Trading Statement

11 June 2007

Incorporated in the Republic of South Africa
(Registration number 1924/002590/06)
Share code:  AFE     ISIN No. ZAE000000220
("AECI” or “the Group” or “the Company”)

In its results for the 2008 financial year, released on SENS on 24 February 2009, AECI advised shareholders that the outlook for volume growth in 2009 was not promising.

The Group’s continuing operations have experienced adverse trading conditions thus far in the current financial year owing to the following key factors:

  1. a substantial reduction in trading volumes in line with the depressed performance of the mining, manufacturing and automotive sectors;
  2. a lackluster property market, as forecast in October 2008;
  3. lower commodity prices, resulting in margin pressure on the Group’s customers and thus exerting similar pressure on all its businesses;
  4. the recent strengthening of the Rand, resulting in lower foreign earnings and severe mark-to-market revaluations in respect of foreign debtors and inventory;
  5. an expected higher interest charge in line with higher gearing, associated with the Company’s strategic capital expenditure programme;
  6. an unstable local and international equity market and volatile movements in the currency/exchange rates. These have had a negative impact on the Pension Fund employer surplus account and on the plan asset for post-retirement liabilities; and
  7. restructuring charges taken through the income statement to enable the Group to reduce costs in line with current reduced volumes.

Owing to the factors above, the Company expects its interim results for the half-year ending 30 June 2009 to be between 55% and 75% lower than the headline earnings per share (“HEPS”) of 325c and earnings per share (“EPS”) of 324c achieved in the corresponding reporting period in 2008.

The Group’s profit from continuing operations (before adjustments to the Pension Fund employer surplus account and the plan asset for post-retirement liabilities) is expected to be between 40% and 60% lower than that achieved in the half-year to 30 June 2008.

Based on current forecasts and information, management expects an improved performance in the second half-year and thus does not expect HEPS for the full financial year, ending 31 December 2009, to be considerably lower than the 412c achieved in 2008.

Shareholders are advised that the information in this trading statement has not been reviewed or reported on by the auditors of the Company.  It is issued in terms of section 3.4(b) of the JSE Limited Listing Requirements, whereby a listed company must publish such a statement as soon as it is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ by at least 20% from that of the previous corresponding period.

The Group’s results for the half-year ending 30 June 2009 are due to be released on SENS on 28 July 2009.

Woodmead, Sandton
11 June 2009

RAND MERCHANT BANK (A division of FirstRand Bank Limited)


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