Go Back Email this Link to a friend

AFE - AECI Limited - Reviewed condensed consolidated financial results for the

Release Date: 22/02/2011 07:05:26      Code(s): AFE
AFE - AECI Limited - Reviewed condensed consolidated financial results for the  
year ended 31 December 2010 and cash dividend declaration                       
AECI LIMITED                                                                    
(Incorporated in the Republic of South Africa)                                  
(Registration No. 1924/002590/06)                                               
Share code: AFE ISIN No.:ZAE000000220                                           
("AECI" or "the Company")                                                       
2010 AND CASH DIVIDEND DECLARATION                                              
Best ever safety performance, Total Recordable Incident Rate of 0,58            
HEPS up 67%                                                                     
Profit from continuing operations up 38%                                        
Gearing improved to 40%                                                         
Final cash dividend of 135 cents declared                                       
All strategic growth projects substantially complete and in ramp-up phase       
Income statement                                                                
                                  %             2010           2009             
                                  change        R millions     R millions       
Continuing operations                                                           
Revenue(2)                          +8            11 569         10 709         
Net operating costs                +6             10 507         9 942          
Profit from operations              +38           1 062          767            
Net (loss)/income from Pension                                                  
Fund employer surplus accounts                    (6)            23             
Net (loss)/income from plan assets                                              
for post-retirement medical aid                                                 
liabilities                                       (5)            11             
1 051          801             
Fair value adjustments - interest                                               
                                                 2              4               
Interest expense (net of costs                                                  
capitalised)                                      (175)          (243)          
Interest received                                 21             21             
Income from associates and                                                      
investments                                       2              7              
901            590             
Impairment of goodwill                            (28)           (18)           
Impairments of plant and equipment                                              
                                                 (4)            (16)            
Reversal of impairment of plant                                                 
and equipment                                    -               7              
Gain on acquisition of subsidiary                                               
                                                 4              -               
Profit before tax                                 873            563            
Tax                                               (233)          (176)          
Net profit from continuing                                                      
operations                                        640            387            
Net profit from discontinued                                                    
operations                                        -              53             
Profit before tax                                 -              65             
Tax                                               -              (12)           
Profit for the year                               640            440            
Profit for the year attributable                                                
- ordinary shareholders                           600            421            
- preference shareholders                         2              2              
- non-controlling interest                        38             17             
                                                 640            440             
Headline earnings are derived                                                   
Profit attributable to ordinary                                                 
shareholders                                      600            421            
Impairment of goodwill                            28             18             
Impairments of plant and equipment                                              
                                                 4              16              
Reversal of impairment of plant                                                 
and equipment                                    -               (7)            
Gain on acquisition of subsidiary                                               
                                                 (4)            -               
Profit on disposal of property,                                                 
plant and equipment                               (5)            (88)           
Loss on disposal of subsidiaires                  20             -              
Profit on disposal of associates                                                
and investments                                  (22)           -               
Tax effects of the above items                    2              10             
Non-controlling interest effect of                                              
the above items                                   (4)            -              
Headline earnings                                 619            370            
Per ordinary share (cents):                                                     
Headline earnings                  +67            577            346            
Diluted headline earnings(3)                      575            344            
Basic earnings                     +42            559            393            
Diluted basic earnings(3)                         558            392            
Continuing basic earnings                         559            344            
Diluted continuing basic                                                        
earnings(3)                                       558            343            
Discontinued basic earnings(3)                    -              49             
Dividends declared                 +128           205            90             
Dividends paid                                    132            169            
Ordinary shares (millions)(4)                                                   
- in issue                                        107            107            
- weighted average number of                                                    
shares                                            107            107            
- diluted weighted average number                                               
of shares(3)                                      108            107            
Statement of comprehensive income                                               
                                               2010            2009             
                                               R millions      R millions       
Profit for the year                             640             440             
Other comprehensive income net of tax:                                          
Revaluation of derivative instruments            *               (6)            
Foreign currency translation differences net                                    
of deferred tax                                  (84)            (169)          
Total comprehensive income for the year          556             265            
Total comprehensive income attributable to:                                     
- ordinary shareholders                          519             250            
- preference shareholders                        2               2              
- non-controlling interest                       35              13             
                                                556             265             
*Nominal amount                                                                 
Statement of financial position                                                 
2010            2009              
                                              R millions      R millions        
Non-current assets                              5 634           5 360           
Property, plant and equipment                   3 564           3 260           
Investment property                             440             430             
Goodwill                                        1 035           1 063           
Pension Fund employer surplus accounts          230             236             
Investments                                     20              13              
Non-current loans receivable                    22              14              
Deferred tax                                    323             344             
Current assets                                  4 647           4 668           
Inventories                                     1 892           1 827           
Accounts receivable                             2 023           2 159           
Assets classified as held for sale              -               14              
Cash and cash equivalents                       732             668             
Total assets                                    10 281          10 028          
Equity and liabilities                                                          
Ordinary capital and reserves                   4 314           3 937           
Preference capital and non-controlling                                          
interest                                        154             121             
Total shareholders` interest                    4 468           4 058           
Non-current liabilities                         2 175           2 564           
Deferred tax                                    88              85              
Non-current borrowings                          1 133           1 731           
Non-current provisions                          954             748             
Current liabilities                             3 638           3 406           
Accounts payable                                2 168           2 208           
Current borrowings                              1 368           1 080           
Tax payable                                     102             118             
Total equity and liabilities                    10 281          10 028          
Statement of cash flows                                                         
2010        2009               
                                                 R millions  R millions         
Cash generated by operations                       1 619       1 137            
Dividends received                                 2           12               
Interest paid                                      (268)       (349)            
Interest received                                  21          22               
Income tax paid                                    (209)       (333)            
Changes in working capital                         26          1 161            
Expenditure relating to non-current provisions                                  
                                                  (37)        (93)              
Expenditure relating to retrenchments and                                       
restructuring                                      (33)        (105)            
Cash available from operating activities           1 121       1 452            
Dividends paid                                     (144)       (167)            
Dividends paid to non-controlling interest                                      
                                                  (2)         -                 
Cash retained from operating activities            975         1 285            
Cash utilised in investment activities             (577)       (981)            
Proceeds from disposal of investments and                                       
businesses                                         39          94               
Investments                                        (7)         (92)             
Net capital expenditure                            (609)       (983)            
Net cash generated                                 398         304              
Cash effects of financing activities               (294)       (6)              
Non-current loans receivable                       14          (14)             
Borrowings                                         (308)       8                
Increase in cash and cash equivalents              104         298              
Cash and cash equivalents at the beginning of the                               
year                                               668         444              
Translation loss on cash and cash equivalents                                   
                                                  (40)        (74)              
Cash and cash equivalents at the end of the year                                
732         668               
Statement of changes in equity                                                  
                                                 2010        2009               
                                                 R millions  R millions         
Total comprehensive income for the year            556         265              
Dividends paid                                     (144)       (167)            
Dividends paid to non-controlling interest                                      
                                                  (2)        -                  
Acquisition of subsidiary                         -            (9)              
Equity at the beginning of the year                4 058       3 969            
Equity at the end of the year                      4 468       4 058            
Made up as follows:                                                             
Issued ordinary capital                            215         215              
Non-distributable reserves                         164         251              
Property revaluation reserve                       237         237              
Foreign currency translation reserve net of                                     
deferred tax                                       (81)        3                
Other                                              8           11               
Retained income                                    3 935       3 471            
Ordinary capital and reserves                      4 314       3 937            
Preference capital and non-controlling interest                                 
                                                  154         121               
Preference capital                                 6           6                
Non-controlling interest                           148         115              
4 468       4 058              
Other salient features                                                          
                                                 2010        2009               
                                                 R millions  R millions         
Capital expenditure - property, plant and                                       
equipment                                          634         1 150            
- expansion                                        385         963              
- replacement                                      249         187              
Capital commitments                                88          737              
- contracted for                                   49          71               
- not contracted for                               39          666              
Future rentals on property, plant and equipment                                 
leased                                             196         185              
- payable within one year                          96          84               
- payable thereafter                               100         101              
Contingent liabilities                             97          83               
Net borrowings                                     1 769       2 143            
Gearing (%)                                        40          53               
Current assets to current liabilities              1,3         1,4              
Net asset value per ordinary share (cents)                                      
4 022       3 681             
Depreciation - continuing operations               332         267              
Rand/US$ closing exchange rate (rand)             6,65        7,38              
Rand/US$ average exchange rate (rand)             7,32        8,27              
Industry segment analysis                                                       
                                                           Profit from          
                                    Revenue                operations           
                                    2010           2009    2010       2009      
R millions             R millions           
Continuing operations                                                           
Mining services                       4 832          4 070   378        298     
Specialty chemicals                   6 453          6 524   811        483     
Property                              370            211     66         33      
Specialty fibres                      294            222     33         9       
Group services and intersegment       (380)          (318)   (226)      (56)    
                                    11 569          10 709  1 062      767      
Discontinued operations                                                         
SANS Fibres - Bellville               -              469     -          66      
                                    11 569          11 178   1 062     833      
                                                Net assets                      
2010            2009            
                                                R millions                      
Continuing operations                                                           
Mining services                                   2 294           2 187         
Specialty chemicals                               3 716           3 643         
Property                                          726             669           
Specialty fibres                                  143             116           
Group services and intersegment                   (93)            (51)          
6 786           6 564          
Discontinued operations                                                         
SANS Fibres - Bellville                          -                (33)          
                                                  6 786           6 531         
Net assets consist of property, plant, equipment, investment property, goodwill,
inventory and accounts receivable less accounts payable.                        
(1) Basis of preparation and accounting policies                                
The condensed consolidated financial results are prepared in accordance with the
recognition and measurement requirements of International Financial Reporting   
Standards, the presentation and disclosure requirements of IAS 34 - Interim     
Financial Reporting, the AC500 series issued by the Accounting Practices Board, 
the Listings Requirements of the JSE Limited, and in the manner required by the 
South African Companies Act, No. 61 of1973, as amended.                         
Accounting policies have been applied consistently by all entities in the Group 
and are consistent with those applied in the previous financial year.           
(2) Includes foreign and export revenue of R3 111 million (2009: R2 520         
(3) Calculated in accordance with IAS33. The Company has purchased call options 
over AECI shares which will obviate the need for the Company to issue new shares
in terms of the AECI share option scheme. In practice, therefore, there will be 
no future dilution.                                                             
(4) Net of 11 884 669 (2009: 11 884 669) treasury shares held by a subsidiary   
(5) The discontinued operations refer to the businesses of SANS Fibres where    
manufacturing activities ceased at the end of March 2009.                       
(6) The auditors, KPMG Inc., have reviewed these condensed consolidated         
financial results. The auditors` unqualified review report is available for     
inspection at the Company`s registered office.                                  
(7) The condensed consolidated financial statements do not include all of the   
information required for full annual financial statements and should be read in 
conjunction with the consolidated annual financial statements for the year ended
31 December 2009.                                                               
(8) The preparation of the financial statements requires management to make     
judgements, estimates and assumptions that affect the application of policies   
and reported amounts of assets and liabilities, income and expenses. The        
estimates and associated assumptions are based on historical experience and     
various other factors that are believed to be reasonable under the              
circumstances, the results of which form the basis of making the judgements     
about carrying values of assets and liabilities that are not readily apparent   
from other sources. Actual results may differ from these estimates.             
The Group delivered pleasing results for 2010, underpinned by a strong recovery 
in mining and manufacturing production volumes in the year. Consumer spending   
improved as interest rates declined and this also assisted the Group`s          
businesses that service related sectors. Revenue from continuing operations     
increased by 8% to R11 569 million (2009:                                       
R10 709 million), driven by commodity price increases but tempered by the 11%   
strengthening of the rand against the US dollar year-on-year. Overall volumes   
grew by 11% and profit from continuing operations increased by 38% to R1 062    
million (2009: R767 million).                                                   
Lower interest rates and improved cash generation impacted positively on        
headline earnings as net finance costs, after capitalising borrowing costs,     
decreased to R154 million (2009: R222 million).                                 
Headline earnings were 67% higher at R619 million (2009:                        
R370 million).                                                                  
The Board has declared a final cash dividend of 135 cents per ordinary share    
(2009: 62 cents).                                                               
Safety and health performance is expressed as the Total Recordable Incident     
Rate. It is gratifying to report that in 2010 the Group achieved its lowest ever
level of employee injuries and illnesses. The rate of 0,58 represents a 23%     
reduction from the level recorded in the prior reporting period.                
Mining services                                                                 
AEL Mining Services ("AEL") delivered a commendable performance, particularly   
noteworthy if viewed in the context of the slow start to the year when surface  
mining operations in southern Africa were negatively affected by heavy rainfall 
and those in the narrow reef sector experienced shaft closures.  Revenue        
increased by 19% to R4 832 million (2009: R4 070 million). This is attributable 
to ammonia price increases and volume growth of 13%. Profit from operations rose
by 27% to R378 million (2009: R298 million) and the operating profit margin was 
at 7,8% (2009: 7,3%). This improvement was facilitated by higher efficiencies on
the Initiating Systems Automation Project (ISAP) in its ramp-up phase, as well  
as being indicative of the benefits of enhanced service package offerings to    
customers.  Retrenchment costs of R49 million affected AEL`s operating profit.  
R39 million of this amount is a provision for restructuring of the old manual   
shocktube plants, to be completed during 2011.                                  
In AEL`s southern African business, sales into the surface and massive sectors  
recorded good growth, particularly in platinum mining. Volumes for the narrow   
reef market declined by 3,5%.                                                   
The African business grew in line with a strong recovery in Botswana`s diamond  
mining as well as improvements in the copper industry in central Africa. This   
growth was achieved notwithstanding delays in customers` projects. Gold mining  
activity in west and east Africa was depressed by production cutbacks and the   
suspension of operations.                                                       
The International business recorded pleasing progress as AEL gained new business
in Indonesia as well as additional sales channel volumes in Europe and South    
Of the R344 million invested in capital expenditure,                            
R102 million was spent on ISAP. Ramp-up of ISAP progressed well, with the       
production run-rate more than doubling in the second half of the year. The ISAP 
project will be fully complete in the first quarter of 2012. The balance of the 
capital expenditure was utilised for expansion in Indonesia and for smaller     
capital replacement projects in Africa and South Africa.                        
Specialty chemicals                                                             
Profit from continuing operations improved sharply by 68% to R811 million (2009:
R483 million) although revenue declined marginally to R6 453 million (2009: R6  
524 million) owing to the effects of the strong rand as well as changes in      
product mix. The operating profit margin improved to 12,6% (2009: 7,4%) as a    
result of excellent cost control in the period as well as the non-recurrence of 
the effects of the bad debt write-off of 2009. Volumes increased by 10% year-on-
There were improved performances from most of the businesses in the portfolio,  
with those from Akulu Marchon, Industrial Oleochemical Products, ImproChem and  
Lake International Technologies being particularly noteworthy. Senmin`s results 
were adversely impacted by the rand exchange rate and by start-up costs as the  
Polyacrylamide (PAM) facility was being ramped up.                              
The restructuring of Plastamid was completed in the second half-year and this   
business was divisionalised into Industrial Urethanes, at a total net cost of   
R10 million.                                                                    
Strong cash generation owing to improved profitability, lower capital           
expenditure and working capital containment were features of 2010.              
Of the R241 million capital expenditure in the year,                            
R92 million was for Senmin`s strategic projects. At Senmin, the Carbon          
Disulphide project is complete and the Acrylamide and PAM facilities have been  
commissioned, with the qualification process due for completion in the first    
quarter of 2011.                                                                
The specialty chemicals portfolio will be enhanced in the coming year, with     
three acquisitions finalised or close to finalisation for a total consideration 
of about R180 million. An agricultural chemicals distribution business will be  
integrated into Plaaskem, a toll manufacturing business will enhance SA Paper   
Chemicals` customer offering and a bulk caustic soda distribution business will 
be integrated into Crest Chemicals.                                             
The property market continued to lag behind the South African economy`s recovery
in 2010 and no significant property sale transactions were recorded. Heartland`s
results were delivered primarily by the leasing and services portfolios.        
Operating profit improved to R66 million from R33 million in 2009. This         
improvement is largely due to the non-recurrence of the cancellation of property
transactions accounted for in 2009.                                             
In property development, Heartland maintained its focus on preparing land for   
release to the market once market conditions improve. The most significant      
achievement in this regard was progress on Longlake at Modderfontein, a 220     
hectare parcel of saleable land suitable for all land uses. Township and        
environmental approvals were received, zoning rights were granted and           
infrastructural designs were approved.                                          
The property market remained curtailed by the lack of end-user finance.         
Specialty fibres                                                                
SANS Technical Fibers, based in the USA, benefitted from global recovery in the 
automotive and consumer sectors. Revenue improved by 48% to US$40 million (2009:
US$27 million), largely driven by volume growth of 48%. Operating profit        
quadrupled to US$4,5 million (2009:                                             
US$1,1 million).                                                                
Plant capacity was expanded by 33% with the installation of equipment           
transferred from the former SANS Fibres site in Bellville. The project, at a    
cost of US$3 million, was completed within budget and ahead of schedule. The new
capacity was fully utilised from the start-up date and, given the global        
automotive sector`s positive outlook, this uptake scenario is not expected to   
Finance and corporate centre                                                    
Gearing continued to improve to 40% of shareholders` fund at year-end (2009:    
53%) as capital expenditure declined to                                         
R634 million (2009: R1 150 million) and profitability improved in the period.   
Net working capital was well managed at 15,1% of gross revenue (2009: 15,9%).   
Cash interest cover improved to 5,6 times (2009: 3,5 times). Net interest paid, 
before capitalising borrowing costs of                                          
R93 million (2009: R105 million), decreased to R247 million (2009: R327         
million).  The decrease is attributable to sustained working capital control,   
improved cash generation and the decline in interest rates.                     
The Group services cost was R226 million (2009: R56 million). This material     
movement is analysed as follows:                                                
an additional R80 million provision in respect of legacy costs. The largest     
portion of this was an adjustment in the Post-retirement Medical Aid Liability  
due to medical aid inflation, a 0,25% decrease in the net discount rate, and the
inclusion of additional members;                                                
an increase of R51 million in long-term incentive provisions as the Group`s     
earnings and the Company`s share price improved in 2010;                        
in 2009, R18 million was recognised as profit on the disposal of the listed     
share portfolio of the captive insurance entity.                                
The recovery in the mining sector and steady increases in global chemical prices
are good indicators of improving demand, albeit in a more competitive           
environment. This bodes well for the Group in terms of volumes.                 
The focus for 2011 will be to:                                                  
complete ramp-up of the PAM and ISAP projects so as to optimise their           
beneficial use, thereby enhancing the Group`s financial performance;            
maintain a sharp focus on costs and working capital management, and on enhanced 
product and service delivery to customers; and                                  
successfully integrate the acquisitions into the specialty chemicals portfolio. 
Fani Titi                       Graham Edwards                                  
Chairman                        Chief Executive                                 
Woodmead, Sandton                                                               
21 February 2011                                                                
Notice to shareholders                                                          
Final ordinary cash dividend No. 154                                            
Notice is hereby given that on Monday, 21 February 2011 the Directors of AECI   
declared a final cash dividend of 135 cents per share, in respect of the        
financial year ended 31 December 2010, payable on Monday, 18 April 2011 to      
ordinary shareholders recorded in the books of the Company at the close of      
business on Friday, 15 April 2011.                                              
The last day to trade cum dividend will be Friday, 8 April 2011 and shares will 
commence trading ex dividend as from Monday, 11 April 2011.                     
Any change of address or dividend instruction must be received on or before     
Friday, 8 April 2011.                                                           
Share certificates may not be dematerialised or rematerialised from Monday, 11  
April 2011 to Friday, 15 April 2011, both days inclusive.                       
This announcement will be mailed to all recorded shareholders on or about       
Tuesday, 22 February 2011.                                                      
By order of the Board                                                           
EA Rea                                                                          
Acting Company Secretary                                                        
Directors: F Titi (Chairman), GN Edwards (Chief executive)+,RMW Dunne*, S       
Engelbrecht, Z Fuphe, KM Kathan+,                                               
MJ Leeming, AJ Morgan, LM Nyhonyha, Adv R Ramashia.                             
+Executive    *British                                                          
Acting Company Secretary: EA Rea                                                
Transfer secretaries                                                            
Computershare Investor Services (Pty) Ltd, 70 Marshall Street, Johannesburg 2001
and Computershare Investor Services PLC, PO Box 82, The Pavilions, Bridgwater   
Road, Bristol BS99 7NH, England                                                 
Registered office                                                               
1st Floor, AECI Place, 24 The Woodlands, Woodlands Drive, Woodmead, Sandton     
Sponsor: Rand Merchant Bank (A division of FirstRand Bank Limited)              
Date: 22/02/2011 07:05:25 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          

Email this JSE Sens Item to a Friend.

Send e-mail to
© 2018 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.