1) 
Weighted average number of contingently returnable
ordinary shares held by CST                                            (4,4)    (4,4)
Weighted average number of shares held by
consolidated subsidiary                                               (11,9)   (11,9) 
Weighted average number of shares repurchased during
the year                                                               (1,4)       ?
Weighted average number of ordinary shares for basic
earnings per share                                                    110,5    111,9
Dilutive adjustment for potential ordinary shares                       3,1      6,0
Weighted average number of ordinary shares for
diluted earnings per share                                            113,6    117,9

Industry segment analysis
                                                    Profit from
                                   Revenue          operations         Net assets
                             Reviewed  Audited  Reviewed  Audited  Reviewed  Audited
R millions                       2015     2014      2015     2014      2015     2014
Explosives                      8 236    7 256       418      372     3 821    3 409
Specialty chemicals             9 886    9 368     1 121    1 000     5 156    4 931
Property??(11)                    922      871       527      490       273      241
Group services and
inter-segment                    (598)    (592)     (363)    (266)      210     (131)
                               18 446   16 903     1 703    1 596     9 460    8 450

Net assets consist of property, plant, equipment, investment property, intangible assets, 
goodwill, inventory, accounts receivable and assets classified as held for sale, less accounts 

Statement of financial position at 31 December
                                                                      2015    2014
R millions                                                        Reviewed Audited
Non-current assets                                                   8 374   7 161
Property, plant and equipment                                        4 296   4 046
Investment property                                                    137     172
Intangible assets                                                      257     247
Goodwill??(5)??(6)??(7)                                              1 590   1 291
Pension fund employer surplus accounts??(9)                            982     179
Investments in associates??(3)                                         250     260
Investments in joint arrangements??(4)                                 313     308
Other investments                                                       27      99
Deferred tax                                                           522     555
Loans receivable                                                         ?       4
Current assets                                                       9 420   7 626
Inventories                                                          3 358   2 879
Accounts receivable                                                  3 825   3 243
Other investments                                                       67       ? 
Assets classified as held for sale??(11)                                 ?      85
Tax receivable                                                          56      43
Cash                                                                 2 114   1 376
Total assets                                                        17 794  14 787
Equity and liabilities
Ordinary capital and reserves                                        8 932   7 726
Non-controlling interest                                               104      71
Preference share capital                                                 6       6
Total equity                                                         9 042   7 803
Non-current liabilities                                              1 871   2 691
Deferred tax                                                           427     189
Non-current borrowings                                                 672   1 459
Contingent consideration??(6)??(7)                                      70       ? 
Non-current provisions and employee benefits??(9)                      702   1 043
Current liabilities                                                  6 881   4 293
Accounts payable??(11)                                               4 003   3 513
Current borrowings                                                   2 620     583
Contingent consideration??(5)                                           15       ? 
Loans from joint arrangements                                           36      49
Tax payable                                                            207     148
Total equity and liabilities                                        17 794  14 787

Statement of cash flows
                                                                     2015    2014
R millions                                                       Reviewed Audited
Cash generated by operations                                        2 607   2 318
Dividends received                                                     30      43
Interest paid                                                        (253)   (204) 
Interest received                                                      66      54
Tax paid                                                             (532)   (488) 
Changes in working capital                                           (215)    547
Cash flows relating to defined-benefit costs                         (284)    (94) 
Cash flows relating to non-current provisions and
employee benefits                                                     (64)    (59)
Cash flows relating to share-based payments                           (94)      ? 
Cash available from operating activities                            1 261   2 117
Dividends paid                                                       (838)   (378) 
Cash flows from operating activities                                  423   1 739
Cash flows from investing activities                                 (844)   (704) 
Net investment expenditure                                           (298)    131
Net capital expenditure                                              (546)   (835)
Net cash (utilised)/generated before financing activities            (421)  1 035
Cash flows from financing activities                                  691    (912) 
Non-current loans receivable                                            4       6
Shares repurchased                                                   (563)      ? 
Borrowings                                                          1 250    (918) 
Increase in cash                                                      270     123
Cash at the beginning of the year                                   1 376   1 219
Translation gain on cash                                              468      34
Cash at the end of the year                                         2 114   1 376

Other salient features
                                                                     2015    2014
R millions                                                       Reviewed Audited
Capital expenditure                                                   583     745
? expansion                                                           275     335
? replacement                                                         308     410
Capital commitments                                                   436     342
? contracted for                                                       71     161
? not contracted for                                                  365     181
Future rentals on property, plant and equipment leased                331     358
? payable within one year                                             112      91
? payable thereafter                                                  219     267
Net borrowings                                                      1 178     666
Gearing (%)??*                                                         13       9
Current assets to current liabilities                                 1,4     1,7
Net asset value per ordinary share (cents)                          8 096   6 644
Depreciation and amortisation                                         590     547
ZAR/US$ closing exchange rate (rand)                                15,47   11,57
ZAR/US$ average exchange rate (rand)                                12,76   10,85
* Borrowings less cash as a percentage of total equity. 

(1) Basis of preparation and accounting policies
The condensed consolidated financial results are prepared in accordance with the 
requirements of the JSE Limited?s Listings Requirements (?Listings Requirements?) 
for provisional reports and the requirements of the Companies Act of South Africa. 
The Listings Requirements require provisional reports to be prepared in accordance 
with the framework concepts and the measurement and recognition requirements of 
International Financial Reporting Standards (?IFRS?); the South African Institute of 
Chartered Accountants Financial Reporting Guides as issued by the Accounting Practice 
Committee; Financial Pronouncements as issued by the Financial Reporting Standards 
Council; and to also, as a minimum, contain the information required by IAS 34 Interim 
Financial Reporting. The accounting policies applied in the preparation of the 
condensed consolidated financial results are in terms of IFRS and are consistent with 
those applied in the previous consolidated financial statements. The preparation of these 
condensed consolidated financial results for the year ended 31 December 2015 was supervised 
by the Financial Director, Mr KM Kathan CA(SA)AMP (Harvard). The condensed consolidated 
financial results have been reviewed by the Company?s auditors, KPMG Inc., who have issued 
an unmodified review conclusion. The auditor?s report does not necessarily report on all 
of the information contained in this announcement. Shareholders are therefore advised 
that in order to obtain a full understanding of the nature of the auditor?s engagement 
they should obtain a copy of the auditor?s report together with the accompanying 
financial information from AECI?s registered office.

(2) Includes foreign and export revenue of R6 361 million (2014: R5 417 million).

(3) During the year, the Group?s investment in BBRI was impaired by US$4,2 million 
(R51 million at the date of recognition) as reported in the interim financial results 
for the six months to 30 June 2015. BBRI is an equity-accounted associate company. The 
value-in-use was re- assessed at 31 December 2015 by discounting the expected future cash 
flows to be generated from the investment over the useful life of the underlying plant 
using a discount rate of 11,0%. At 31 December 2015 the recoverable amount for the investment 
in BBRI was US$15 million (R233 million translated at that date), unchanged from the original
assessment, and the impairment recognised at 30 June 2015 was unchanged.

(4) On 30 June 2015 AECI, through its wholly-owned subsidiary Chemical Services Limited, 
acquired the remaining 50% share in Resinkem Proprietary Limited from its joint venture partner, 
GP Chemicals International Holdings S.A.R.L., for R1,00. AECI acquired 100% of the shares in 
Resinkem for a fair value consideration of R22,5 million. The fair value of the assets acquired 
and liabilities assumed amounted to R45 million, resulting in a bargain purchase gain of 
R22,5 million being recognised in net operating costs.

Acquirees? net assets at acquisition date
                                                                                    R millions
Property, plant and equipment                                                             17,0
Working capital                                                                           10,0
Provisions                                                                                (8,0)
Cash                                                                                      26,0
Deferred and current tax                                                                     * 
Net identifiable assets and liabilities                                                   45,0
Gain on bargain purchase                                                                  22,5
Net consideration (non-cash)                                                              22,5
* Nominal amount.

(5) On 1 June 2015 AECI?s wholly-owned subsidiary AECI (Mauritius) Limited acquired 100% of 
the shares of Farmers Organisation Limited (?FOL?), a Malawian company which distributes agrochemicals, 
seeds and spraying equipment. The acquisition grows AECI?s agrochemicals footprint and affords Nulandis, 
AECI?s existing agrochemicals business, the opportunity to expand sales of its manufactured products to 
Malawi. The acquisition was initially recognised and accounted for on a provisional basis as at 
30 June 2015. The Purchase Price Allocation (?PPA?) and the final acquistion accounting was completed 
and this resulted in a change to the net identifiable assets and goodwill initially recognised. The
PPA was unchanged but the working capital was R18 million lower, and the deferred and current tax reduced 
from R11 million to nil. Goodwill increased from R54 million to R88 million as a result.

The initial purchase price of US$10,2 million (R124 million) was settled with a payment of US$9,3 million
(R113 million) on 1 July 2015 and an additional payment of US$0,9 million (R11 million) on 14 August 2015, 
based on FOL?s approved working capital. A contigent consideration of US$1 million (R12 million), being the 
fair value of the contingent consideration on acquisition, was recognised based on FOL achieving an 
EBITDA target in the 12 months after acquisition.

FOL contributed revenue of R140 million and profit from operations of R27 million since acquisition.

Acquirees? net assets at acquisition date
                                                                                   R millions
Property, plant and equipment                                                               3
Working capital                                                                            45
Net identifiable assets and liabilities                                                    48
Goodwill on acquisition                                                                    88
Net consideration                                                                         136

(6) During the year AECI acquired 100% of the shares of Southern Canned Products Proprietary Limited 
(?SCP?), a manufacturer and distributor of ingredients for juice-based drinks and products, from Gerber 
Goldschmidt South Africa, a private equity investment company, and the management of SCP. All the 
conditions precedent in the agreement were met in July 2015 and the effective date of the acquisition 
was 1 August 2015.

The initial purchase price of R175 million was paid on 3 August 2015 with a further payment of R6 million, 
which was dependent on audited financial statements and working capital levels, paid on 22 October 2015. 
AECI will pay the selling shareholders an additional consideration in 2019, dependent on the achievement 
of an EBITDA target. A contingent consideration of R44 million was included in the purchase consideration 
in respect of this additional consideration which is the fair value of the contingent consideration at the 
date of acquisition. A further R20 million (fair value of R16 million) is payable three years after the 
effective date and is contingent on there being no breach of the warranties, as set out in the agreement 
of sale, at that date.

SCP contributed revenue of R388 million and profit from operations of R27 million since acquisition.

Acquirees? net assets at acquisition date
                                                                                R millions
Property, plant and equipment                                                           36
Intangible assets                                                                       35
Working capital                                                                         58
Current loans                                                                          (31)
Non-current loans                                                                      (16) 
Deferred and current tax                                                               (16) 
Net identifiable assets and liabilities                                                 66
Goodwill on acquisition                                                                175
Net consideration                                                                      241

(7) During the year AECI, through its division Nulandis, acquired 100% of the shares of Biocult Proprietary 
Limited (?Biocult?), a South African research and development-based company that develops and produces a range 
of soil-enhancing biological products. All the conditions precedent were met in October and the 
acquisition?s effective date was 2 November 2015.

The acquisition has been recognised on a provisional basis as the PPA has not yet been completed. 
Accordingly, the contingent consideration and goodwill recognised may be adjusted.

The initial purchase price of R7 million was paid on 2 November 2015. There is a contingent consideration 
of R16 million which is dependent on Biocult?s future earnings and is payable five years after the 
effective date. The contingent consideration has been estimated with a fair value of R10 million and 
will be assessed as part of the PPA to determine the appropriate liability to be included in the purchase 
consideration at acquisition date.

Biocult contributed revenue of R1 million and profit from operations of R0,1 million since acquisition.

Acquirees? net assets at acquisition date (provisional)
                                                                              R millions
Property, plant and equipment                                                          * 
Working capital                                                                        1
Net identifiable assets and liabilities                                                1
Goodwill on acquisition                                                               16
Net consideration (provisional)                                                       17
* Nominal amount.

(8) If the business combinations referred to above had occurred on 1 January 2015, management estimates 
that AECI?s consolidated revenue and consolidated profit from operations would have been impacted as follows:

                                                                            Profit from 
R millions                                                         Revenue   operations 
Reported                                                            18 446        1 703
Less: business combinations contribution                               529           54
                                                                    17 917        1 649
Estimated impact of business combination (if
acquired on 1 January 2015)                                            888           68
                                                                    18 805        1 717

(9) Settlement of defined-benefit obligations
It was stated in AECI?s 2014 integrated report that offers had been made to all members of the AECI Pension 
Fund (?APF?), the AECI Supplementary Pension Fund (?ASPF?) and retired employees eligible for a post- 
retirement medical aid subsidy, to settle their defined-benefit entitlements. The APF?s applications to 
transfer the obligations for pensioners to Sanlam Life Insurance Limited, whereby annuities were offered in 
place of their defined-benefit entitlements, and to transfer active members to the AECI Defined Contribution 
Pension Fund, were approved by the Registrar of Pension Funds (?Registrar?) on 14 August 2015. On that date, 
the Registrar also approved the transfer of an additional pension, made available from the employer surplus 
account (?ESA?) of the APF, to MMI Group Limited (?MMI?) to purchase annuities for eligible APF pensioners 
who accepted AECI?s settlement offer. On 4 December 2015 approvals were obtained from the Registrar for similar 
transfers of active members, deferred pensioners and pensioners of the ASPF.

The APF had a surplus over and above the present value of the defined- benefit obligations and the 
solvency reserve. AECI applied the asset limitation requirements of IAS 19 in the past, recognising 
only the amounts allocated to the ESA as an asset in its statement of financial position. The settlement 
involved the allocation of the fund surplus on an equitable basis to all stakeholders in the fund, which 
included AECI. As a result, there was no cost to AECI for settling the obligations as none of AECI?s assets 
were utilised in settling these obligations. Instead, the settlement resulted in additional amounts being 
allocated to the ESA.

The ASPF also had a surplus but not to the same extent as the APF. AECI agreed to utilise its ESA to enable 
the ASPF to offer an equivalent proportionate enhancement to members of this fund. This resulted in AECI 
utilising its recognised asset to settle part of the obligation, with a settlement cost of R103 million being 
recognised in the income statement.

AECI used part of the ESA allocated to it by the APF to offer an enhanced pension to eligible pensioners 
in settlement of their post- retirement medical aid (?PRMA?) benefit. Accordingly, individual annuities for 
all pensioners who accepted the offer were purchased with MMI utilising the ESA. The pensioners agreed to 
accept the annuity as an alternative benefit to the existing AECI subsidy.

AECI also made the PRMA settlement offer to eligible former employees who were not pensioners of any 
Group fund. AECI paid R222 million to MMI, in cash, to assume the risks. MMI granted individual annuities 
to all members as an alternative benefit to the existing AECI subsidy.

The PRMA settlements took effect on 31 August 2015. The difference between the cost of the annuities 
(cash and ESA) and the present value of the defined-benefit obligation was accounted for as a loss on 
settlement and was recognised in the income statement.

A similar process has commenced to offer settlements in respect of AECI?s two other defined-benefit 
pension funds.

An alternative offer was made to active employees eligible for the PRMA subsidy to settle their 
defined-benefit entitlement. Offers were made in December 2015 and, for those who accept, settlement 
will take place in the first half of 2016.

R millions                                                               APF    ASPF    PRMA 
The effects of the settlements were as follows:
Fund assets transferred                                               13 556     509     652
Purchase price for annuities                                               ?       ?     222
Effect of the asset limitation                                        (6 394)   (134)      ?
Liabilities settled                                                   (7 162)   (272)   (799) 
Defined-benefit settlement costs included in net operating costs           ?     103      75
Remaining fund net assets                                              1 721       ?       ? 
Effect of the asset ceiling                                             (627)      ?       ? 
Defined-benefit liabilities                                             (185)      ?    (479)
Pension fund employer surplus account                                    909       ?       ?

(10) Share repurchase
During the year AECI undertook a general share repurchase in terms of the general authority to 
repurchase shares approved by shareholders at the Annual General Meeting of the Company held on 
1 June 2015. 5 969 845 shares, or 4,66% of AECI?s issued share capital, were repurchased at a 
cost of R563 million.

(11) The AECI Group transferred the remaining two properties at Modderfontein to Shanghai Zendai 
during the year. Proceeds of R122 million, previously recognised in income received in advance, 
and the carrying amount of R74 million, previously classified as held for sale, were recognised 
in the income statement. The profit of R48 million was included in the property segment but excluded 
from HEPS as it was capital in nature.

(12) Contingent liabilities
There were no further developments in the investigation by the Competition Commission of South Africa 
in respect of Akulu Marchon, as disclosed in AECI?s 2014 integrated report. Accordingly, no provision 
for any potential liability has been made.

The Group is currently involved in various legal proceedings and has, in consultation with its legal 
counsel, assessed the outcome of these proceedings. Following this assessment, the Group?s management 
has determined that no provision is required in respect of these legal proceedings. Litigations, current 
or pending, are not likely to have a material adverse effect on the Group.

(13) The Group entered into various sale and purchase transactions with related parties in the Group 
in the ordinary course of business, on an arm?s length basis, the nature of which was consistent with 
those previously reported. All transactions and balances with these related parties have been eliminated 
appropriately in the consolidated results.

(14) The Group measures forward exchange contracts at fair value using inputs as described in level 2 of 
the fair value hierarchy. The fair values for forward exchange contracts are based on quotes from brokers. 
Similar contracts are traded in an active market and the quotes reflect the actual transactions on similar 
instruments. All other financial assets or liabilities? carrying values approximate their fair values based
on the nature or maturity period of the financial instrument. There were no transfers between levels 1, 2 
or 3 of the fair value hierarchy during the year.

(15) The reviewed condensed consolidated financial results do not include all of the disclosures required 
for full financial statements and should be read in conjunction with the consolidated financial statements 
for the year ended 31 December 2014.


Financial performance
AECI delivered a pleasing financial performance due to the significant contribution from land sales at 
Somerset West, market share gains, the benefits of acquisitions and enhanced efficiencies through strategic 
portfolio management. Volumes in businesses servicing the mining sector improved and this also assisted the 
Group in achieving its 2015 results.

Revenue increased by 9% to R18 446 million (2014: R16 903 million), of which 34% was generated outside 
South Africa (2014: 32%). Profit from operations was R1 703 million, 7% higher than the R1 596 million 
achieved in 2014, and the trading margin was 9,2% (2014: 9,4%).

Headline earnings increased by 5% from R943 million in 2014 to R988 million. HEPS was 894 cents (2014: 842 cents), 
with the bulk sale of property surplus to operational requirements in Somerset West contributing 230 cents. 
However, HEPS was negatively impacted by bad debt provisions of about R104 million (2014: R14 million). The 
provisions were a consequence of long cycles for input VAT refunds in Indonesia and poor trading conditions in 
the coal mining sector in South Africa. In addition, an abnormal negative adjustment of R178 million (before tax) 
relating to the de-risking of the Company?s defined-benefit post-retirement obligations was required. Processes 
regarding changes to post-retirement obligations are largely complete and annual savings of about R120 million 
are anticipated in 2016 and future years. EPS was 911 cents (2014: 979 cents).

The Board has declared a final cash dividend of 260 cents per ordinary share, a 16% increase on 2014?s 225 cents, 
bringing the total dividend for the 2015 financial year to 385 cents, 13% higher than last year?s 340 cents. 
A special cash dividend of 375 cents per ordinary share was also paid, on 1 June 2015.

Business environment
AECI achieved improved results in a difficult environment, particularly for the global mining industry and 
for the local manufacturing sector. The effects of severe drought conditions in most parts of South Africa 
and in other Southern African countries had an adverse effect on the water treatment, agricultural and general 
industrial sectors in particular. Owing to the geographic diversification of Group businesses, the weaker rand 
exchange rate had a positive effect overall although managing the volatility in exchange rate movements posed 

Commodity prices continued to decline as a result of lower demand from China. This trend, which is expected to 
persist in the medium term, added further pressure to the global mining sector. Some mines have closed, others 
have undertaken operational restructuring and all mining houses are strongly focused on cost containment 
processes in their supply chain.

Tragically, there were two fatalities in the year. In January Mr Zingisile Reginald Mkhosi, a Group employee, 
died in a traffic accident while travelling on a public road to a customer?s site. In October Mr Vincent Mahema, 
also a Group employee, sustained fatal injuries in a forklift accident.

AECI?s Total Recordable Injury Rate (?TRIR?) was 0,35 (0,50 in December 2014), with a marked improvement in the 
specialty chemicals segment?s performance. The TRIR measures the number of incidents per 200 000 hours worked.

Revenue increased by 14% to R8 236 million (2014: R7 256 million). Profit from operations was R418 million, 
12% up on that for the prior year. The operating margin of 5,1% was unchanged year-on-year. Overall explosives 
volumes grew by 13%.

In South Africa, AEL benefited from the recovery of the platinum mining sector after 2014?s strikes, and new 
business gained in the gold mining sector. AEL retained the majority of business in the rigorous retendering 
processes undertaken by major customers in the first six months of the year, albeit that it was necessary to 
sacrifice margin. Explosives volumes were 6% higher year-on-year and those for initiating systems 34% higher. 
The latter increase had a positive effect on the ISAP plant, where output was at capacity. In addition to the 
effects of the commodity cycle, which resulted in lower stripping ratios, other factors that restricted demand 
growth were business rescue processes, safety-related stoppages and operational problems at some customer sites.

There were pleasing results from businesses in the rest of the continent and overall explosives volumes 
increased by 14% year-on-year. Growth in Central Africa?s copper mining sector continued and a more favourable 
product mix assisted AEL?s performance in West Africa. There were also pleasing results in East Africa.

The business in Indonesia stabilised in the second half-year but remained constrained as a result of very weak 
thermal coal prices. Mines have closed, customers have reduced their stripping ratios and focused on free digging, 
all of which reduced the demand for explosives and AEL?s volumes declined by 23% in the region.

The entry into Australia in the first quarter was successful and expected volumes were achieved. The approved 
product range was expanded during the year and this will enable AEL to enter new market sectors.

AEL?s capital expenditure for the year was R313 million, of which R136 million was for investments at customer 
sites to support growth.

Specialty chemicals
The specialty chemicals segment delivered a notable performance notwithstanding subdued growth in the local 
manufacturing sector and lower demand from customers in the agricultural and water treatment segments as a 
consequence of drought conditions. This hampered the results of ImproChem and Nulandis, in particular.

Revenue increased by 6% to R9 886 million (2014: R9 368 million). Profit from operations was 12,1% higher at 
R1 121 million (2014: R1 000 million) and the operating margin increased to 11,3% from 10,7% last year. This 
was attributable to the improved profi-tability of Chemical Initiatives, Experse, Industrial Oleochemical 
Products, Nulandis and SANS Technical Fibers. Volumes were 4,9% higher overall.

Senmin made a pleasing contribution as platinum mining activities recovered after last year?s protracted strikes. 
The global commodity downturn, resulting in concentrator and mine closures, impacted negatively on exports.

ImproChem?s performance, particularly in the public water sector, was boosted by the acquisition and integration 
of Clariant Southern Africa?s water treatment business in Africa. This acquisition, in 2014, was in line with 
AECI?s strategy to become a leading provider of water treatment solutions in Africa. In addition to the drought, 
the severe decline of South Africa?s steel industry also had a negative effect on ImproChem, as did reduced 
activity in Africa?s oil industry as a consequence of low prices for this commodity.

Nulandis, which is leading the Group?s agrochemicals strategic thrust into Africa, enhanced its footprint through 
the acquisition of Farmers Organisation Limited (?FOL?), based in Malawi, for a net consideration of R136 million. 
The FOL transaction took effect on 1 June 2015 and both its and Nulandis? results were in line with expectations.

Also integrated with Nulandis was Biocult, a South African research and development-based company that develops 
and produces a range of soil- enhancing biological products. Biocult was acquired for a net consideration of 
R17 million, with effect from 1 November 2015. This acquisition supports Nulandis? strategy of expanding its 
product range in holistic plant health.

AECI acquired 100% of Southern Canned Products (?SCP?), a leading manufacturer and distributor of juice-based 
drinks and additives based in Cape Town, for a net consideration of R241 million. The acquisition took effect 
on 1 August 2015 and is part of AECI?s strategy of growing its food additives and ingredients business in 
South Africa and ultimately the rest of Africa. SCP has enhanced the offering to the beverage industry, in 
particular. Its five-month contribution exceeded expectations.

Capital expenditure for the specialty chemicals segment totalled R235 million of which R130 million was for 
expansion. Key projects completed were Senmin?s new Research and Development centre, in Sasolburg, and Lake Foods? 
new manufacturing facility in Cape Town.

Revenue of R922 million (2014: R871 million) comprised R554 million related to land sales and the balance 
to the leasing and facilities management businesses. Profit from operations was R527 million (2014: R490 million).

Transfer processes in terms of the Somerset West bulk land sale, which contributed R294 million to profit 
from operations, were almost complete by year-end and the remaining transfers will be effected in the first 
quarter of 2016. Land in Precinct 1, which is 25 hectares in extent and which was excluded from the bulk sale, 
was also sold in 2015.

The Group still has 216 hectares of land surplus to operations in Modderfontein.

Cash utilisation
Capital expenditure of R583 million (2014: R745 million) was managed in line with depreciation and amortisation 
for the year. About half the expenditure related to expansion projects.

Gearing was higher at 13%, from 9% in December 2014. The net working capital to sales ratio was 
17,2% (2014: 15,4%). The working capital ratio was affected by longer trade cycles outside South Africa 
and by cash proceeds not yet received from sales of property in Precinct 1.

Cash interest cover at 10,4 (2014: 14,5 times) was impacted by the special dividend of R431 million and 
the share repurchase of R563 million. Consequently, the net interest paid increased to R187 million 
(2014: R150 million).

Share repurchase
Between August and December 2015, the Company repurchased 5 969 845 (4,66% of the total issued share capital) 
of its issued ordinary shares, on market, for R563 million. The repurchase was in terms of an authority to 
this effect granted to the Company by shareholders at the Annual General Meeting held on 1 June 2015. The 
repurchased shares have all been cancelled.

De-risking of defined-benefit obligations
AECI has been working closely with the trustees of its defined-benefit retirement funds in order to restructure 
these in a fair and equitable process. The surplus which was allocated to the Company by the AECI Pension Fund 
was utilised primarily to offer members of the AECI Supplementary Fund a similar enhancement to that given to 
members of the AECI Pension Fund, and to settle qualifying pensioner members? post- retirement medical aid 
(?PRMA?) liabilities via a voluntary alternative benefit offer. 65% of qualifying pensioner members accepted 
the alternative offer. The net non-cash effect of these de-risking projects on operating income was R178 million 
(before tax).

The employer surplus account at 31 December 2015 was R982 million. Part of this surplus will be utilised to
fund a voluntary alternative benefit offer to qualifying employees in respect of their PRMA benefits. This process 
will be finalised in 2016. The remainder of the surplus will be utilised as a retirement fund contribution holiday.

Two remaining, smaller defined-benefit retirement funds are expected to be restructured during 2016 in 
consultation with their trustees.

On 14 December 2015 the Department of Environmental Affairs (?DEA?), accompanied by representatives from 
the City of Johannesburg, conducted a Dawn Raid at AEL Modderfontein. Management is co-operating with the 
DEA and has submitted a response to its allegations, relating to AEL?s compliance with certain conditions 
of its emissions licence. Feedback from the DEA?s process is awaited.

Tak Hiemstra resigned as a Non-executive Director of the Company in October. The Board thanks him for his 
services. On 31 January, the Board welcomed Graham Dempster as a Non-executive Director. Dr Khotso Mokhele 
will also join the Board in the same capacity on 1 March 2016. AECI looks forward to their contribution to 
the affairs of the Company and the Board.

Outlook and strategy
Indications are that conditions in the global and local economic environments will remain difficult, with no 
step-change improvement expected in the short to medium term. In Southern Africa, the effects of drought 
conditions are an additional concern. Locally, the weak and volatile rand exchange rate presents challenges 
but also opportunities.

AECI believes that its diversified products and services portfolio, its geographic footprint, and ongoing 
innovation to meet customers? changing requirements will sustain performance. The Group will continue to
reshape and refocus its business model for the current operating environment, pursue additional acquisitions 
in South Africa, the rest of Africa and internationally in support of its strategic growth pillars, and expand 
and leverage its international presence further so as to grow earnings generated in major currencies. 
Opportunities for exports and import replacements will be rigorously pursued.

The careful management of working capital remains a focus, as does the maintenance of the most effective cost 
base possible. The objective will be to manage fixed capital spend in line with depreciation and amortisation.

Innovation is key if AECI is to remain at the forefront of adding value to its customers. Accordingly, research 
and development that enhances current products and services while preparing more effective alternatives for the 
future will continue.

Collaboration between Group businesses is another focus area. The best current example of this is the mine-to-metal
model that brings together the expertise of AEL, Senmin and ImproChem as a single Mining Solutions offering. 
Similar initiatives will be developed in the Group?s other strategic pillars.

Schalk Engelbrecht                   Mark Dytor
Chairman                             Chief Executive

Woodmead, Sandton
23 February 2016

Directors: S Engelbrecht (Chairman), GW Dempster?, MA Dytor (Chief Executive)*, RMW Dunne**, Z Fuphe, G Gomwe***, 
KM Kathan (Financial Director)*, LL Mda, AJ Morgan, LM Nyhonyha, R Ramashia.
???Appointed 31 January 2016 *??Executive **??British ***??Zimbabwean
Group Company Secretary: EN Rapoo

Notice to shareholders
Declaration of final ordinary cash dividend no. 164
Notice is hereby given that, on Monday, 22 February 2016, the Directors of AECI declared a gross final cash dividend 
of 260 cents per share, in respect of the financial year ended 31 December 2015. The dividend is payable on Monday, 
11 April 2016 to holders of ordinary shares recorded in the register of the Company at the close of business on the 
record date, being Friday, 8 April 2016.

The last day to trade ?cum? dividend will be Friday, 1 April 2016 and shares will commence trading ?ex? dividend 
as from the commencement of business on Monday, 4 April 2016.

A South African dividend withholding tax of 15% 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 221 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 Friday, 1 April 2016.

The issued share capital at the declaration date is 122 271 295 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 Friday, 1 April 2016.

Share certificates may not be dematerialised or rematerialised between Monday, 4 April 2016 and Friday, 
8 April 2016, both days inclusive. 

By order of the Board
EN Rapoo
Group Company Secretary

Woodmead, Sandton
23 February 2016

Transfer Secretaries
Computershare Investor Services (Pty) Ltd
70 Marshall Street

Computershare Investor Services PLC 
PO Box 82
The Pavilions 
Bridgwater Road 
Bristol BS 99 7NH 

Registered Office
1st floor, AECI Place
24 The Woodlands
Woodlands Drive

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

Date: 23/02/2016 07:05:00 Supplied by www.sharenet.co.za                     
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