A E C I LIMITED - Condensed consolidated interim financial results and cash dividend declaration for the half-year ended 30 June 2018

Release Date: 25/07/2018 07:05
Code(s): AFE AFEP
 
Wrap Text
Condensed consolidated interim financial results and cash dividend declaration for the half-year ended 30 June 2018

AECI Limited
(Incorporated in the Republic of South Africa)
Registration number: 1924/002590/06
Tax reference number: 9000008608
Share code: AFE
ISIN: ZAE000000220
Share code: AFEP
ISIN: ZAE000000238
JSE Bond company code: AECI 
(“AECI” or “the Company”)

Condensed consolidated unaudited interim financial results and
cash dividend declaration for the half-year ended 30 June 2018

Revenue
+24% to R10 473m

Profit from operations
+35% to R911m

HEPS
+19% to 458c

EBITDA
+28% to R1 258m

Acquisitions finalised

Improved to Level 3
B-BBEE Contributor

Interim cash dividend
+8% to 149cps

Income statement

                                                                     2018
                                                                    First
                                                            %        half
R millions                                        Note change   Unaudited
Revenue                                              2     24      10 473
Net operating costs                                                (9 562) 
Profit from operations                                      35        911
Share of profit of equity-accounted investees,
net of tax                                                             17
Profit from operations and equity-accounted
investees                                                   33        928
Net finance costs                                                    (161) 
Interest expense                                                     (171) 
Interest received                                                      10
Profit before tax                                                     767
Tax expense                                                          (263) 
Profit for the period                                                 504
Profit for the period attributable to:
— Ordinary shareholders                                               483
— Preference shareholders                                               1
— Non-controlling interest                                             20
                                                                      504
Headline earnings are derived from:
Profit attributable to ordinary shareholders                          483
Impairment of goodwill                                                  —
Impairment of property, plant and equipment                             — 
Impairments recognised by equity-accounted
investee                                                                —
Loss on disposal of equity-accounted investee                           — 
Surplus on disposal of property, plant and
equipment                                                               —
Foreign currency translation differences 
reclassified on net investments in foreign
operations                                                              —
Tax effects of the above items                                          — 
Headline earnings                                                     483
Per ordinary share (cents):
Headline earnings                                           19        458
Diluted headline earnings                                             441
Basic earnings                                              19        458
Diluted basic earnings                                                441
Ordinary dividends declared                                  8        149
Ordinary dividends paid                                               340

Income statement

                                                           2017
                                                          First     2017
                                                           half     Year
R millions                                            Unaudited  Audited
Revenue                                                   8 478   18 482
Net operating costs                                      (7 801) (16 903) 
Profit from operations                                      677    1 579
Share of profit of equity-accounted investees, 
net of tax                                                   20        — 
Profit from operations and equity-accounted 
investees                                                   697    1 579
Net finance costs                                           (85)    (167) 
Interest expense                                            (98)    (202) 
Interest received                                            13       35
Profit before tax                                           612    1 412
Tax expense                                                (188)    (429) 
Profit for the period                                       424      983
Profit for the period attributable to:
— Ordinary shareholders                                     407      950
— Preference shareholders                                     1        3
— Non-controlling interest                                   16       30
                                                            424      983
Headline earnings are derived from:
Profit attributable to ordinary shareholders                407      950
Impairment of goodwill                                        —        3
Impairment of property, plant and equipment                   —       10
Impairments recognised by equity-accounted investee           —       54
Loss on disposal of equity-accounted investee                 1        2
Surplus on disposal of property, plant and equipment         (1)      (8) 
Foreign currency translation differences reclassified
on net investments in foreign operations                      —       18
Tax effects of the above items                                —      (17) 
Headline earnings                                           407    1 012
Per ordinary share (cents):
Headline earnings                                           386      959
Diluted headline earnings                                   377      915
Basic earnings                                              386      900
Diluted basic earnings                                      377      859
Ordinary dividends declared                                 138      340
Ordinary dividends paid                                     300      438

Statement of comprehensive income

                                                  2018      2017
                                                 First     First    2017
                                                  half      half    Year
R millions                                   Unaudited Unaudited Audited
Profit for the period                              504       424     983
Other comprehensive income net of tax
Items that may be reclassified subsequently 
to profit or loss:
— Foreign currency translation differences         294       (76)   (212)
— Effective portion of cash flow hedges              9         1      (4) 
Items that may not be reclassified
subsequently to profit or loss:
— Remeasurement of defined-benefit
obligations                                        (15)       (6)     11
Total comprehensive income for the period          792       343     778
Total comprehensive income attributable to:
— Ordinary shareholders                            761       329     752
— Preference shareholders                            1         1       3
— Non-controlling interest                          30        13      23
                                                   792       343     778

Statement of changes in equity

                                                  2018      2017
                                                 First     First    2017
                                                  half      half    Year
R millions                                   Unaudited Unaudited Audited
Total comprehensive income for the period          792       343     778
Dividends paid                                    (379)     (342)   (497) 
Change in ownership percentage                       —        11       — 
Adjustment on adoption of IFRS 9, net of
deferred tax                                       (42)        —       —
Share-based payment reserve                          2       (14)     29
Non-controlling interest acquired                   27         —       — 
Equity at the beginning of the period            9 356     9 046   9 046
Equity at the end of the period                  9 756     9 044   9 356
Made up as follows:
Ordinary share capital                             110       110     110
Reserves                                         1 397     1 197   1 102
— Foreign currency translation reserve           1 167     1 016     883
— Other reserves                                     4         —      (5)
— Share-based payment reserve                      226       181     224
Retained earnings                                8 073     7 591   8 022
Non-controlling interest                           170       140     116
Preference share capital                             6         6       6
                                                 9 756     9 044   9 356

Reconciliation of weighted average number of shares

                                                  2018      2017
                                                 First     First    2017
                                                  half      half    Year
Millions                                     Unaudited Unaudited Audited
Weighted average number of ordinary shares
at the beginning of the period                   131,9     131,9   131,9
Weighted average number of unlisted
ordinary shares held by consolidated EST         (10,1)    (10,1)  (10,1) 
Weighted average number of contingently
returnable ordinary shares held by CEDT           (4,4)     (4,4)   (4,4)
Weighted average number of shares held by
consolidated subsidiary                          (11,9)    (11,9)  (11,9) 
Weighted average number of ordinary shares
for basic earnings per share                     105,5     105,5   105,5
Dilutive adjustment for potential ordinary
shares                                             4,1       2,6     5,0
Weighted average number of ordinary shares
for diluted earnings per share                   109,6     108,1   110,5

Statement of financial position

                                               2018       2017      2017
                                          At 30 Jun  At 30 Jun At 31 Dec
R millions                           Note Unaudited  Unaudited   Audited
Assets
Non-current assets                           11 493      7 368     7 365
Property, plant and equipment                 5 525      3 925     3 965
Investment property                             187        139       216
Intangible assets                               177        200       188
Goodwill                             3, 4     4 139      1 534     1 524
Pension fund employer surplus
accounts                                        454        497       487
Investments in associates                       204        188       199
Investments in joint ventures                   295        296       274
Other investments                               122         29       117
Deferred tax                                    390        560       395
Current assets                                9 733      7 754     8 606
Inventories                                   3 839      3 057     3 355
Accounts receivable                           4 235      3 362     3 793
Other investments                               164        153       155
Loans to joint ventures                          55          —         — 
Tax receivable                                  129        117        97
Cash and cash equivalents                     1 311      1 065     1 206
Total assets                                 21 226     15 122    15 971
Equity and liabilities
Equity                                        9 756      9 044     9 356
Ordinary share capital and
reserves                                      9 580      8 898     9 234
Non-controlling interest                4       170        140       116
Preference share capital                          6          6         6
Non-current liabilities                       1 864      2 390     1 614
Deferred tax                                    183        287        93
Non-current borrowings                        1 100      1 601     1 100
Contingent consideration                         36         60        29
Non-current provisions and
employee benefits                               545        442       392
Current liabilities                           9 606      3 688     5 001
Accounts payable                              3 805      3 096     4 272
Current borrowings                3, 4, 5     5 620        471       530
Loans from joint ventures                        44         67       130
Tax payable                                     137         54        69
Total equity and liabilities                 21 226     15 122    15 971

Statement of cash flows
                                                  2018      2017
                                                 First     First    2017
                                                  half      half    Year
R millions                                   Unaudited Unaudited Audited
Cash generated by operations                     1 353     1 102   2 350
Dividends received                                   —        55      55
Interest paid                                     (112)      (95)   (202) 
Interest received                                   10        13      35
Tax paid                                          (171)     (269)   (481) 
Changes in working capital                        (789)     (822)   (358) 
Cash outflows relating to defined-
benefit costs                                       (8)      (12)   (101)
Cash outflows relating to non- 
current provisions and employee
benefits                                           (24)      (40)    (77) 
Cash available from/(utilised in)
operating activities                               259       (68)  1 221
Dividends paid                                    (379)     (342)   (497) 
Cash flows from operating
activities                                        (120)     (410)    724
Cash flows from investing
activities                                      (4 239)     (215)   (753) 
Net investment activities              3, 4     (3 862)       27     (97) 
Net capital expenditure                           (377)     (242)   (656) 
Net cash utilised before financing
activities                                      (4 359)     (625)    (29)
Cash flows from financing
activities                                       4 378       272    (121) 
Loans with joint ventures                         (140)       (8)     55
Proceeds from disposal of partial
interest in a subsidiary                             —        11       — 
Settlement of performance shares                   (46)      (43)    (44) 
Borrowings raised                   3, 4, 5      5 433       462     250
Borrowings repaid                                 (869)     (150)   (382) 
Net increase/(decrease) in cash                     19      (353)   (150) 
Cash at the beginning of the
period                                           1 206     1 465   1 465
Translation gain/(loss) on cash                     86       (47)   (109) 
Cash at the end of the period                    1 311     1 065   1 206

Industry segment analysis
Basis of segmentation
The Group’s key growth pillars, which are its reportable segments, are
described below. Businesses in the pillars offer differing products and 
services and are managed separately because they require different 
technology and marketing strategies.

Reportable          Operations       
segments 

Mining              The businesses in this pillar provide a mine-to-mineral 
Solutions           solution for the mining sector internationally. The 
                    offering includes surfactants for explosives manufacture, 
                    commercial explosives, initiating systems and blasting 
                    services right through the value chain to chemicals for 
                    ore beneficiation and tailings treatment.

Water &             ImproChem provides integrated water treatment solutions, 
Process             process chemicals and equipment solutions for a diverse 
                    range of applications in Africa. These include, inter 
                    alia, public and industrial water, desalination and 
                    utilities.

Plant &             Nulandis manufactures and supplies an extensive range 
Animal Health       of crop protection products, plant nutrients and 
                    services for the agricultural sector in Africa. Schirm, 
                    based in Germany, is a contract manufacturer of 
                    agrochemicals and fine chemicals with a European and US 
                    footprint. It is the largest provider of external 
                    agrochemical formulation services in Europe.

Food &              These businesses supply ingredients and commodities to 
Beverage            the dairy, beverage, wine, meat, bakery, health and 
                    nutrition industries. The other main activity is the 
                    manufacture and distribution of a broad range of juice- 
                    based products and drinks, including formulated compounds, 
                    fruit concentrate blends and emulsions.

Chemicals           Supply of chemical raw materials and related services for 
                    use across a broad spectrum of customers in the 
                    manufacturing, infrastructure and general industrial 
                    sectors mainly in South Africa and in other Southern 
                    African countries.

Property &          Mainly property leasing and management in the office, 
Corporate           industrial and retail sectors, and corporate centre 
                    functions including the treasury.

There are varying levels of integration between the segments. This includes 
transfers of raw materials and finished goods, and property management services. 
Inter-segment pricing is determined on terms that are no more and no less 
favourable than transactions with unrelated external parties.

Information relating to reportable segments
Information relating to each reportable segment is set out below. Segmental 
profit from operations is used to measure performance because management 
believes that this information is the most relevant in evaluating the results 
of the respective segments relative to other entities that operate in the same 
industries. The comparative figures have been restated to reflect the revised 
operating segments, which were first reported in the Group’s annual financial 
statements for the year ended 31 December 2017. The restatements merely affect 
the classification between segments and do not change the results recognised 
in the prior year.

                                                                   First
                                                         First      half
                                                          half  Restated
                                                     Unaudited Unaudited
                                                          2018      2017
R millions                                             External revenue
Mining Solutions                                         4 987     4 544
Water & Process                                            652       685
Plant & Animal Health                                    1 859       922
Food & Beverage                                            529       535
Chemicals                                                2 286     1 642
Property & Corporate                                       160       150
Inter-segment                                                —         —
                                                        10 473     8 478
                                           Profit/(loss) from operations
Mining Solutions                                           520       477
Water & Process                                             80        82
Plant & Animal Health                                      115        29
Food & Beverage                                             31        25
Chemicals                                                  241       160
Property & Corporate                                       (76)      (96)
                                                           911       677
                                                        Operating Assets
Mining Solutions                                         6 936     6 423
Water & Process                                          1 214     1 216
Plant & Animal Health                                    3 646     1 180
Food & Beverage                                            715       728
Chemicals                                                4 937     2 088
Property & Corporate                                       655       582
                                                        18 103    12 217

                                                                   First
                                                         First      half
                                                          half  Restated
                                                     Unaudited Unaudited
                                                          2018      2017
R millions                                         Inter-segment revenue
Mining Solutions                                           34         30
Water & Process                                            26         22
Plant & Animal Health                                      23         25
Food & Beverage                                            23          3
Chemicals                                                  53         52
Property & Corporate                                       51         45
Inter-segment                                            (210)      (177)
                                                            —          — 
                                                        Depreciation and
                                                            amortisation
Mining Solutions                                          208        216
Water & Process                                            22         25
Plant & Animal Health                                      42          6
Food & Beverage                                             8          8
Chemicals                                                  51         36
Property & Corporate                                       16         11
                                                          347        302
                                                   Operating Liabilities
Mining Solutions                                        1 516      1 466
Water & Process                                           250        240
Plant & Animal Health                                     828        415
Food & Beverage                                           168        160
Chemicals                                                 885        649
Property & Corporate                                      157        166
                                                        3 804      3 096

                                                                   First
                                                         First      half
                                                          half  Restated
                                                     Unaudited Unaudited
                                                          2018      2017
R millions                                         Total segment revenue
Mining Solutions                                        5 021      4 574
Water & Process                                           678        707
Plant & Animal Health                                   1 882        947
Food & Beverage                                           552        538
Chemicals                                               2 339      1 694
Property & Corporate                                      211        195
Inter-segment                                            (210)      (177)
                                                       10 473      8 478
                                                             Impairments
Mining Solutions                                            —          — 
Water & Process                                             —          — 
Plant & Animal Health                                       —          — 
Food & Beverage                                             —          — 
Chemicals                                                   —          — 
Property & Corporate                                        —          —
                                                            —          — 
                                                     Capital Expenditure
Mining Solutions                                          290        164
Water & Process                                             6         10
Plant & Animal Health                                      63         30
Food & Beverage                                            10          5
Chemicals                                                  53         19
Property & Corporate                                       14         33
                                                          436        261

Operating assets comprise property, plant and equipment, investment 
property, intangible assets, goodwill, inventories, accounts receivable 
and assets classified as held for sale. Operating liabilities comprise 
accounts payable.

Other salient features

                                                  2018      2017
                                                 First     First    2017
                                                  half      half    Year
R millions                                   Unaudited Unaudited Audited
Capital expenditure                                436       261     704
— expansion                                        113        90     288
— replacement                                      323       171     416
Capital commitments                                412       393     405
— contracted for                                   124       113     119
— not contracted for                               288       280     286
Acquisitions authorised and contracted for           —         —   4 173
Future rentals on property, plant and
equipment leased                                   456       403     367
— payable within one year                          102       105     116
— payable thereafter                               354       298     251
Net borrowings1                                  5 409     1 007     424
Depreciation and amortisation                      347       302     597
Gearing (%)2                                        55        11       5
Current assets to current liabilities              1,0       2,1     1,7
Net asset value per ordinary share (cents)       8 714     8 093   8 399
ZAR/US$ closing exchange rate (rand)             13,72     13,05   12,31
ZAR/US$ average exchange rate (rand)             12,30     12,90   13,31

1 Current and non-current borrowings, less cash.
2 Borrowings less cash, as a percentage of equity.

Notes
(1) (a) Basis of preparation and accounting policies
The condensed consolidated unaudited interim financial results are
prepared in accordance with the framework concepts and the measurement 
and recognition requirements of International Financial Reporting 
Standards (“IFRS”), the SAICA Financial Reporting Guides as issued by 
the Accounting Practices Committee and Financial Pronouncements as 
issued by the Financial Reporting Standards Council, and the requirements 
of the Companies Act of South Africa, and contain as a minimum the 
information required by IAS 34 Interim Financial Reporting. The accounting 
policies applied in the preparation of these condensed consolidated unaudited 
interim financial results are in terms of IFRS and are consistent with those 
applied in the previous consolidated annual financial statements, except as 
described below in note 6.

The preparation of these condensed consolidated unaudited interim financial 
results for the half-year ended 30 June 2018 was supervised by the Financial 
Director, Mr KM Kathan CA(SA) AMP(Harvard). The condensed consolidated 
financial results have not been audited or reviewed by the Company’s auditor, 
Deloitte & Touche.

(2) Revenue includes foreign and export revenue of R4 139 million 
(2017: R2 893 million).

(3) Acquisition of Schirm
AECI Mauritius Limited, a wholly-owned subsidiary of AECI, acquired 100%
of the share capital in Schirm GmbH and shareholder loan claims from Imperial 
Chemical Logistics GmbH (“ICL”), a wholly-owned subsidiary of Imperial Holdings 
Limited. The effective date of this transaction was 30 January 2018. As part of 
the acquisition, Schirm GmbH acquired the contract manufacturing service business 
of ICL and a property in Wolfenbüttel, Germany (collectively, “Schirm”). On 
17 January 2018, all conditions precedent to the transaction had been fulfilled 
and the transaction became unconditional. The financial results of Schirm were 
consolidated from the effective date in the Group’s Plant & Animal Health 
operating segment. However, Schirm operates as a stand-alone business.

The purchase consideration of the transaction was €128,4 million (R1 901 million), 
which was paid in cash on the effective date. A further payment of €6 million 
(R96 million) was made on 29 June 2018 following a purchase price adjustment, 
bringing the total consideration paid to €134,4 million (R1 997 million).

The initial accounting for the acquisition had not been provisionally determined 
at the reporting date. At the date of finalisation of these results, the 
necessary market valuations and other calculations had not been finalised.

Carrying value of acquirees’ net assets at the acquisition
date                                                          R millions
Property, plant and equipment                                        847
Inventory                                                            244
Accounts receivable                                                  466
Accounts payable                                                    (231) 
Cash and cash equivalents                                            127
Net deferred tax liability                                           (13)
Net current tax receivable                                             3
Non-current provisions                                              (154) 
Net identifiable assets and liabilities acquired                   1 289
Goodwill on acquisition                                              708
Gross consideration paid                                           1 997
Less: cash and cash equivalents                                     (127) 
Net consideration paid                                             1 870

(4) Much Asphalt
The Group entered into an agreement with Capitalworks Private Equity, MIC
Investment Holdings Proprietary Limited and the management team of Much 
Asphalt Proprietary Limited (“Much Asphalt”) whereby management retained 
approximately 2% of the shares of Much Asphalt and AECI acquired 
approximately 98% of the entire issued share capital of Much Asphalt. 
All conditions precedent to the transaction were fulfilled on 3 April 2018. 
The results of Much Asphalt were consolidated in the Group’s results from 
the effective date in the Group’s Chemicals segment, with Much Asphalt 
operating as a stand-alone business.

The purchase consideration of R1 988 million was paid on the effective 
date and was subject to further adjustments pending the finalisation of 
the effective date accounts. Consequently, an additional amount of 
R59 million was paid on 20 June 2018 as a purchase price adjustment, 
bringing the total consideration paid to R2 047 million.

The initial accounting for the acquisition had not been provisionally 
determined at the reporting date. At the date of finalisation of these 
results, the necessary market valuations and other calculations had not 
been finalised.

Carrying value of acquirees’ net assets at the acquisition
date                                                          R millions
Property, plant and equipment                                        552
Investment in associates                                              10
Inventory                                                            132
Accounts receivable                                                  221
Accounts payable                                                    (280) 
Net deferred tax liability                                           (61) 
Net current tax receivable                                            14
Cash and cash equivalents                                             33
Borrowings                                                          (360) 
Non-controlling interest                                             (27) 
Net identifiable assets and liabilities acquired                     234
Goodwill on acquisition                                            1 813
Gross consideration paid                                           2 047
Less: cash and cash equivalents                                      (33) 
Net consideration paid                                             2 014

(5) Current borrowings
Current borrowings includes bridging finance loans related to the business
combinations of Schirm and Much Asphalt, provided by the Standard Bank
Group, as follows:

* €128,4 million (R1 901 million) loan to AECI Mauritius Limited to acquire 
  the shares and shareholder loan claims of Schirm. The loan bears interest 
  at a variable rate linked to three-month EURIBOR and is repayable by 
  30 November 2018; and

* R2 342 million loan to AECI Limited to acquire the shares and loan claims 
  of Much Asphalt and to repay Much Asphalt’s existing external borrowings. 
  The loan bears interest at a variable rate linked to three- month JIBAR 
  and is repayable by 2 April 2019.
  
The Company is evaluating longer-term funding options, including listed debt 
and institutional banking term debt. The requisite funding will be in place 
by the end of the current financial year.

(6) Changes in significant accounting policies
The changes in accounting policies reflected below are also expected to be 
reflected in the Group’s consolidated financial statements as at and for the 
year ending 31 December 2018.

The Group adopted IFRS 15 Revenue from Contracts with Customers (see note
6(a)) and IFRS 9 Financial Instruments (see note 6(d)) from 1 January
2018. A number of other new standards and amendments to existing standards
became effective from 1 January 2018, but these do not have a material effect 
on the Group’s financial statements.

The effect of initially applying these standards is mainly as follows:
* earlier recognition of revenue from consignment stock contracts, where 
  control of the goods passes to the customer earlier than the risks and 
  rewards of ownership (see note 6(a));
* changes in the amount of revenue recognised from product sales as a result 
  of variable considerations that affect the transaction price (see note 
  6(a)); and
* an increase in impairment losses recognised on financial assets (see
  note 6(d)).

(6) (a) IFRS 15 Revenue from Contracts with Customers
The Group has applied IFRS 15 Revenue from Contracts with Customers in the 
current year. IFRS 15 replaces the previous revenue recognition guidance, 
including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13
Customer Loyalties Programs. IFRS 15 introduces a five-step approach to 
revenue recognition. Far more prescriptive guidance has been added to deal 
with specific scenarios.

The Group has adopted IFRS 15 using the cumulative effect method (without 
practical expedients), at the date of initial application (i.e. 1 January
2018). Accordingly, the information presented for 2017 has not been restated — 
i.e. it is presented, as previously reported, under IAS 18, IAS 11 and 
related interpretations.

The transition to IFRS 15 for the full 2017 financial year would have 
resulted in an increase in revenue of R10 million, an increase in operating 
expenses of R12 million and a resulting decrease in profit before tax of 
R2 million. The impact on opening retained earnings would have resulted in 
a decrease of R1 million, with no impact on non-controlling interest.

Apart from providing more extensive disclosure on the Group’s revenue 
transactions, the application of IFRS 15 has not had a significant impact 
on the financial position and/or financial performance of the Group as 
described above and, accordingly, no adjustment was made to opening 
reserves.

The Group’s accounting policies for its revenue streams are disclosed in 
notes 6(b) and 6(c).

New significant accounting policies and changes in significant accounting 
policies 
(6) (b) Revenue recognition
The Group recognises revenue from the following major sources:
* sale of goods in all its operating segments;
* sale of goods and related product application services in its Mining
Solutions, Water & Process and Chemicals operating segments; and
* rental income and related facilities management services in its Property
& Corporate operating segment.

Revenue is measured based on the consideration specified in a contract
with a customer and excludes amounts collected on behalf of third parties.
The Group recognises revenue when it transfers control of a product or 
service to a customer. For certain revenue categories, the Group identifies 
“sale of goods and services” as “not distinct” and thus combines goods and 
services with other promised goods or services until it identifies a 
“combined bundle of goods and services” as a single performance obligation.

Sale of goods in all operating segments
For sales of goods to customers, revenue is recognised when control of the
goods has transferred, being when the goods have been delivered to the 
customer’s specific location (delivery). Following delivery, the customer 
has full discretion over the manner of use or further distribution and price 
to sell the goods, has the primary responsibility for and bears the risks of 
obsolescence and loss in relation to the goods. A receivable is recognised 
by the Group when the goods are delivered to the customer as this represents 
the point in time at which the right to consideration becomes unconditional, 
since only the passage of time is required before payment is due.

Sale of goods and related product application services in the Mining
Solutions, Water & Process and Chemicals operating segments
The Group provides product application services to customers which are 
performed as and when goods are delivered. These relate mainly to:
* blasting services, where explosives are delivered directly to the point 
  and location of usage and detonated within hours of delivery; and
* dosing of chemicals directly into a customer’s manufacturing or water 
  treatment process, where the promise to the customer is a specific outcome 
  to its process regardless of product volumes or service levels required to 
  achieve that outcome.

The goods and services are delivered simultaneously or near-simultaneously and 
result in the product being used by the customer at that point in time. As a 
consequence, revenue is recognised when the product and related application 
service are delivered and the right to consideration becomes unconditional.

Rental income and related facilities management services in the Property & 
Corporate operating segment 
IFRS 15 does not apply to revenue from lease contracts within the scope of 
IAS 17 Leases. Consequently, the Group continues to recognise revenue in 
respect of rentals received from leasing activities on a straight line basis 
over the period of the lease where fixed escalation clauses apply, and when 
there is a reasonable expectation that recovery of the lease rental is probable. 
Where no fixed escalation clauses are applicable to a lease, rental income is 
recognised in the period in which it is due by the lessee.

Facilities management services to lessees comprise rail, environmental and 
laboratory services, steam generation, effluent treatment, electricity
provision and storage and handling services. Revenue from these services is 
recognised as and when the services are provided, since these services are 
usage-based and are delivered at a point in time.

Critical accounting judgements and key sources of estimation uncertainty
(6) (c) Revenue recognition
Management has not made any critical judgements in the process of applying 
IFRS 15 Revenue from Contracts with Customers that have a significant effect 
on the amounts recognised in the Group’s condensed consolidated unaudited 
interim financial results. The Group has no key sources of estimation 
uncertainty relating to revenue from contracts with customers.

Disaggregation of revenue — unaudited

                                             2018      2017
                                            First     First     2017
                                             half      half     Year
R millions                              Unaudited Unaudited  Audited
Mining Solutions                            5 021     4 574    9 718
Sale of goods                               4 280     3 882    8 316
Sale of goods and services                    741       692    1 402
Water & Process                               678       707    1 454
Sale of goods                                  52        16       36
Sale of goods and services                    626       691    1 418
Plant & Animal Health                       1 882       947    2 543
Sale of goods                               1 882       947    2 543
Food & Beverage                               552       538    1 195
Sale of goods                                 552       538    1 195
Chemicals                                   2 339     1 694    3 564
Sale of goods                               2 311     1 671    3 515
Sale of goods and services                     28        23       49
Property & Corporate                          149       142      297
Sale of goods                                  12        17       22
Sale of services                              137       125      275
Revenue recognised at a point in time      10 621     8 602   18 771
Property & Corporate                           62        53      109
Rental income                                  62        53      109
Inter-segment                                (210)     (177)    (398) 
Total segment revenue                      10 473     8 478   18 482

(6) (d) IFRS 9 Financial Instruments
The standard sets out requirements for recognising and measuring 
financial assets, financial liabilities and some contracts to buy or 
sell non-financial items. This standard replaces IAS 39 Financial 
Instruments: Recognition and Measurement.

The following table summarises the impact, net of tax, of transition 
to IFRS 9 on the opening balance of reserves and retained earnings 
as at 1 January 2018.
Impact of adopting IFRS 9 at 1 January 2018               R millions
Recognition of expected credit losses under IFRS 9                56
Related tax                                                      (14) 
Decrease in retained earnings                                     42

The adoption of IFRS 9 had no impact on non-controlling interest.

The table and the accompanying notes that follow explain the original 
measurement categories under IAS 39 and the new measurement categories
under IFRS 9 for each class of the Group’s financial assets, as at 
1 January 2018.



                                              Original             New 
                                        classification  classification 
                                  Note     under IAS 9    under IFRS 9
Financial assets
Unlisted shares (level 3)          (i)  Available-for-  FVOCI — equity
                                                  sale      instrument
 
Forward exchange contracts        (ii)     Fair value-     Fair value-
(level 2)                                      hedging         hedging
                                            instrument      instrument

Money market investment in                  Designated     Mandatorily 
collective investment scheme               as at FVTPL        at FVTPL
(level 1)

Employer surplus accounts                   Designated     Mandatorily 
(level 1)                                  as at FVTPL        at FVTPL 
    
Accounts receivables               (iii)     Loans and       Amortised 
                                           receivables            cost

Cash                                         Loans and       Amortised
                                           receivables            cost

Loans receivable to other                    Loans and       Amortised 
investments                                receivables            cost

Total financial assets

                                                 Original            New 
                                                 carrying       carrying 
                                                   amount         amount 
                                                    under          under 
                                                   IAS 39         IFRS 9
Financial assets
Unlisted shares (level 3)                              87             87
Forward exchange contracts (level 2)                   43             43
Money market investment in collective
investment scheme (level 1)                            77             77
Employer surplus accounts (level 1)                    78             78
Accounts receivables                                3 393          3 337
Cash                                                1 206          1 206
Loans receivable to other investments                  26             26
Total financial assets                              4 910          4 854

(i) Included in the unlisted shares is a R65 million investment in Origin 
Materials (“Origin”) which is considered to be a level 3 financial asset. 
The Group had applied the IAS 39 exemption (paragraph 46c) and carried the 
investment at cost in the prior year. These equity securities represent 
investments that the Group intends to hold for long-term strategic purposes. 
As permitted by IFRS 9, the Group has designated these investments at the 
date of initial application as measured at fair value through other 
comprehensive income (“FVOCI”). Previously, these assets were designated 
as available-for-sale financial assets.

(ii) 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. The carrying values of 
all other financial assets and liabilities 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 half-year ended 30 June 2018.

(iii) Accounts receivable that were classified as loans and receivables 
under IAS 39 are now classified at amortised cost. An increase of 
R56 million in the allowance for impairment over these receivables was 
recognised in opening retained earnings at 1 January 2018 on transition 
to IFRS 9. No additional trade receivables were recognised at 1 January 
2018 on the adoption of IFRS 15 and, consequently, no additional impairment 
was necessary.

Changes in significant accounting policies resulting from the adoption of 
IFRS 9 are disclosed in notes 6(e) and 6(f) and have been applied 
retrospectively, except as described below:

* The Group has taken an exemption not to restate comparative information 
for prior periods with respect to classification and measurement (including 
impairment) requirements. Therefore, comparative periods have been restated 
only for retrospective application of the cost of hedging approach for forward 
points. Differences in the carrying amounts of financial assets and financial 
liabilities resulting from the adoption of IFRS 9 are recognised in retained 
earnings and reserves as at 1 January 2018. Accordingly, the information 
presented for 2017 does not generally reflect the requirements of IFRS 9 but 
rather those of IAS 39.

The following assessments have been made on the basis of the facts and 
circumstances that existed at the date of initial application:
* the determination of the business model in which a financial asset is held;
* the designation and revocation of previous designations of certain
  financial assets and financial liabilities as measured at fair value through 
  profit or loss (“FVTPL”);
* the designation of certain investments in equity instruments not held
  for trading as at FVOCI;
* if an investment in a debt security had low credit risk at the date of
  initial application of IFRS 9, then the Group has assumed that the credit 
  risk on the asset had not increased significantly since its initial recognition;
* changes to hedge accounting policies have been applied prospectively except 
  for the cost of hedging approach for forward points, which has been applied 
  retrospectively to hedging relationships that existed on, or were designated 
  after, 1 January 2017;
* all hedging relationships designated under IAS 39 at 31 December 2017 met the 
  criteria for hedge accounting under IFRS 9 at 1 January 2018 and, therefore, are 
  regarded as continuing hedging relationships.

New significant accounting policies and changes in significant accounting policies
(6) (e) Financial instruments
Changes in accounting policies
The adoption of IFRS 9 resulted in the change of classification of certain financial 
assets with the only significant impact being that unlisted equity instruments 
previously measured at cost are now measured at fair value, with changes in fair 
value recognised in other comprehensive income. The other significant change to 
the Group’s policies is the measurement of impairment of financial assets, 
specifically trade receivables, which is now measured using an expected credit loss 
model instead of an incurred loss model. The Group uses a provision matrix to 
calculate expected credit losses, with amounts more than 90 days past due
viewed as default events. This change resulted in an increase in the loss allowance 
compared to the previous impairment model.

New accounting policy 
Financial assets 
Investments
Investments in unlisted equity securities are classified as financial assets at fair 
value through other comprehensive income and are measured at fair value with any 
gains or losses, including foreign exchange, recognised in other comprehensive 
income, along with the associated deferred tax.

When these assets are derecognised, the gain or loss accumulated in other 
comprehensive income is reclassified to retained income. Dividends on these 
investments are recognised in the income statement as investment income when 
they are declared and the Group has a right to receive them.

Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on
financial assets except for the assets at fair value through other comprehensive 
income. The amount of expected credit losses is updated at each reporting date to 
reflect changes in credit risk since initial recognition of the respective financial 
asset.

The Group recognises lifetime expected credit losses for accounts receivable and 
these are estimated using a provision matrix based on the Group’s historical credit 
loss experience, adjusted for factors that are specific to the debtors, general economic 
conditions and an assessment of both the current and forecast direction of conditions, 
including the time value of money where appropriate.

For all other financial assets, the Group recognises lifetime expected credit losses 
when there has been a significant increase in credit risk since initial recognition. 
If there has been no significant increase in credit risk, the loss allowance is measured 
at an amount equal to the 12- month expected credit losses.

The Group determines increases in credit risk by considering any change in the risk of 
default occurring since the date of initial recognition. The Group considers that default 
has occurred when a financial asset is more than 90 days past due.

Critical accounting judgements and key sources of estimation uncertainty
(6) (f) Financial instruments
The fair value of unlisted investments requires judgement and estimation of the key inputs 
into valuation techniques used to determine the fair value.

Determining expected credit losses requires assessments of general economic conditions, 
both current and future, and their impacts on the credit risk of financial assets, as well 
as using periods that amounts are past due, to indicate levels of credit loss expected. 
Credit losses may occur differently to these expectations, both in terms of timing and 
amount.

(7) Standards, interpretations and amendments to existing standards not yet effective
IFRS 16 Leases
This standard introduces a single, on-balance sheet lease accounting model for lessees. 
A lessee recognises a right-of-use asset representing its right to use the underlying asset 
and a lease liability representing its obligation to make lease payments. There are 
optional exceptions for short-term leases and leases of low-value items. Lessor accounting 
remains similar to current practice– i.e. lessors continue to classify leases as finance or 
operating leases. IFRS 16 replaces IAS 17 Leases, IFRIC 4 Determining whether an Arrangement 
contains a Lease, SIC 15 Operating Leases - Incentives and SIC 27 Evaluating the Substance 
of Transactions Involving the Legal Form of a Lease. It includes more disclosures for both 
lessees and lessors.

The Group will adopt this standard when it becomes effective. Management is collating and 
analysing all lessee arrangements across the Group and evaluating the terms and conditions 
of these arrangements in order to prepare the relevant calculations and system changes 
required to implement the new standard. Management still needs to make a decision on the 
transition method to be applied as well as the practical expedients to be used, if elected.

(8) The Group entered into various sale and purchase transactions with related parties in 
the Group in the ordinary course of business, the nature of which was consistent with those 
previously reported. Those transactions were concluded on terms that were no more and no 
less favourable than transactions with unrelated external parties. All transactions and 
balances with these related parties have been eliminated appropriately in the consolidated 
results.

(9) The condensed consolidated unaudited interim 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 2017.

Commentary
The strong performance trend established by the Group’s businesses in the
last three months of 2017 continued into 2018, particularly in the first quarter. This, 
together with contributions from the acquisitions of Schirm and Much Asphalt effective 
February and April, respectively, enabled AECI to increase its revenue by 24% to R10 473 
million (2017: R8 478 million) and profit from operations by 35% to R911 million (2017: 
R677 million). Of the total Group revenue, 40% was generated outside South Africa and 
mainly in US$.

Headline earnings for the period improved from R407 million in the prior year to R483 
million, in line with the 19% growth in HEPS to 458 cents (2017: 386 cents).

This pleasing growth was delivered in an environment that remained challenging. Although 
demand and prices in the global resources sector were buoyant overall, the strong 
rand exchange rate against major currencies partly offset the benefits of higher chemical 
input prices and also had a negative impact on earnings generated outside South Africa. 
In addition, conditions in the local economy, including the mining and manufacturing 
sectors, remained depressed. The effects of the drought in the Western Cape persisted.

The table below summarises the effects of Schirm and Much Asphalt on the
Group’s results for the period:

                                      Operations                    2018
                                       excluding                   Total
R millions                          acquisitions Acquisitions   reported
Revenue                                    9 127        1 345     10 473
Profit from operations                       764          147        911                                    
Headline earnings                            443           40        483
HEPS (cents per share)                       420           38        458

                                                Growth (%)
                              2017   Operations
                             Total    excluding
R millions                reported acquisitions Acquisitions   Overall
Revenue                      8 478            8           16        24
Profit from operations         677           13           22        35
Headline earnings              407            9           10        19
HEPS (cents per share)         386            9           10        19

Profit from operations excluding the acquisitions increased by 13% and headline 
earnings improved by 9%. The combined impact of the acquisitions on headline 
earnings was accretive and had a 10% positive effect. Schirm’s profit from 
operations included a once-off net gain of R32 million.

The Board has declared an interim cash dividend of 149 cents per ordinary share, 
an increase of 8% from 2017’s 138 cents per share. A South African dividend 
withholding tax of 20% will be applicable to the dividend, resulting in a net 
dividend of 119,20 cents per share payable to those shareholders who are not 
eligible for exemption or reduction.

Safety
The aspiration of zero harm to employees and contractors remains. The 12-month 
rolling Total Recordable Injury Rate (“TRIR”) was 0,47 from 0,39 in June 2017. 
This deterioration was due mainly to the high number of Recordable Incidents 
at Schirm in Germany. Significant emphasis has been placed on rolling out the 
Group’s Zero Harm safety strategy to Schirm and Much Asphalt as part of their 
integration into the Group. Both these businesses have committed themselves 
unequivocally to upholding AECI’s safety, health and environmental policies 
and standards.

Excluding the acquisitions, the Group’s TRIR improved to 0,33.

The TRIR measures the number of incidents per 200 000 hours worked. 

Segmental performance
Mining Solutions
This segment comprises explosives (AEL Mining Services) and mining
chemicals (Experse and Senmin).

Revenue increased by 10% to R5 021 million (2017: R4 574 million), largely due 
to good volume growth outside South Africa. Overall volumes grew by 4,2%. 
Because 54% of the segment’s total revenue was generated by foreign operations 
the strong ZAR/US$ exchange rate, particularly in the first four months of 2018, 
curtailed both revenue and profit from operations in rand terms. This 
notwithstanding, profit from operations of R520 million was 9% higher than the 
R477 million achieved in the first half of 2017. The operating margin was 
10,3% (2017: 10,4%).

Explosives
Overall bulk explosives volumes increased by 9,9% whilst those for initiating 
systems declined by 12,1%.

In South Africa, bulk explosives volumes were 4,9% lower, impacted by Optimum 
Coal mine being placed in business rescue again as well as the loss of business 
at a customer in the iron ore mining sector. Reduced sales of initiating 
systems were a consequence of shaft closures in the underground platinum and 
gold mining sectors. Numerous Section 54 stoppages at customers’ mines also 
contributed to the loss of volumes.

In the rest of Africa, explosives volumes grew by 10,6%. Strong global demand 
for copper and cobalt drove prices for these commodities and hence mining 
activity in the Central African region. The ramp-up of new contracts gained in 
Francophone West Africa made a positive contribution. In Ghana, the performance 
of the gold mining business was tempered by changes to the in-country mining 
plan.

Volumes in the Asia Pacific region increased by 47% compared to the first half 
of last year. This improvement was enabled by opportunistic sales in Australia 
and the successful deployment of reactive ground technology at a large mine. 

The service offering to potential customers in that country has been enhanced 
and further additions to the offering will be pursued over the next six months. 
Volumes and business operations in Indonesia remained solid in the period.

Mining chemicals
Overall volumes increased by 1,9%. Senmin’s volumes were 3,6% higher on the 
back of strong demand for collectors in the Central African region. Exports of 
flocculants remained pedestrian due to an international customer having lost 
market share.

Commissioning of the R90 million xanthates expansion project, in Sasolburg, 
has commenced and it is anticipated that volumes in the second half-year will 
be in line with management’s guidance.

Water & Process (ImproChem)
Revenue was R678 million (2017: R707 million), profit from operations was
R80 million (2017: R82 million) and volumes were 15,4% lower. This was due to 
softer demand for water treatment chemicals as a consequence of the drought in 
the Western Cape. Also, a customer in the oil refining sector experienced an 
unplanned extended shutdown. Some exports to other African countries were 
delayed to the second half of the year, owing to credit management processes.

The trading margin at 11,8% was slightly higher than the prior year’s
11,6%.

Four desalination plants for customers in the fisheries and food processing 
industries in the Western Cape were commissioned successfully and long-term 
service and chemical supply agreements are in place to support the 
infrastructure.

Business in the rest of Africa remains key to ImproChem’s growth strategy. 
Accordingly, discussions are underway with financial institutions to underwrite 
some of the risk associated with the public water sector on the continent.

Plant & Animal Health (Nulandis and Schirm)
Revenue increased by 98,8% to R1 882 million (2017: R947 million), profit from 
operations improved to R115 million (2017: R29 million) and the trading margin 
was 6,1% (2017: 3,1%), primarily as a result of the inclusion of Schirm’s results 
for the five months after the acquisition closed.

Although Nulandis’ results continued to be impacted by drought conditions in 
the Western Cape, rainfall in the most affected areas in recent months has 
improved the outlook for the business.

In respect of Biocult, distributor agreements are being finalised in both the 
US and Canada. Investment in expansion is planned, subject to the successful 
finalisation of requisite approvals in North America.

Schirm in Germany and the US generates approximately 70% of its revenue in the 
first six months of the year, during the European and US planting season. Between 
February and June, the business’ performance was curtailed by the delay in starting 
up the new synthesis operating facility in Schönebeck, Germany. As a result, the 
registration of the new facility in respect of customer products was similarly 
delayed and costs incurred were not recovered.

Results were boosted by a once-off net gain of R32 million, mainly foreign exchange, 
after the US$ strengthened against the euro in the latter months of the half-year. 
Excluding this gain, Schirm was nonetheless accretive for the five months and added 
21 cents in HEPS.

Historically, the business’ returns have been marginal in the second half of the 
year owing to seasonality.

Food & Beverage (Lake Foods and Southern Canned Products (“SCP”))
Revenue of R552 million was 2,6% higher than 2017’s R538 million. Profit from 
operations was R31 million (2017: R25 million), a 24% increase. Overall volumes 
were 4% lower, reflecting SCP’s strategy to grow its value-added formulated juice 
business and focus less on trading activities. The trading margin was slightly 
better at 5,5% (2017: 4,7%) and further improvement continues to be pursued.

Chemicals (Chemfit, Chemical Initiatives, ChemSystems, Industrial
Oleochemical Products, Much Asphalt and SANS Technical Fibers)
Revenue increased by 38,1% to R2 339 million (2017: R1 694 million) and
profit from operations was 50,9% higher at R241 million (2017: R160 million), 
inclusive of Much Asphalt from April. The trading margin improved to 10,3% 
(2017: 9,4%).

Excluding Much Asphalt, operating businesses in the segment maintained the strong 
overall growth trend evident in the last quarter of 2017. Very pleasing were the 
higher levels of exports achieved, particularly in sales of sulphuric acid to meet 
demand from the mining sector in the Central African region, and a significant 
improvement in trading conditions in the poultry farming sector.

Much Asphalt’s performance for the three months since acquisition was below 
expectations as state-owned entities and local government delayed infrastructure 
contract awards and conditions in the overall construction sector remained 
difficult. The execution of projects in the Western Cape, where Much Asphalt has 
a solid order book, was delayed by the onset of the rainy season. The business’ 
results were not accretive to HEPS for the period and had a negative 14 cents 
impact.

Property & Corporate
The revenue streams of the Group’s remaining property activities comprise
mainly the leasing of buildings at Modderfontein (Gauteng) and Umbogintwini 
(KwaZulu-Natal), and the provision of utilities and services at the multi-user 
Umbogintwini Industrial Complex. Revenue from these activities increased by 8,2% 
to R211 million (2017: R195 million) and profit from operations was 31% higher 
at R55 million (2017: R42 million).

Corporate costs were well controlled, resulting in a 5% year-on-year decrease. 
The net operating expense of the segment was R76 million (2017: R96 million).

Cash utilisation
The cash outflow in respect of the acquisitions, both of which closed and were 
settled during the period, amounted to R3,9 billion (R1,9 billion for Schirm and 
R2,0 billion for Much Asphalt). Short-term borrowings increased to R5,6 billion 
primarily as a consequence of this.

Fixed capital expenditure was R436 million (2017: R261 million), with R113 million 
being for expansion. Key capital projects included Senmin’s xanthates expansion; 
the statutory shutdown of the boiler at AEL’s Nitrates facility, Modderfontein; 
mobile manufacturing unit replacements for AEL; air emission abatement projects at 
AEL Nitrates; and investments in support of business expansion in Francophone Africa.

The significant cash outflow relating to working capital was disappointing. Main 
contributors were extensions of customers’ credit terms and the acquisitions. 
Trade working capital was at 20,8% of revenue (2017: 18,5%).

Cash interest cover was robust at 15,5 times (2017: 14,6 times) and net cash 
interest paid was R102 million (2017: R82 million). The primary difference between 
the latter and net finance costs of R161 million reflected in the income statement 
related to an interest cost accrual at the end of the period.

Acquisitions: integration, funding and purchase price allocation
Teams across all of the Group’s disciplines have been active in closing
the acquisitions and integrating them into AECI in terms of systems, culture, and 
policies and standards. This complex process has required the sustained input of 
all parties concerned and is expected to be largely completed by the end of the 
current financial year. Although synergies with existing businesses were not the 
overriding drivers for the transactions, opportunities have been identified in this 
regard and are being pursued.

Currently, both acquisitions are being funded through bridging finance from the 
Standard Bank Group. A process to raise term finance from banks and, potentially, 
from debt capital markets is in place and will be finalised before year-end.

The Purchase Price Allocation (“PPA”) process underway for both acquisitions is 
also expected to be completed by year-end. Any non-cash adjustments resulting from 
the PPA process will be applied retrospectively to the effective dates of the 
transactions.

Outlook
From a global perspective, the outlook is positive overall although recent
shifts in world trade relations have created a level of uncertainty. Nonetheless, 
demand for commodities is still robust.

In South Africa, the positive changes in the political environment at the end of 
2017 have not yet translated into accelerated economic growth and a step-change 
in the short term appears unlikely.

The expansion and maintenance of infrastructure is fundamental to South Africa’s 
economic growth. It is of concern that the timing of contract awards in this sector 
remains unclear, although there have been some recent indications that investment 
could accelerate in the foreseeable future.

The terms of the Mining Charter are still under discussion and investment for future 
growth in this sector should accelerate when the matter has been finalised to the 
satisfaction of all stakeholders. The sustainability of the local underground gold 
and platinum mining sectors remains of concern.

The rand strengthened significantly against the US$ at the end of 2017 and into 2018 
and, although there was some weakening in the last months of the half-year, a level 
of volatility in the exchange rate persists. The oil price has remained stable and 
has driven higher chemical input prices. The Group’s ability to benefit from this 
price trend will depend on the foreign exchange rate going forward.

Rainfall in the Western Cape has been encouraging in the early part of season. Good 
rains in the coming months, as well as normal weather patterns country-wide and in 
other SADC countries, will have a strong influence on the agricultural sector’s 
prospects.

Focus
To maintain the growth trend achieved in the first six months of 2018, the Company’s 
focus to year-end will be on cash generation and the diligent management of this 
cash, with a claw-back in trade working capital being a priority; finalising the 
integration of its acquisitions and extracting the value expected from them; and 
capitalising on opportunities for synergies within and across its businesses.

Any forecast information included in this announcement has not been reviewed and 
reported on by the Company’s auditor.

Changes to the Board
Philisiwe Sibiya and Jonathan Molapo were appointed to the Board as Non-executive 
Directors with effect from 27 February 2018 and 1 June 2018, respectively. The Board 
looks forward to their contribution to the affairs of the Company.

Khotso Mokhele
Chairman

Mark Dytor
Chief Executive

Woodmead, Sandton
25 July 2018
Directors: KDK Mokhele (Chairman), GW Dempster, MA Dytor (Chief Executive), Z Fuphe, 
G Gomwe*, KM Kathan (Executive), J Molapo, AJ Morgan, R Ramashia, PG Sibiya.
* Zimbabwean
Group Company Secretary: EN Rapoo

Notice to shareholders
Declaration of interim ordinary cash dividend no. 169
Notice is hereby given that on Tuesday, 24 July 2018, the Directors of AECI declared 
a gross interim cash dividend of 149 cents per share, in respect of the six month 
period ended 30 June 2018. The dividend is payable on Monday, 3 September 2018 to 
holders of ordinary shares recorded in the register of the Company at the close of 
business on the record date, being Friday, 31 August 2018.

The last day to trade “cum” dividend will be Tuesday, 28 August 2018 and shares 
will commence trading “ex” dividend as from the commencement of business on 
Wednesday, 29 August 2018.

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 119,20 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, 28 August 2018.

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, 28 August 2018.

Share certificates may not be dematerialised or rematerialised from
Wednesday, 29 August 2018 to Friday, 31 August 2018, both days inclusive.

By order of the Board

EN Rapoo

Group Company Secretary
Woodmead, Sandton
25 July 2018

Transfer secretaries
Computershare Investor Services Proprietary 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

Registered Office
First floor, AECI Place, 24 The Woodlands, Woodlands Drive, Woodmead, 
Sandton, 2196

Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
1 Merchant Place, Cnr Fredman Drive and Rivonia Road, Sandton, 2196
Date: 25/07/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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