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Summarised unaudited financial results and cash dividend declaration for the half year ended 30 June 2020
AECI LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1924/002590/06
Tax reference number 9000008608
Share code: AFE
ISIN: ZAE000000220
Hybrid code: AFEP
ISIN: ZAE000000238
Bond company code: AECI
LEI: 3789008641F1D3D90E85
('AECI' or 'the Company' or 'the Group')
Summarised unaudited consolidated interim financial
results and cash dividend declaration
for the half-year ended 30 June 2020
Revenue
-6% to R11 265m
Foreign and export revenue: 48% of total revenue
EBITDA
-18% to R1 111m
Profit from operations
-32% to R558m
HEPS
-34% to 240c
Gearing
32%
(FY19: 36%)
Interim dividend of 100c declared
deferred final dividend
for '19 to be paid in '20
Safety performance
TRIR of 0,36
Improvement trend sustained
Retained
Level 2
B-BBEE contributor status
GCR rating maintained
A+
with stable outlook
COVID-19
It is with great sadness that the Board and management report that we
have lost three colleagues in South Africa to the coronavirus to date.
We extend our sincere condolences to their families, friends and fellow
team members.
The COVID-19 pandemic has had a profound effect on every aspect of daily
life in countries across the world. The Board and management take this
opportunity to thank all AECI's stakeholders for their support during
this exceptionally challenging time. In particular, we wish to express
our gratitude to our 7 600 employees in all 26 countries where the Group
operates. Their continued efforts and diligence have been exemplary.
A comprehensive AECI COVID-19 Response Plan was developed in March 2020
and has been updated regularly to reflect the changing circumstances and
requirements through the pandemic. Employees' health and movement are
tracked and monitored daily in line with this plan.
More than 90% of all employees are performing their duties at this time.
A total of 183 employees have tested positive for COVID-19 to date, with
89 of them having fully recovered. 90 positive cases are being actively
tracked and one employee is receiving treatment in hospital.
The Group leadership's focus since March this year has been on navigating
the business through the effects of the pandemic. To this end, a COVID-19
Task Team was established with the strategic intent of minimising impact
on our people, on our operations and safeguarding the supply of essential
services to customers.
In addition to implementation of the AECI COVID-19 Response Plan, which is
available at https://www.aeciworld.com/covid-19.php, operational business
continuity management plans have been adapted and applied in line with the
Company's overall risk management framework. These measures have enabled
continuity in operations and in the delivery of products and services to
customers.
Business in South Africa, which accounts for the greatest portion of the
Group's activities and where the highest number of employees are based, was
the most severely affected in the reporting period. Certain businesses were
deemed essential under national Alert Level 5 restrictions ('hard lockdown')
declared by the South African government on 23 March 2020. Essential
services included:
* the supply of products and services to the coal mining sector initially,
and subsequently to the surface mining sector as a whole
* chemicals for the treatment of potable water, in particular
* raw materials for the manufacture of personal care and home care products
* inputs for the food industry, and
* agrochemicals and related services for the farming sector.
The effects on other sectors in which the Group's customers operate were
significant. Key among them were mining, infrastructure and the balance of
manufacturing-related industries.
Although most sectors resumed operations as lockdown restrictions eased,
market demand has remained depressed and the operating environment has yet
to normalise.
The net asset value per share attributable to ordinary shareholders
increased by 17% (from 8 994 cents in 2019 to 10 537 cents) and basic
earnings per share decreased by 33% (from 367 cents in 2019 to 245 cents
in 2020).
Financial performance
Revenue of R11 265 million was 6% lower (2019: R11 972 million), with
declines recorded in all segments other than Plant & Animal Health. Of
the total revenue, 48% was generated outside of South Africa and mostly
in US dollars and Euros. The weaker rand exchange rate against these major
currencies thus curbed the revenue decline.
EBITDA of R1 111 million was 18% lower than 2019's R1 361 million. The
profit on disposal of the Group's paper chemicals business unit contributed
R108 million to EBITDA.
Profit from operations in the half-year was 32% lower at R558 million
(2019: R826 million). In addition to COVID-19, R64 million in retrenchment
costs associated with restructuring of the Food & Beverage and Chemicals
segments contributed to the year-on-year decrease. Impairments of R69 million
were recognised. The Group's exit from its sauces business and closure of
Industrial Oleochemical Products' tall oil distillation operations accounted
for the majority of this amount. Annualised benefits of at least R100 million
are anticipated from restructuring.
It was pleasing to note that in the first quarter of the year profit from
operations (before taking into account any restructuring costs) had improved
by more than 20% on the corresponding period in the prior year. In the second
quarter, however, the effects of the pandemic on markets and performance were
acute.
The benefits of the strategic realignment projects undertaken in the prior year
in the Explosives and Water & Process businesses were in line with expectations
overall, albeit that the Explosives business was challenged by lower sales of
initiating systems to underground mining customers as their operations were
limited by lockdown due to COVID-19.
Financial impact of COVID-19
Each Group business estimated the impact of the COVID-19 pandemic on revenue,
volumes and costs as accurately as it was possible to do so from March 2020
onwards. The Mining Solutions segment and Much Asphalt were the most seriously
affected.
In South Africa, most mines were not operational in terms of hard lockdown
restrictions. When the resumption of some activity was permitted, operations
resumed slowly and their consistency was hampered by, inter alia, actions
required to manage new cases of infection as they were confirmed.
Much Asphalt's customers serve mainly the road infrastructure sector. This
sector was not deemed essential under Alert Level 5 and, consequently, Much
Asphalt did not trade from 27 March and throughout April. The business
resumed operations in the first week of May, with market demand returning
slowly since then.
Conversely, the pandemic presented opportunities for ChemSystems, in the
Chemicals segment, and Schirm in Germany. Both businesses entered the hand
sanitiser and disinfectants markets to good effect and both are expected to
continue to sustain sales in these markets for the duration of the pandemic
and beyond.
Reported HEPS of 240 cents was 34% lower year-on-year (2019: 365 cents).
Headline earnings decreased to R254 million from 2019's R385 million.
The estimated negative impact on the Group's performance in the half-year,
was as follows:
* revenue R1 015 million
* profit from operations R454 million
* headline earnings per share ('HEPS') 294 cents
Having considered that the Company managed its cash resources very well in
the period and that it remains in a solid financial position,
notwithstanding the uncertainty and negative effects resulting from the
COVID-19 pandemic, the Board decided to declare an interim cash dividend
of 100 cents (2019: 156 cents).
It is intended that the deferred final cash dividend of 414 cents (No.
172) declared for the 2019 financial year be paid before the end of 2020.
The record date for this dividend was 3 April 2020 and the payment date
was 6 April 2020. The Board would prefer to retain this original Corporate
Action Timetable and, accordingly, the Company has approached the
Companies Tribunal for an exemption in this regard. The date of payment of
the deferred dividend will be finalised once the Companies Tribunal's
decision has been received.
Directorate
Allen Morgan retired from the AECI Board at the Annual General Meeting
of the Company's shareholders held on 26 May 2020. He had served as an
Independent Non-executive Director since 2010. The Board thanks Allen
most sincerely for his valued input during his almost 10-year tenure.
On 1 June 2020 Marna Roets was appointed as an Independent Non-executive
Director of the Company. She also joined the Audit Committee and the
Remuneration Committee on that date. The Board welcomes her and looks
forward to her contribution.
Dividend
Declaration of interim ordinary cash dividend no. 173
NOTICE IS HEREBY GIVEN that on Tuesday, 28 July 2020, the Directors
of AECI declared a gross interim cash dividend of 100 cents per share,
in respect of the six-month period ended 30 June 2020. The dividend is
payable on Monday, 7 September 2020 to holders of ordinary shares
recorded in the register of the Company at the close of business on
the record date, being Friday, 4 September 2020.
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 80 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,
1 September 2020.
The issued share capital at the declaration date is 109 944 384
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, 1 September 2020.
The salient dates for the dividend will be as follows:
Last day to trade cum dividend Tuesday, 1 September 2020
Ex dividend trade Wednesday, 2 September 2020
Record date Friday, 4 September 2020
Payment date Monday, 7 September 2020
Share certificates may not be dematerialised or rematerialised from
Wednesday, 2 September 2020 to Friday, 4 September 2020, both days
inclusive.
By order of the Board
EN Rapoo
Group Company Secretary
Woodmead, Sandton
29 July 2020
The full long-form announcement is available for inspection:
https://senspdf.jse.co.za/documents/2020/JSE/ISSE/AFE/hy20.pdf
https://www.aeciworld.com/pdf/investors/interim-results/2020/interim-results-2020.pdf
The contents of this short-form announcement are the responsibility
of the Board of Directors of AECI. This short-form announcement is
only a summary of the information in the full announcement and does
not contain full or complete details. Any investment decisions made
by investors and/or shareholders and/or noteholders should be based
on consideration of the full announcement as a whole. Investors,
shareholders and noteholders are encouraged to review the full
announcement which is available on SENS and on AECI's website. The
full announcement is available for inspection at the registered office
of AECI, at no charge, during normal business hours from 29 July 2020.
Copies of the full announcement, at no charge, can also be requested
by contacting the Group Company Secretary: EN Rapoo, Private Bag X21,
Gallo Manor, 2052, nomini.rapoo@aeciworld.com or
groupcommunications@aeciworld.com
Registered office
First floor, AECI Place, 24 The Woodlands, Woodlands Drive, Woodmead, Sandton
Share transfer secretaries
Computershare Investor Services Proprietary Limited, Rosebank Towers,
15 Biermann Avenue, Rosebank, Johannesburg, 2196
Computershare Investor Services plc, PO Box 82, The Pavilions, Bridgwater
Road, Bristol BS99 7NH, England
Sponsor
Rand Merchant Bank (a division of FirstRand Bank Limited), 1 Merchant Place,
cnr Fredman Drive and Rivonia Road, Sandton, 2196
Directors
K D K Mokhele (Chairman), S A Dawson*, F F T De Buck, W H Dissinger**,
M A Dytor (Chief Executive), G Gomwe***, K M Kathan (Executive), J Molapo,
R Ramashia, A M Roets, P G Sibiya
* Australian ** German *** Zimbabwean
http://AECIWORLD.COM
Date: 29-07-2020 07:05:00
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