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AECI - GROUP INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2002
AECI LIMITED
Incorporated in the Republic of South Africa
(Registration No. 1924/002590/06)
Share code: AFE ISIN No: ZAE000000220
* Net trading profit up 64%
* Headline earnings per share up 53%
* Interim dividend up 25%
* Return on invested capital (ROIC)
up to 15%
* Outlook positive
specialty
product and
service solutions
Commentary
The Group has achieved a most pleasing result, benefiting from the completion of
the transformation strategy and stronger than expected demand in most domestic
markets.
Performance
Headline earnings of 145 cents per ordinary share were 53 per cent higher than
in the first half of 2001, extending the strong growth trend established since
1999. An increased interim dividend of 40 cents per ordinary share has been
declared (2001 - 32 cents).
Revenue increased by 19 per cent year on year as moderate volume growth in local
markets and the weaker rand exchange rate more than offset lower international
demand and the impact of disposals. Higher raw material costs in rand terms
could not be fully recovered in selling prices. However, the benefits of
restructuring, together with a continuing focus on enhanced efficiencies and
lower operating costs, delivered a 64 per cent gain in net trading profit. The
operating margin improved to 8.5 per cent from 6.2 per cent in the same period
last year. The annualised return on invested capital (ROIC) for the Group,
excluding revaluation of land, at 15 per cent approached an acceptable level for
the first time in many years.
All businesses improved their performance. Highlights included the turnaround of
the technical coatings business in Chemical Services; growth in holes drilled by
the South African mining industry, after many years of decline, to the benefit
of AEL; and markedly better performances by Dulux and Heartland Properties.
Commissioning of the joint venture (Unifi-SANS) nylon industrial yarn plant in
Stoneville, North Carolina, USA was completed in the period. However, customer
product approvals are taking longer than planned and could delay profitability
of the joint venture into next year.
The weaker level of the rand exchange rate year on year had a net positive
impact on earnings in the period although the modest recovery in the exchange
rate did diminish this impact during the second quarter. The translation
differences arising on the Group`s net investment in activities outside South
Africa were recognised, as in 2001, through reserves and not through the income
statement.
Financial
The final payment of R206 million was made in terms of the share buy-back
agreement approved by shareholders in January 2001.
Net investment and capital expenditure at R93 million in the period was
significantly lower than in recent years with the completion of the new nylon
spinning platform by SANS Fibres the only notable component of the total.
Working capital was tightly managed to 17 per cent of sales.
The Group`s net borrowings were well contained to R1 047 million at mid-year and
benefited from strong cash flow from the businesses. Cash interest cover
improved to 5.3 times whilst gearing increased marginally from year-end to 46
per cent of shareholder funds.
Portfolio
Disposal of the Group`s 40 per cent equity-accounted interest in Huntsman
Tioxide SA, effective January 2002, was concluded during the period and the
proceeds of R79 million were received in June. Disposal of the animal feeds
business Kynoch Feeds, effective April 2002, was also finalised in the period
although the proceeds of R70 million had not been received by mid-year.
Chemical Services has concluded an agreement in principle to acquire the mining
and alkylate chemicals businesses of Dow Sentrachem for a cash consideration of
approximately R140 million. The purchase is subject to Board and regulatory
approvals.
Outlook
The hesitant recovery in a volatile global economy is not expected to gain much
momentum in the second half. However, the new AECI with its more specialised
business portfolio is well positioned to sustain its recent track record and
expects continued real growth in headline earnings for the full 2002 financial
year, albeit at a lower rate than that achieved in the first half year.
Dividend
A formal announcement of the dividend declared by the Board is published
separately from this announcement.
Alan Pedder Lex van Vught
Chairman Chief Executive
Sandton
29 July 2002
Income statement
First half First half Year
% Unaudited Unaudited Audited
R millions Change 2002 2001 2001
Revenue (Note +19 3 849 3 246 6 745
1)
Net trading +64 328 200 492
profit
Net financing (84) (68) (141)
costs
Income from 4 14 25
associates and
investments
248 146 376
Provision for (12) - (20)
post-employment
medical
benefits
Amortisation of (29) (21) (56)
goodwill
Exceptional - (114) (371)
items
Net 207 11 (71)
profit/(loss)
before taxation
Taxation (75) (30) 3
Normal (75) (41) (85)
activities
Exceptional - 11 88
items
Net 132 (19) (68)
profit/(loss)
Attributable to (20) (11) (20)
preference and
outside
shareholders
Normal (26) (17) (45)
activities
Amortisation of 6 - 12
goodwill
Exceptional - 6 13
items
Net 112 (30) (88)
profit/(loss)
attributable to
ordinary
shareholders
Headline
earnings are
derived from:
Net 112 (30) (88)
profit/(loss)
attributable to
ordinary
shareholders
Amortisation of 23 21 44
goodwill
Net exceptional - 97 270
items
135 88 226
Headline +53 145 95 243
earnings per
ordinary share
(cents)
Diluted 139 91 235
headline
earnings per
ordinary share
(cents)
Attributable 120 (32) (95)
earnings/(loss)
per ordinary
share (cents)
Dividends +25 40 32 87
declared per
ordinary share
(cents)
Dividends paid 55 50 82
per ordinary
share (cents)
Ordinary shares
(millions)
- in issue 93 93 93
- weighted 93 93 93
average number
of shares
- diluted 97 96 96
weighted
average number
of shares
Notes
(1) Includes exports of R987 million (2001 - R833 million).
(2) Accounting policies are in accordance with South African Statements of
Generally Accepted Accounting Practice and are consistent with those applied in
the previous financial year.
Industry segment analysis
for the six months ended 30 June
Net trading
Revenue profit Assets
Unaudited Unaudited Unaudited
R millions 2002 2001 2002 2001 2002 2001
Mining 912 683 83 60 823 851
solutions
Specialty 1 470 1 121 149 101 962 787
chemicals
Specialty 1 038 874 91 78 944 733
fibres
Property 83 74 10 3 650 681
Other 402 507 12 (11) 157 414
businesses
Group
services,
development
and (56) (13) (17) (31) 5 41
intergroup
3 849 3 246 328 200 3 541 3 507
Assets consist of property, plant, equipment and goodwill, inventory, accounts
receivable and accounts payable. Assets in the property segment include land
revaluation of R509 million (2001 - R509 million).
Balance sheet
30 Jun 30 Jun 31 Dec
Unaudited Unaudited Audited
R millions 2002 2001 2001
Assets
Non-current 2 410 2 487 2 606
assets
Property, 1 829 1 832 1 910
plant and
equipment
Goodwill 496 491 525
Investments 85 164 171
Current 3 301 2 788 3 277
assets
Inventory 1 252 1 042 1 231
Accounts 1 523 1 290 1 469
receivable
Cash and cash 526 456 577
equivalents
Total assets 5 711 5 275 5 883
Equity and
liabilities
Ordinary 2 050 2 215 2 264
capital and
reserves
Preference
capital and
outside
shareholders`
interest in 222 182 211
subsidiaries
Total 2 272 2 397 2 475
shareholders`
interest
Non-current 1 415 195 1 391
liabilities
Deferred (188) (185) (207)
taxation
Long-term 1 243 59 1 248
borrowings
Long-term 360 321 350
provisions
Current 2 024 2 683 2 017
liabilities
Accounts 1 559 1 148 1 530
payable
Provision for 86 44 109
restructuring
Short-term 330 1 450 316
borrowings
Taxation 49 41 62
Total equity 5 711 5 275 5 883
and
liabilities
Statement of
changes in
shareholders`
equity
First First half Year
half
Unaudited Unaudited Audited
R millions 2002 2001 2001
Headline earnings 135 88 226
Amortisation of (23) (21) (44)
goodwill net of
outside
shareholders`
interest
Exceptional items - (97) (270)
net of taxation
and outside
shareholders`
interest
Net profit/(loss) 112 (30) (88)
attributable to
ordinary
shareholders
Dividends paid (51) (46) (76)
Foreign currency (70) 2 140
translation
differences net of
deferred taxation
Ordinary shares 1 1 2
issued
Other - 2 -
Net decrease in (8) (71) (22)
equity for the
year before share
buy-back
Repurchase of own (206) (775) (775)
shares
Equity at the 2 264 3 061 3 061
beginning of the
period
Equity at the end 2 050 2 215 2 264
of the period
Made up as
follows:
Share capital and 94 94 95
share premium
Non-distributable 465 503 662
reserves
Surplus arising on 346 393 391
revaluation of
property, plant
and equipment
Foreign currency 112 47 182
translation
reserve net of
deferred taxation
Retained earnings 2 72 84
of associates
Other 5 (9) 5
Retained income 1 491 1 618 1 507
2 050 2 215 2 264
Cash flow
statement
First half First half Year
Unaudited Unaudited Audited
R millions 2002 2001 2001
Cash generated 445 300 660
by operations
Dividends 4 2 2
received
Net financing (84) (68) (141)
costs
Taxes paid (51) (47) (74)
Changes in (53) (103) (72)
working
capital
Expenditure (2) (8) (14)
relating to
long-term
provisions
Expenditure (23) (24) (74)
relating to
restructuring
Cash available 236 52 287
from operating
activities
Dividends paid (59) (53) (87)
Cash retained 177 (1) 200
from/(absorbed
by) operating
activities
Cash utilised (93) (212) (470)
in investment
activities
Proceeds from 79 8 65
disinvestment
and
restructuring
Expenditure on (206) (775) (775)
repurchasing
own shares
Net cash (43) (980) (980)
utilised
Cash effects 9 398 464
of financing
activities
Proceeds from 1 1 2
issue of new
shares
Decrease in (33) (581) (514)
cash and cash
equivalents
Cash and cash 577 1 037 1 037
equivalents at
the beginning
of the period
Translation (18) - 54
(loss)/gain on
cash and cash
equivalents
Cash and cash 526 456 577
equivalents at
the end of the
period
Other salient features
First half First half Year
Unaudited Unaudited Audited
R millions 2002 2001 2001
Capital 99 137 424
expenditure
- expansion 68 65 276
- replacement 31 72 148
Capital 88 106 102
commitments
- contracted 64 86 92
for
- not 24 20 10
contracted
for
Future 177 147 179
rentals on
property,
plant and
equipment
leased
- payable 41 32 40
within one
year
- payable 136 115 139
thereafter
Net 155 180 160
contingent
liabilities
and
guarantees
Net 1 047 1 053 987
borrowings
Gearing (%) 46 44 40
Current 1.6 1.1 1.6
assets to
current
liabilities
Net asset 2 194 2 383 2 430
value per
ordinary
share (cents)
Depreciation 109 107 221
Transfer secretaries
Computershare Investor Services Limited
41 Fox Street, Johannesburg, 2001
and
Computershare Investor Services PLC
PO Box 82, The Pavilions, Bridgwater Road
Bristol BS99 7NH, England
Registered office
First Floor, AECI Place
24 The Woodlands
Woodlands Drive
Woodmead, Sandton
Sponsor
JP Morgan
www.aeci.co.za
AEL
Mining solutions
Development, manufacture and supply of value-adding services, initiating systems
and explosives.
Chemical Services Limited
Specialty chemicals
Largest specialty chemical operation in southern Africa, supplying a diverse
range of specialties, raw materials and related services to a broad spectrum of
industries.
SAns Fibres
Specialty fibres
Production, marketing and distribution of specialty nylon and polyester yarn for
local and export markets; production of PET bottle polymer.
Date: 30/07/2002 08:09:29 AM Produced by the JSE SENS Department
AECI LIMITED - NOTICE TO SHAREHOLDERS INTERIM ORDINARY DIVIDEND NO. 137
AECI LIMITED
Incorporated in the Republic of South Africa
(Registration No. 1924/002590/06)
Share code: AFE ISIN No: ZAE000000220
Notice to shareholders
Interim ordinary dividend No. 137
NOTICE IS HEREBY GIVEN that on 29 July 2002 the directors of AECI Limited
declared an interim dividend of 40 cents per share, in respect of the financial
year ending 31 December 2002, payable on Monday, 23 September 2002 to ordinary
shareholders recorded in the books of the Company at the close of business on
Friday, 20 September 2002.
The last day to trade cum dividend will be Friday, 13 September 2002 and shares
will commence trading ex dividend as from Monday, 16 September 2002.
Any change of address or dividend instruction must be received before Friday, 13
September 2002.
Share certificates may not be dematerialised or rematerialised from Monday, 16
September 2002 to Friday, 20 September 2002, both days inclusive.
This announcement will be mailed to all registered shareholders on or about 31
July 2002.
By order of the Board
M J F Potgieter
Secretary
Sandton
29 July 2002
Transfer secretaries
Computershare Investor Services Limited
(Registration number 1958/003546/06)
Sponsor
JP Morgan
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