| Tue 31 Jul 2001, 0:00 | | Aeci: Group Interim Results |
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AECI
Group interim results for the half-year ended 30 June 2001
HIGHLIGHTS
* HEADLINE EARNINGS PER SHARE UP 30%
* PROFIT OF CONTINUING OPERATIONS UP 25%
* SALE OF FERTILIZER BUSINESS COMPLETED
* RESTRUCTURING CONTINUES
Income statement
2001 2000 2000
First half First half Year
Unaudited Unaudited Audited
Note R millions R millions R millions
Revenue (1) 3 246 2 913 6 009
Net trading profit 200 210 474
Continuing operations 200 160 414
Discontinued operations - 50 60
Net financing costs (68) (20) (27)
Income/(loss) from associates
and investments 14 (7) 10
146 183 457
Exceptional items (114) - (30)
Amortisation of goodwill (21) (14) (30)
Net profit before taxation 11 169 397
Taxation (30) (54) (121)
Normal activities (41) (54) (137)
Exceptional items 11 - 16
Net (loss)/profit after taxation (19) 115 276
Attributable to preference and
outside shareholders (11) (16) (32)
Normal activities (17) (16) (35)
Exceptional items 6 - 3
Net (loss)/profit attributable to
ordinary shareholders (30) 99 244
Headline earnings are derived from:
Net (loss)/profit attributable to
ordinary shareholders (30) 99 244
Net exceptional items 97 - 11
Amortisation of goodwill 21 14 30
88 113 285
Headline earnings per ordinary
share (cents) 95 73 184
Attributable (loss)/earnings per
ordinary share (cents) (32) 64 158
Dividend per ordinary share (cents)
Paid during the period 50 50 80
Number of ordinary shares in
issue (millions) (2) 93 155 155
Notes
(1) Includes exports of R833 million (2000 - R601 million).
(2) In January 2001 the Company re-purchased 61 866 725 of its own ordinary
shares, representing 40% of the issued share capital, from Anglo South
Africa (Pty) Limited.
Industry segment analysis
for the half-year ended 30 June
Revenue Net trading profit Assets
2001 2000 2001 2000 2001 2000
Unaudited Unaudited Unaudited
R millions R millions R millions
Mining solutions 683 580 60 50 851 851
Specialty chemicals 1 121 941 101 93 787 643
Specialty fibres 874 628 78 58 733 608
Property - - 3 9 681 627
Other businesses 581 572 (11) (20) 414 430
Group services,
development and
intergroup (13) (130) (31) (30) 41 34
3 246 2 591 200 160 3 507 3 193
Discontinued operations - 322 - 50 - 249
3 246 2 913 200 210 3 507 3 442
Assets consist of property, plant, equipment and goodwill, inventory,
accounts receivable and accounts payable.
Balance sheet
2001 2000 2000
30 June 30 June 31 Dec
Unaudited Unaudited Audited
Note R millions R millions R millions
Assets
Non-current assets 2 487 2 576 2 482
Property, plant and equipment 1 832 1 856 1 798
Goodwill 491 446 428
Investments 164 274 256
Current assets 2 788 3 222 3 291
Inventory 1 042 996 1 035
Accounts receivable 1 290 1 252 1 219
Cash and cash equivalents 456 974 1 037
Total assets 5 275 5 798 5 773
Equity and liabilities (3)
Ordinary capital and reserves 2 215 2 946 3 061
Preference capital and outside
shareholders' interest in
subsidiaries 182 165 177
Total shareholders' interest 2 397 3 111 3 238
Non-current liabilities 195 208 184
Deferred taxation (185) (194) (182)
Long-term borrowings 59 50 38
Long-term provisions 321 352 328
Current liabilities 2 683 2 479 2 351
Accounts payable 1 148 1 104 1 160
Provision for restructuring 44 106 62
Short-term borrowings 1 450 1 249 1 073
Taxation 41 20 56
Total equity and liabilities 5 275 5 798 5 773
(3) Accounting policies are consistent with those applied in the previous
financial year other than the introduction of AC 107 (Revised) in regard to
accounting for dividends declared. Comparative figures have been restated.
Statement of changes in shareholders' equity
2001 2000 2000
First half First half Year
Unaudited Unaudited Audited
R millions R millions R millions
Headline earnings 88 113 285
Exceptional items net of taxation and
outside shareholders' interest (97) - (11)
Amortisation of goodwill (21) (14) (30)
Dividends paid (46) (77) (123)
Foreign currency
translation differences 2 - 20
Other 2 4 -
Net (decrease)/increase in equity
for the period (72) 26 141
Equity at the beginning of the year 3 061 2 920 2 920
Repurchase of own shares (775) - -
Ordinary shares issued 1 - -
Equity at the end of the period 2 215 2 946 3 061
Made up as follows:
Ordinary share capital
and share premium 94 228 228
Non-distributable reserves 503 581 608
Retained income 1 618 2 137 2 225
2 215 2 946 3 061
Cash flow statement
2001 2000 2000
First half First half Year
Unaudited Unaudited Audited
R millions R millions R millions
Cash generated by operations 300 300 608
Investment income 2 - 10
Net financing costs (68) (20) (27)
Taxes paid (47) (53) (64)
Changes in working capital (103) (126) (149)
Expenditure relating to long-term
provisions (8) (1) (20)
Expenditure relating to restructuring (24) (141) (190)
Cash available from operating
activities 52 (41) 168
Dividends paid (53) (83) (134)
Cash (absorbed by)/retained
from operating activities (1) (124) 34
Cash utilised in investment
activities (212) (159) (212)
Proceeds from disinvestment and
restructuring 8 86 224
Expenditure on repurchasing own shares (775) - -
Net cash (utilised)/generated (980) (197) 46
Cash effects of financing activities 398 282 97
Proceeds from issue of new shares 1 - -
(Decrease)/increase in cash and
cash equivalents (581) 85 143
Other salient features
2001 2000 2000
First half First half Year
Unaudited Unaudited Audited
R millions R millions R millions
Capital expenditure 137 113 271
Expansion 65 64 147
Replacement 72 49 124
Capital commitments 106 151 235
Contracted for 86 68 143
Not contracted for 20 83 92
Future rentals on property, plant
and equipment leased 147 166 162
Payable within one year 32 38 42
Payable thereafter 115 128 120
Net contingent liabilities and
guarantees 180 169 289
Net borrowings 1 053 325 74
Gearing (%) 44 11 2
Current assets to current liabilities 1.1 1.3 1.4
Net asset value per ordinary
share (cents) 2 383 1 875 1 947
Depreciation and amortisation 128 117 235
Overview
Headline earnings per ordinary share at 95 cents were 30 per cent higher
than in the first half of 2000. This result reflects a resilient performance
by the core businesses of the Group in particularly difficult trading
conditions, augmented by the significant effect of the share buy-back which
took place in January this year. An increased interim dividend of 32 cents
per ordinary share has been declared (2000 - 30 cents).
Had the share buy-back not taken place, it is estimated that headline
earnings would have been 75 cents per ordinary share, an improvement of 2
cents on the prior year.
Operating results
In the midst of a major slowdown in the world chemical industry,
characterised by lower volumes, higher energy related raw material costs and
a widespread decline in earnings, the sustained performance of the Group's
core business clusters was commendable.
Revenue and trading profit of continuing operations increased by some 25
per cent year on year as additional PET capacity at SANS Fibres and
acquisitions by Chemical Services offset flat to lower demand in most
sectors of the domestic economy. Export revenue increased by 39 per cent,
boosted by the weaker Rand exchange rate. However, the widening effects of
the economic downturn in the United States became progressively evident in
the second quarter with sharp cutbacks in international demand for
industrial yarns from SANS Fibres.
Higher raw material costs in Rand terms could still not be fully recovered
from local markets and the operating margin in continuing operations was
unchanged from the 6.2 per cent recorded in the same period last year.
Initiatives to lift margins through enhanced efficiencies and lower
operating costs continue to be pursued aggressively.
The highlight of the period was the performance of SANS Fibres where local
demand for both industrial yarns and PET exceeded expectations. An unplanned
outage of the SANS polyester polymer plant at Bellville in July is not
expected to have a material effect on Group results for the year. African
Explosives achieved a pleasing result with an increased contribution from
foreign operations. Solid gains in most of the Chemical Services' portfolio
were offset by continued underperformance of the technical coatings
business. A weakening market for industrial land adversely affected the
Group's property operations, although the uptake of land for residential use
remained buoyant.
Net capital and investment expenditure of R204 million, together with the
R775 million disbursement of cash resources on the share buy-back,
contributed to an increased net debt to equity ratio of 44 per cent at mid-
year. Cash interest cover at 4.5 times in the period is expected to be
higher in the seasonally stronger second half.
Restructuring
During July the sale of AECI's 50 per cent interest in Kynoch Fertilizer to
Norsk Hydro was finalised. The transaction, effective 1 January 2001,
completes the Group's exit from the non-core retail fertilizer business. A
book loss on disposal of R60 million has been recognised as an exceptional
item in the period. The disposal has reduced the contingent liabilities of
the Group by R90 million.
Chemical Services has decided to discontinue non-core components of the
technical coatings business to focus on technology and service intensive
sectors. A provision of R54 million in respect of this and other closures
and restructuring was recognised as an exceptional item in the period.
All businesses in the Group have identified significant further
opportunities for restructuring and rationalisation in the ongoing drive for
world class competitive performance.
Notwithstanding widespread interest in the course of a formal tender
process, indicative offers received for the Dulux decorative business did
not approach the Board's estimate of fair value. Accordingly the business
will be retained and restructured with a view to the realisation of fair
value in future years. Discussions are continuing with various parties
regarding the remaining, relatively minor non-core operations of the Group.
Prospects
Trading conditions in the second half now appear likely to be less
favourable than envisaged in the previous report to shareholders as the
global slowdown takes hold. Nonetheless, given the further benefits of
restructuring, the Group remains well positioned to achieve an improvement
in headline earnings per share in the second half-year.
STRATE
The conversion of the Company's shares to the STRATE system commenced on 2
July 2001 with the dematerialisation of such shares. Electronic trading
commenced on 23 July with the first electronic settlement date being 30 July
2001.
Alan Pedder Lex van Vught
Chairman Chief Executive
Declaration of Ordinary Dividend No. 135
Notice is hereby given that an interim dividend of 32 cents per share has
been declared in respect of dividend No. 135 for the financial year ending
31 December 2001.
Shareholders are advised that the last day to trade cum dividend will be
Friday, 17 August 2001. The shares will trade ex dividend as from Monday, 20
August 2001. The record date will be Friday, 24 August 2001 and the dividend
will be payable on Tuesday, 25 September 2001.
By order of the Board
M J F POTGIETER
Secretary
30 July 2001
Transfer secretaries
Computershare Services Limited
41 Fox Street
Johannesburg
2001
and
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgewater Road
Bristol BS99 7NH
England Registration number 1924/002590/06
www.aeci.co.za
AEL CS SANS FIBRES
MINING SOLUTIONS SPECIALTY CHEMICALS SPECIALTY FIBRES
